Everything you need to know about college financial woes

It's no secret that colleges have been having financial problems since the 2008 recession, which led to cuts in college funding. The cost of college is skyrocketing--the average cost of attendance at a four-year public university has out of pocket. Today's prospective students have been spooked with discussion of the very real "college loan but in some ways
This is how colleges finance themselves

There's a lot of general confusion about how colleges fund and finance themselves. The difference in funding for colleges is increasing steadily. Following the onset of "the Great Recession,” states seriously cut their funding to public post-secondary schools. The money lost from these cuts "adjunct” professors (essentially the college equivalent of a substitute teacher). And the salaries of most full time professors at universities have increased only slightly, if at all.

The real reason for the increase in personnel spending is the trend of "administrative bloat.” Colleges and universities increased their amount of administrators by 60% in the 16 year period between 1993 and 2009. While a slight increase in administrative faculty over the years is sensible in response to the increase in enrollment, the increase that has occurred at many colleges is astronomical and without excuse. The amount of money that schools are spending to pay all of these additional administrators' six-figure salaries is a contributing factor in the spike in tuition costs.

Overspending on expensive amenities

Colleges have been spending billions of dollars on amenities that they believe will draw in more students. Gourmet food, water parks, and video gaming stations are among the amenities some colleges are adding to their roster. College's motivation for taking part in the so-called "amenities arms race” and adding these extravagant amenities isn't wholly negative. When colleges get more students, they get more tuition money. But if all of the tuition money is being spent on building projects for amenities, then the immediate benefit is negligible.

What does all of this mean for students?

Colleges' financial problems can have a big impact on future students and college admissions. The difference in the way colleges are funded is fairly simple but the ways that they adapt to changes in funding is more nuanced. Some, especially private four-year institutions which need to rely on tuition a lot more than their public counterparts, have turned to extending admission exclusively or mostly to students they believe can easily pay the tuition or complete their four years of schooling. This is an unfortunate consequence of colleges losing money (or overspending), and disproportionately discriminates against lower income people who might need financial aid or loans. Beyond leading to discrimination against people of lower income, college's financial problems can impact student's quality of education. Schools having serious financial issues tend to make sweeping cuts to faculty and classes, while raising tuition to compensate for the money they've lost. The result is that students end up paying more money for less choices and quality of education.