Michigan Universities Could Cut Costs

Michigan’s Governor Rick Snyder claims that he wants to balance Michigan’s budget. One area in which the state could save money is higher education. Some state colleges and universities charge tuition and receive state funding in line with reasonable costs, but other universities, like Michigan State and University of Michigan, are grossly overpriced.

According to the Michigan Senate Fiscal Agency, annual tuition at Michigan public four-year universities runs from around $6,900 at Saginaw Valley State University to $12,400 at University of Michigan. Michigan State is close to UM at $11,363. Additionally, the state appropriates $3,563 for each SVSU student, $7,918 for each UM student, and $6,742 for each MSU student. This is approximately $350 per credit at SVSU, $670 at UM, and $600 at MSU. Dividing these numbers by the number of hours spent in the classroom–15–a seat in an SVSU classroom costs $23 per hour, a seat in a UM classroom $45, and a seat in an MSU classroom $40. Why should it cost nearly twice as much per student at UM or MSU as at SVSU? Why does the state pay more per student to schools that charge higher tuition? What should a college education cost?

First, there is the classroom, itself. If we assume that a classroom for a three-hour class should cost about the same as a conference room at a mid-level hotel, that would be $500.

Then there is the professor. At a $72,000 annual salary, a full-time professor, with benefits and overhead, would cost about $144,000 per year. Teaching four three-hour classes per semester, that would be 24 credit hours times 15 class hours per credit hour, or 360 class hours per year. Dividing $144,000 by 360 yields $400 per hour, or $1,200 for each three-hour class.

Even with the above conservative estimates, the cost of the classroom and the professor would not exceed $1,700 per three-hour class, or $566 per hour. Even if there are only 30 students in the class, the cost of putting on the class is less than $20 per student per hour. Adding 15% for administrative expenses, it appears that SVSU is appropriately priced, but UM’s and MSU’s budgets could be trimmed by nearly 50%.

This does not take into account the income from the universities’ enormous endowments. Furthermore, classes at larger universities typically have upwards of 100 students and many of those classes are taught by graduate students or adjunct professors who get paid a fraction of what a tenured professor receives.

If Gov. Snyder wants to trim state expenditures, there is a lot of potential for belt-tighting at Michigan’s larger, more expensive universities. These state universities could continue to provide top-quality higher education at much lower tuition and with much less state aid.


John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2011 John B. Payne, Attorney