Instructional Spending Proposals vs. Higher Ed Realities (Part II)

Note: This article is part 2 of a two-part series on instructional spending tests, recommended policies, and the realities of higher education.

In my last article, I reviewed recommendations for instructional spending policies from The Century Foundation, Third Way and Connecticut Democrat senator Chris Murphy. For this article, I will discuss the Veterans Education Project paper, referenced in a recent Inside Higher Ed article about the limits of instructional spending tests for college accountability.

Veterans Education Project Paper

“Off the Mark – The Limitations of Instructional Spending Tests for College Accountability” is the title of the Veterans Education Project paper authored by Jason Delisle and Andrew Gillen.

In the intro, the authors recount the many accountability measures already in place for all institutions of higher education as well as regulations specific to for-profit institutions. They note that in recent years, policymakers “across the ideology spectrum” have expressed concerns that the existing accountability regulations are not enough to address the high cost of college and high student loan balances.

The Obama administration’s Gainful Employment rule is cited as an attempt to weed out academic programs that did not provide graduates with earnings sufficient to repay their student loans. Per Delisle and Gillen, the recent proposals for using college instruction expenditures to evaluate institutional quality have been proposed as additional rules related to student outcomes. The purpose of their research paper is to “understand the size and scope of the policy, and to understand which institutions would be affected.”

The research generated four major findings:

  • Using a hypothetical two-stage test based on student loan repayment rates and instructional spending, the authors found that online and non-traditional institutions including public and non-profit providers are much more likely to face sanctions than traditional institutions due to accounting rules treating spending and revenue at these institutions.
  • The two-stage test also “creates a large, categorical exemption for public institutions with weak outcomes” because of the funding subsidies from the state or local jurisdictions.
  • Using a one-stage test with a minimum 33% instructional spending-to-tuition ratio, more than 1,400 institutions would not meet the ratio.
  • There is no statistical significance demonstrating any correlation between student outcomes and the percentage of tuition revenue that institutions spend on instruction.

In support of their first finding, the authors cite a letter sent by leaders of the University of Maryland Global Campus, Western Governors University, Southern New Hampshire University, and Capella University to the U.S. Department of Education. The letter points out that not all teaching and learning experiences in online programs are composed of activities conducted by the teaching faculty.

Additional activities may involve course and curriculum designers, support instructors, faculty mentors and staff qualified in student engagement and instruction, as well as investments in online library, tutorial, and interactive learning resources. All these expenses fall into non-instructional categories.

Delisle and Gillen make the point that traditional institutions are allowed to include research expenses in the IPEDS instructional cost category. Traditional research institutions have faculty teaching only one course per semester, while schools operating online programs generally do not conduct research and hire adjunct faculty whose primary assignment is to teach.

The University of Maryland’s Global Campus (UMGC) and Southern New Hampshire University (SNHU) are two institutions that teach more than 50,000 online students each. The authors note that UMGC’s ratio of instructional costs to tuition is .32 and SNHU’s ratio is .18. Both would fail the 33% test proposed by Senator Murphy.

The authors note that it’s puzzling to see multiple proposals advocating for instructional spending as a determinant of academic quality, when better ratios such as loan repayment rates and earnings already exist in the U.S. Department of Education’s College Scorecard data. They suggest that policymakers should decide what constitutes an unacceptable student outcome and sanction all types of institutions with those outcomes.

Delisle and Gillen are too kind with their conclusions. All the instructional spending proposals originate with Democrat politicians or Democratic-leaning organizations. They’re crafted to support traditional institutions and weaken institutions that have developed online programs. They’re also crafted to make for-profit institutions less competitive by adding cumbersome regulations that reduce the innovative capabilities of those institutions.

There’s no reason why the unsubsidized cost of higher education is as high as it is. General education requirements should be standard, and open educational resources should be developed to enable these courses to be taught inexpensively including in high school (dual credit). The state of Texas has developed those standards and requires them for all its public two-year and four-year institutions.

Using contrived metrics with no statistical basis indicating a correlation to improved outcomes is demonstrably political. I note that there is no mention in the Democratic-leaning papers of the increased instructional costs due to research at research universities or the high pay and low teaching requirement for professors focused on research. There is also no mention in those papers of the incredible “profit” for freshmen and sophomore lecture classes offered by traditional institutions.

No one disagrees that we need to lower the cost of higher education and reduce the debt burden on graduates. I write about that topic constantly. When the Department of Education holds their negotiated rulemaking sessions to redo the Gainful Employment regulations, they should make sure that those regulations apply to all colleges and universities, regardless of tax status.

In addition, every college should be forced to publish its median debt to median earnings ratios for graduates of all programs as recently revealed by the Wall Street Journal. With more transparency and a level playing field, we might be able to implement change that would benefit students and their families as well as our economy.

Subjects of Interest


Higher Education

Independent Schools


Student Persistence