New CIC Report Demonstrates Cost-Effectiveness of Private Colleges in Educating Undergraduates

10/19/2015 — Washington, DC

​​​The Council of Independent Colleges (CIC) today released a report, The Cost-Effectiveness of Undergraduate Education at Private Nondoctoral Colleges and Universities, which provides compelling evidence that private (nondoctoral) colleges not only produce a significant percentage of all bachelor’s degree graduates, but they do so more efficiently and at much lower cost to taxpayers than public institutions. The full report is available as a PDF at

In announcing the report, CIC President Richard Ekman said it “clearly documents how private colleges and universities graduate a higher percentage of students within four years and with significantly less reliance on state and federal subsidies than public institutions. To put it plainly, a bachelor’s degree from a public institution costs taxpayers 6.4 times more than a degree at a private institution. Furthermore, private nondoctoral colleges and universities educate a diverse population of students—in fact, they educate higher percentages of low-income and first-generation students than public research universities.” Ekman added that “policymakers who wish to increase the college attainment rate in the United States should know that private institutions are 22 percent more efficient at producing degrees within four years than comparable public institutions.” 
The authors are both distinguished scholars who are not based at private institutions. William Zumeta, professor of public policy and higher education at the University of Washington in Seattle, and Nick Huntington-Klein, assistant professor of economics at California State University Fullerton, propose that if states made modest grant increases to aid-eligible students who choose a private college, significant numbers of students would switch from public to private colleges. “Such a shift could, in principle, save states on operating appropriations to public institutions and on student aid grants in states where these grants currently go to primarily public college students,” they said. Moreover, Zumeta and Huntington-Klein said, students who switch from a public to a comparable private institution would, in most cases, graduate more quickly, resulting in additional savings.
Ekman noted that “the researchers’ institutional affiliations as well as their reputation for rigorous inquiry are evidence that there is no conflict of interest in this report.”
  • Private nondoctoral colleges and universities have a 22 percentage point edge over comparable public institutions in four-year graduation rates and a nearly 12 point advantage in six-year graduation rates.
  • Private nondoctoral colleges retain students who are initially interested in STEM and health to graduate with degrees in those majors at rates (41 percent) that approach twice the rates of public doctoral and nondoctoral institutions (24 and 23 percent, respectively).
  • Private nondoctoral degrees are less costly to society overall by an estimated 9 percent—a gap that widens to nearly 30 percent when the additional social opportunity cost of the extended time to degree at public institutions is taken into account (see figure below).
  • Public sector degrees are 6.4 times more costly to taxpayers than degrees at private colleges. In the period 2005–2012, the cost to state governments for each undergraduate degree from a private nondoctoral college averages $7,200 (mostly in the form of a tuition grant) compared with $46,401 for a bachelor’s degree from public institutions.


In order to explore the realistic possibilities for cost savings to states and direct benefit to individual citizens from redirecting some future students from public to private nondoctoral colleges, Zumeta and Huntington-Klein selected five states and simulated the effects of plausible increases ($1,000 and $2,000) in annual state student aid grants to aid-eligible students who choose a private college. To achieve the national goal of increasing undergraduate degree attainment, a number of practical steps based on the report findings can be taken in states that have projected growth in high school graduates:
  • California is a state of interest because of its large size and prominence, the strains on its public finances and public baccalaureate education capacity, and its considerable number but relatively low proportion of private nondoctoral colleges. An increase in aid spending targeted to those who “switch” from the public to private sector would be more than offset by the assumed decrease in operating appropriations to public institutions. This comes to $3.2–$4.8 million in savings per cohort with a $1,000 grant aid increase or $6.2–$9.5 million with a $2,000 grant.
  • Georgia could save an estimated $0.3–$0.6 million per cohort in targeted state grant aid with a $1,000 grant increase for private sector students, with 387–592 students shifting to private nondoctoral colleges, depending on net price elasticity.
  • Implementation of the simulated increased grant levels has the ability to save Kansas $21–$33 million (for the $1,000 grant increase) or $41–$62 million (for the $2,000 increase) in public sector building costs, respectively, depending on the response elasticity assumed.
  • By shifting a significant number of students from public to private nondoctoral institutions, Pennsylvania could produce more college graduates. Depending on grant size and net price elasticity, the effect could be between an additional 44 (with a $1,000 grant) and 130 degrees per year (with a $2,000 grant), because private nondoctoral colleges in Pennsylvania have better completion rates and times.
  • Virginia is a state of interest because it has an increasing high school age population, a vibrant private higher education sector, and a long-standing Tuition Assistance Grant for resident students attending private colleges in the state. Adding in an assumed decrease in appropriations per student for public institutions, a $1,000 grant increase targeted at students who switch from the public to the private sector would allow for state savings of $7.5–$11.5 million per entry cohort, and a $2,000 grant increase would allow for savings of $14.3–$22.0 million.
Overall, modest increases in grants to students who switch from public institutions to private nondoctoral colleges and universities could significantly improve degree attainment rates in these states. Zumeta and Huntington-Klein, however, indicate that such financial incentives must target particular students to achieve the desired goals: “If all aid-eligible students—not just those who are induced to switch—receive the benefits of the grant increase, the costs to the state quickly balloon to the point at which they swamp any likely benefits.” They explained that one way to target students “would be to shift policy thinking out of the current student aid paradigm to consider simply rewarding private colleges for enrolling more state resident students than they did in a base year.”
Ekman said that the authors’ “recommended policy changes at the state level can help not only these states but also the nation as a whole increase the number and percentage of undergraduate degree holders and in turn secure America’s future in the 21st century knowledge economy.”

The Council of Independent Colleges (CIC) is an association of 750 nonprofit independent colleges and universities and higher education affiliates and organizations that has worked since 1956 to support college and university leadership, advance institutional excellence, and enhance public understanding of private higher education’s contributions to society. CIC is the major national organization that focuses on providing services to leaders of independent colleges and universities as well as conferences, seminars, and other programs that help institutions improve educational quality, administrative and financial performance, and institutional visibility. CIC conducts the largest annual conference of college and university presidents. CIC also provides support to state fundraising associations that organize programs and generate contributions for private colleges and universities. The Council is headquartered at One Dupont Circle in Washington, DC.​