The cost of a university education is always a big topic. Most of the discussion focuses upon the cost to students. To look at the other side of the coin, I thought it might be interesting to explore how much it costs a university to produce a student, focusing upon generating a single graduate degree award.

The numbers are pretty surprising.  They show that, for the past 25 years, US universities have been spending around $80,000 (in current dollars) to generate a single master’s or doctorate award. During some prior periods that cost has been somewhat lower, but $80,000 per award is a good, round and stable number to take away from this.

Bear in mind that this is an average estimate derived from throwing all of the spending and production numbers of the entire university system into one hopper and on the basis of a set of very simple assumptions. This is a first approximation. Some schools spend a lot more to produce a graduate, whereas other schools spend a lot less. Still, if the total tuition and fees you paid for your graduate school degree were less than $80,000, you are free to imagine you got a bargain.

The true cost could be even higher than what is estimated here, since this analysis assumes that the cost of training persons with graduate degrees is born entirely within the cost of conducting research. The logic for that is spelled out below. This analysis does not factor in the major costs of instruction, or student support or service costs that universities also track, some fraction of which are probably allocated to graduate students. We’ll just assume for now that that undergraduate students are the beneficiaries of all that other spending (which is sometimes how it feels to most graduate students), whereas spending on research is dedicated solely to the graduate students.

Some basic assumptions of this analysis.

Assumption 1: The research conducted at universities fulfills two, and only two, basic purposes: The production of knowledge and the production of knowledge producers.

Universities have multiple missions that do many things for many different groups of people and, collectively, for the overall good of an advanced society. Research is just one of these missions. Ultimately, knowledge and knowledge producers are the main outputs of the university research mission. University research is all about adding another brick to the wall of knowledge, and the people who are mentored in the process of doing this.

Assumption 2: All people with an advanced degree are knowledge producers.

Few would argue that those who’ve earned research/scholarship doctorates are certified knowledge producers. They’ve got the thick dissertations and the published articles to show it. Many might argue that someone with a master’s degree providing certification of some professional practice is not a knowledge producer. But in this model, I argue that the two of these define either end of a broad spectrum of knowledge producers. In the middle of that spectrum would be the master’s student grinding out a brief thesis project over the course of one summer, or the medical or law student. They all deserve to be on the spectrum because most everybody earning an advanced degree is practicing an advanced level of critical thinking and analysis, which is the primordial soup from which new knowledge emerges. Therefore, by this simple logic, anybody with an advanced degree is a knowledge producer (or is equipped to become one).

Assumption 3: Knowledge is fairly easy to recognize but way too difficult to quantify for the present purpose.

I won’t attempt to put a price on the value of the knowledge produced by all universities. For obvious reasons. Not that it wouldn’t be an interesting exercise.

Assumption 4: University spending on research accounts for the cost of producing knowledge producers.

Research expenditures pay for a lot of things: supplies, salaries, equipment, research subjects, publication fees, conference travel, and so on. And graduate students in training aren’t the only knowledge producers working at a university. There are also faculty, research staff, postdoc’s and others. Nevertheless, if we accept assumption #1 above, then all of these costs of research, distilled down to their essence, are the cost of producing knowledge and of producing knowledge producers.  We can think of this spending as that which creates the broader research environment necessary to propel the production of master’s and doctorate awards.

Furthermore, university research spending and the number of graduate degrees awarded are strongly correlated, which is evident in the similar rates of growth in research spending and awards shown above. There are a few outlier institutions here and there, but in general the more a university spends on research, the greater number of advanced degrees it awards. Finally, very few advanced degrees are awarded by institutions in the US that don’t have significant research spending, and even fewer by institutions that don’t do any research at all. In fact, 90% of all research spending occurs at less than 900 of the over 2000 campuses that award advanced degrees.

In 2012, US universities collectively had approximately $380 billion in total expenditures. Of that, only 16.5%, or $65 billion, was spent on research.  That $65 billion in research spending by US universities in 2012 produced over 800,000 million knowledge producers, who’ve now gone on to begin their life’s work and do fantastic things in the economy.

An interesting side benefit of the $80,000 investment in the production for each advanced degree holder is, in fact, all of the knowledge that they all generated, which is so difficult to value, as noted above.  This includes advances in the treatment of diseases and social disorder, a deeper understanding of human biology, the environment on earth and the larger cosmos, improved practices and technologies for all sorts of industries and business ventures, a deeper understanding of our arts and letters and cultures, and so on and so forth. Surely all of that must be worth something, too?

The government data used in this analysis were extracted from tables downloaded from the National Science Foundation and from the National Center for Education Statistics. Adjustments in research expenditures to account for inflation were based upon BLS statistics.