Where Does the Money Go?
By Arnold Kling
Harvard tuition is about $30K (not counting room and board). Assuming 4 classes each of the two 12-week semesters and 3 class hours a week in each class, one finds that each hour class at Harvard costs about $100
So, if 250 students go to freshman economics lectures, Harvard gets $25,000 an hour to teach them. Even for a superstar like Greg, annual salary divided by teaching hours probably is not as high as $25,000.
If the students get split up into ten sections and taught by teaching assistants, each teaching assistant brings in $2500 an hour in revenue. Teaching assistants do not get paid $2500 an hour, no matter how you slice it.
The markup over labor cost in higher education is simply staggering, particularly considering how much of the labor is low-paid teaching assistants and adjuncts. I know that administrative positions have grown tremendously, but I still cannot figure out where the tuition goes.
My best guess is that those who teach subsidize those who do not. I conjecture that if you divided the total number of classes by the total number of full-time faculty, you would see an average work load of less than one class per semester.