Per-Credit Expenditures for Undergraduate Courses Declines 16% Over 15 Years

Engineering majors cost twice as much as lower-cost majors, a new report shows.

• By Dian Schaffhauser
• 01/17/17

The cost of producing graduates in engineering is about double that of producing graduates in low-cost majors, such as business, at least in Florida. Researchers from the University of Chicago and Yale studied student and expenditure data from Florida public universities to understand how the cost of producing graduates varies by major. The results, they noted, alter the estimated net returns reported for different occupations.

The same project also revealed that per-credit expenditures for undergraduate courses declined by 16 percent between 1999 and 2013. The largest drops occurred in engineering and health, where per-credit spending fell by more than 40 percent. A report of the results was issued by the National Bureau of Economic Research.

As the report stated, "Some majors may lead to high earnings but be costly to produce, offering lower net returns per graduate or per invested dollar than lower-earning but less costly majors." The differences between net returns and earnings returns are even "more striking" when examined against instructional expenditure. The researchers found that high-earning but high-cost degree programs in engineering and health offer per-dollar returns that are quite similar to lower-earning but lower-cost programs in fields such as education and philosophy. By this measure, they reported, "high-earning but low-cost degree programs in fields like business and computer science have the highest net returns."

The data used in the study came from the Florida State University System, which has 12 four-year public institutions.

According to the report, the average cost per graduate across all fields is $39,184. However, the five priciest majors by spending per credit were:

• Engineering;
• Multi-disciplinary study;
• Health sciences;
• Engineering technologies; and
• Agribusiness.

The least expensive majors in rank order were:

• Parks and recreation;
• Math;
• Social sciences;
• Protective services; and
• Business

Per-credit spending on direct instruction in the highest-cost major, engineering, was $322, about 272 percent higher than per-credit spending in the lowest-cost major, parks and recreation. Engineering was 237 percent higher than the field with the second lowest cost, mathematics. More broadly, the total instructional spending cost per credit of an engineering course was $569 compared to $184 per-credit cost for mathematics.

The report emphasized that although STEM fields, including engineering, health sciences and engineering technology, are among the highest-cost fields, not all high-cost fields are STEM-related. Visual arts, architecture and library science also had above-average pre-credit costs.

When the per-dollar spending is correlated with estimated earnings for the student after graduation, the degrees that fare best on a per-dollar basis are business and computer science, which are both high-earning and "relatively cheap." The degrees that do the worst are architecture, art and the physical sciences, which are expensive and have relatively low earnings.

The researchers offered three conclusions based on their findings. First, if schools are allocating their funding across majors, that's an indication that they believe degrees in fields with low per-dollar returns, including art, architecture, engineering and the physical sciences "offer larger non-pecuniary and public benefits" than programs in fields like computer science, business, or law.

Second, per credit spending differs by major. Overall, per credit spending fell by 16 percent between 1999 and 2013. Those majors with increasing numbers of credit hours experienced "especially rapid declines." Two examples were engineering and health science, where per credit funding fell by more than 40 percent over that period. While the researchers acknowledged that the drops cold reflect greater "pedagogical efficiency" rather than a reduction in program quality, they think otherwise: "Our findings suggest that these average declines may mask larger declines in some majors than others, and that these large declines may occur in high-return areas." They added that the impact of the changes was fodder for "future study."

Finally, the results question the common practice of fixed tuition pricing across majors. While they noted that some schools do vary tuition across majors, others reduce tuition to encourage students to enroll in "high-need" majors regardless of the costs — particularly in STEM fields. The report suggested that this latter group of institutions consider accounting for differences in "production costs" for producing majors as they evaluate private labor market needs. An alternative would be to reallocate spending across majors while keeping tuition as it is.