Tuition to faculty salary ratio at New York University

I got hold of some aggregate numbers for a typical private American university. Last year New York University (NYU) collected $1.395 billion in tuition and fees from students (this is actual money received net of discounts (“financial aid”), i.e., not the aspirational rates that they publish). How much was spent on education? Faculty salaries were $395 million and an additional $82 million was paid to adjuncts.

A little arithmetic shows that the students paid 2.92 times what the university paid out to teachers.

Related: posting regarding the ratio back in Calvin Coolidge’s college days.

15 Comments

  1. Peter Norvig

    January 23, 2014 @ 4:58 pm

    1

    Phil, are you claiming that classrooms and labs and and libraries and TAs are not part of education?

  2. philg

    January 23, 2014 @ 6:51 pm

    2

    Peter: I guess the library does give students a place to nap and the classroom gives them a place to text, so both are important. But on the other hand, i don’t think they account for an additional $1 billion per year in costs.

  3. polemarch

    January 23, 2014 @ 7:47 pm

    3

    Does the salary include health insurance and benefits?

    Still, clear there is significant bureaucratic overhead.

  4. Anonymous

    January 23, 2014 @ 8:57 pm

    4

    I’m really surprised by those numbers. It is probably true that NYU has other sources of income, so the ratio of teacher salaries to total expenditures has to be even more dramatic.

  5. Anonymous

    January 23, 2014 @ 8:57 pm

    5

    This is about the most ignorant assessment of university spending I’ve seen. I’m not saying that there aren’t budgetary issues at NYU, because I don’t know, but there is no way that we can make any assessment based on this skewed and bias analysis. What about utility costs? And as somebody mentioned, this figure does not include faculty benefits. They might have a bit of debt from various construction projects (maybe academic buildings?). Oh, and you know, those academic buildings also require maintenance. Do you have any data to support the claim that students only use the library to nap? And that students do nothing but text in class? I sincerely hope you do not waste any space in academia.

  6. Mike

    January 23, 2014 @ 10:15 pm

    6

    More interesting would be the tuition to administrator salary ratio.

  7. Anonymous

    January 23, 2014 @ 10:41 pm

    7

    Anonymous II: I disagree, I think the host makes a good point. As a society we are paying a very high price for those out of control expenditures. Student loan debt is now higher than credit card debt. http://www.whitehouse.gov/issues/education/higher-education
    There are many reasons for that, but certainly among them misuse of university funds.

  8. Federico

    January 24, 2014 @ 5:40 am

    8

    In the UK every grant has to go through a ‘full economic costing’, i.e. people have to ask for a budget that will cover both salaries and expenses + estates fees and college admin fees. The bottom line is that for every pound sterling one needs to have a salary (or pay salary of other staff) and do the actual work, roughly one to one and a half pound sterling are added on top due estate and admin costs. So, in simple terms, if a researcher working in a *state* university (meaning that the university still receives plenty of money from the government over and above students fees) asks for £10,000, the budget will show between £20,000 to £25,000 as full costs.

    In addition, if your research requires use of special facilities over and above basic office space (i.e. basic lab access) these costs might be substantially greater.

  9. wallyw

    January 24, 2014 @ 12:56 pm

    9

    So how does this compare to other enterprirses?

    Went to google and typed as far as “salaries as ” before the relevant completion came up “salaries as a percentage of operating expense” The first link gave 18-52 % as typical. Another link said “From an overall financial standpoint, businesses that pay out 20 to 30 percent of gross revenue in payroll expenses generally are doing OK.” From my 3 minutes of research it sounds like NYU is about right.

  10. ICH

    January 24, 2014 @ 1:03 pm

    10

    @anonymous
    I think the point is sound. I think the real question that is being asked is what is the value of a particular school? the metric is more complicated than just professor salaries, but probably not by much.

    If I give money to a charitable organization, I’m very interested in the percentage that goes to charity. If I give money to an educational institution, I’m very interested in the percentage that goes to education. Why is it not acceptable to calculate this? Are there other costs? yes. Should they be calculated as well. But it is hard to argue that teaching itself isn’t going to be one of the major costs. I’d love to see the costs of classroom space, laboratories, libraries, all calculated separately.

    My experience is that a LOT of money is being spent on ‘collegiate experience’ i.e. really nice study halls, dormitories, bureaucracy. Universities continue to claim that budgets are tight and they cannot survive, yet every single college campus I’ve been on, is in the midst of a building boom. There is money aplenty and from what I see, an awful lot of it is spent on lawn’s, sprinkler’s, art galleries, administrative buildings, fields and stadiums, luxury dormitories.

    My solution is to end the federal subsidy of education, because in reality there is no subsidy. We are encouraging students to take on significant debt to pay for this building boom, much of it funded not through aid, but through loans.

  11. Anonymous

    January 24, 2014 @ 5:36 pm

    11

    wallyw: NYU is not operating an airline, making cars, or producing energy. It looks to me like in the business of teaching, teachers should be the main expense.

  12. jay c

    January 24, 2014 @ 7:08 pm

    12

    From tuition page it looks like you would be spending USD $22,479 before discounts, or /2.92 = ~$7,700 in faculty expense per semester. That’s still a lot of money, and does not include housing.

    If I were going to do it all over again, I would outsource my education and go to Taiwan for undergraduate (I am a caucasian american). Cost is USD $3,500 for everything (tuition, books, living expenses housing) per semester. National Tsing Hua University tuition: link I see far more people in South Bay (Silicon Valley) with an undergrad degree from NTHU than from NYU.

  13. Anonymous

    January 24, 2014 @ 7:56 pm

    13

    jay c: College education in the EU and Asia may be cheaper but the US still has the best universities (the good ones) in the world. That does not mean that those institutions should not be accountable. Also, I must say that the US also has many universities and colleges that, for a variety of reasons, cannot hold a candle to the average European equivalent. Paying $200K for a math degree from NYU may be too expensive, paying the same amount for a degree in “communications” from XXX university (no SAT or ACT required) is simply silly.

  14. Pettus

    January 24, 2014 @ 11:28 pm

    14

    I also regard the rise in tuition at universities as suspicious. Given the increasing prevalence of online courses, paperless billing/communication, the decline in the number of full time/tenured faculty and the exemptions from a variety of taxes universities usually enjoy (corporate, property, etc.), the cost of getting an education should be going down.

    The best explanation is that we overvalue education just as Americans overvalued housing a few years back. An American’s belief in higher education is practically religious and to question it is often deemed rude if not heretical. Despite the value that universities and colleges claim they endow upon society, most seem to be in constant need of subsidies. And even worse, many of their graduates often have a hard time paying back their loans, which are often subsidized themselves! So much for increasing one’s value through education.

    I do realize people can go to school without expecting financial benefits. But given the incredible costs of just sleeping in the library and texting in class, one hopes that the mostly young people that attend these places will increase their value enough to cover the costs.

  15. George

    January 25, 2014 @ 9:28 pm

    15

    I just came back from a 3 hour session from a public university here in Mass which I will not name. This was a session for accepted parents and students through early action. This was the 2nd university visit this month and three others universities are lined up for next month. Furthermore, this is my second tour of such event as I went through the experience 2 years ago for my daughter. So, you can see I have first hand experience.

    What’s my take away from all those sessions and campus visits (all local here in Mass)? They ALL talk about:

    1) expanding by adding new buildings,
    2) remodeled dorms,
    3) state of the art cafeteria and the food program,
    4) many fun students activities,
    5) sports, and more sports,
    6) and the list goes on.

    No one, absolutely no one, talks about:

    1) who are there faculty and what makes them special,
    2) what academic programs they have that makes them stand out,
    3) list of well know successful graduates who attended their university,
    4) list of research programs currently active and how students are taking advantage of them,
    5) how and what programs the university has to ensure student success,
    6) and so on.

    In summary, universities are selling a “vacation package” not an “academic package”. It is only a mater of time when students won’t be able to afford an education because universities cost will be out of reach.

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