Student Fees and the Regressive Athletics Tax

By: Matthew Denhart and Andrew Cadamagnani

A few weeks ago, Steve Burkowitz from USA Today pointed us to a great Master's thesis written by Katherine Ott. Ms. Ott's thesis explores the interesting, and often overlooked, topic of student fees. She rightly notes that even amidst tuition freezes, schools have often turned to fee increases as a type of "backdoor" tuition increase.

Using U.S. Department of Education data for 2000 and 2008, we examined the growth in student fees relative to tuition at four-year public research institutions (165 in total). The numbers show that average real inflation adjusted tuition increased almost 53 percent from $3,480 to $5,320. Meanwhile, over this same period, required fees rose 36.5 percent from $1,261 to $1,721.

Although the fee increase was somewhat less severe, student fees as a percentage of tuition increased. In 2000, the ratio of fees to tuition was around 35 percent, but by 2008, this had jumped to almost 43 percent.

However, the most interesting dimension of the thesis involves students' knowledge of fees and whether fees are allocated according to students' preferences. To analyze these questions, Ms. Ott surveyed students at the University of Toledo (a four-year public school in northwestern Ohio).

Her research found that roughly 91% of respondents knew they paid a student fee, but only 43% could correctly identify the amount. Furthermore, 43% believed the fee was less than it actually was, while only 14% thought it was more, meaning that as a whole these students underestimated the fee amount.

As their three most important uses of student fee dollars, the students listed: (1) the student recreation center, (2) the student medical center and (3) the student union.

Yet, in 2008, intercollegiate athletics (ICA) and cheerleading received nearly $10 million in student fees, more than any other unit. Interestingly, only 25% of surveyed students believed athletics and cheerleading received any general fee funding and 39% responded that ICA and cheerleading were not important to them.

Ott's thesis does much to shed light on this growing scandal. Students are increasingly being charged in back-handed ways to fund the ICA "Arms Race." In 2007-08, the 101 public FBS institutions for which we have data, reported spending $338.9 million dollars of student fees to subsidize athletics, or an average of about $3.4 million each.

However, ICA subsidization, even when not directly funded through student fees, also affects students. Money is fungible, meaning that every dollar spent on ICA, is a dollar that cannot be spent elsewhere (or used to reduce tuition/fees). The graph below shows the sources of funding for the ICA sports subsidy.



We have been arguing that the ICA subsidy is a regressive tax on precious resources. Students and taxpayers are increasingly footing the bill of an athletics complex. Ott's thesis shows that at least at Toledo (which is among the leaders in the largest ICA subsidies), students often do not support their fees going primarily to ICA. Does this hold true at other institutions? CCAP hopes to explore this question very seriously within the next year.