Before the pandemic, many US universities were in a student amenities spending arms race

November 6, 2020To woo students, universities spent heavily on student amenities, including expansive offerings in entertainment, gourmet dining, and wellness. Spending on student services has grown four times faster than investments in instruction and research.

Research and instruction remained the largest expenses of total spending at universities, but expense growth over ten years showed more resources dedicated to student services.

Spending on student services has been growing four times as fast as spending on instruction.

Chart summary

Although more than half of total spending at four-year universities was invested in research and instruction, growth over ten years since 2007 showed 0.3% less was spent on research and only 0.5% more on instruction. Meanwhile, 8.5% of the total was invested in student services⁴, the largest area of growth in spending per student (2.1%) over ten years.

Chart data

Ten-year growth percentage by spending area followed by the percentage of total spending at the end of the ten-year period.
	Research	Public service	Instruction	Institutional support²	Academic support³	Student services⁴	Other
Growth of expenses¹ per full-time student at four-year public and private nonprofit universities, 2007–08 to 2017–18, %	-0.3	0.0	0.5	1.0	1.4	2.1	0
Proportion of total spending in 2017–2018, %	15.5	4.5	39.4	13.1	11.5	8.5	7.5

Notes:

¹Adjusted for inflation.

²Includes expenses for the day-to-day operational support of the institution. Includes expenses for general administrative services, central executive-level activities concerned with management and long-range planning, legal and fiscal operations, space management, employee personnel and records, logistical services such as purchasing and printing, and public relations and development.

³Includes expenses for activities and services that support the institution's primary missions of instruction, research, and public service.

⁴Includes expenses for admissions, registrar activities, and activities whose primary purpose is to contribute to students' emotional and physical well-being and to their intellectual, cultural, and social development outside the context of the formal instructional program. Examples include student activities, cultural events, student newspapers, intramural athletics, student organizations, supplemental instruction outside the normal administration, and student records.

Source: College Scorecard; Federal Reserve Bank of Minneapolis (CPI); National Center for Education Statistics Trend Generator

McKinsey & Company

To read the article, see “Reimagining higher education in the United States,” October 26, 2020.