A growing number of American colleges and universities are in real financial trouble, and Bain & Company says if trends continue we'll have a higher education system that won't be able to "meet the diverse needs of the U.S. student population in 20 years."

Almost two out of three colleges are in bad shape according to a new analysis of nearly 1,700 public and private higher education institutions by Bain. One third are considered to be on an "unsustainable financial path," while 28 percent are "at risk of slipping into an unsustainable condition."

Since 1983, college tuition has increased three times faster than inflation. Bain estimates that under current conditions, they'll grow to increase 6.5 times more than the Consumer Price Index by 2030. As government funding declined in recent decades, higher education institutions have taken on more debt "without the revenue or the cash reserves to back them up."

Jeff Denneen of Bain & Company and Tom Dretler of Sterling Partners explained in their report, colleges and universities have been following the "Law of More":

Many institutions have operated on the assumption that the more they build, spend, diversify and expand, the more they will persist and prosper. But instead, the opposite has happened: institutions have become overleveraged. Their long-term debt is increasing at an average rate of approximately 12 percent per year, and their average annual interest expense is growing at almost twice the rate of their instruction-related expense. In addition to growing debt, administrative and student services costs are growing faster than instructional costs. And fixed costs and overhead consume a growing share of the pie.

Bain noted colleges will need to trim administrative costs, so more money is available to fund student services and instruction.

"Boards of trustees and presidents need to put their collective foot down on the growth of support and administrative costs," Denneen and Dretler write. "Those costs have grown faster than the cost of instruction across most campuses. In no other industry would overhead costs be allowed to grow at this rate — executives would lose their jobs."

This is something that's been noted before by the Goldwater Institute. From 1993 to 2007, college administrative costs grew faster than any other expense at higher ed institutions -- almost twice as much as research or instruction.

Richard H. Ekman, president of the Council of Independent Colleges, told the Chronicle of Higher Education analyses like these may not tell the whole story because they rely on data from a certain period of time.

Bain offers consulting services to higher ed institutions, which have sometimes stirs up controversy, like in the case at the University of North Texas at Dallas.

The report didn't make distinctions between the different kinds of colleges either. The Chronicle also noted the report "classifies wealthy institutions such as Cornell, Harvard and Princeton Universities as being on an "unsustainable path" alongside tuition-dependent institutions like Central Bible College in Missouri."

Bain also recommended universities look to consider converting "even a small portion of an institution's real estate assets to cash" to improve their finances.

bain company higher education cost

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  • Alabama - 8.7 Percent

    The Auburn University Board of Trustees approved <a href="http://www.wtvm.com/story/17648502/trustees-approve-tuition-hikes-for-auburn-and-aum" target="_hplink">an 8 percent tuition increase</a> for undergrads and a 9 percent hike for graduate students. In-state medical students at the University of Alabama will <a href="http://blog.al.com/spotnews/2012/04/tuition_increases_proposed_for.html" target="_hplink">see a 4 percent tuition</a> increase, while dental students get a 6 percent hike and 8 percent for optometry students. For other UA students, <a href="http://www.abc3340.com/story/18810386/parents-react-to-uas-tuition-hike" target="_hplink">ABC3340 reports</a> a 7 percent jump for students attending the main campus in Tuscaloosa, 8.6 jump for students at UAB and 8.7 percent at the Huntsville campus. After increasing tuition by <a href="http://www.annistonstar.com/view/full_story/18258460/article-JSU-trustees--no-tuition-increase-if-state-will-pony-up?instance=home_lead_story" target="_hplink">almost 13 percent</a> last year, Jacksonville State University promised they will hold tuition level if the state doesn't cut their funding. Alabama's public colleges and universities <a href="http://www.bizjournals.com/birmingham/morning_call/2012/04/tuition-increasing-4-for-in-state.html" target="_hplink">are facing a 5 percent cut</a> from state appropriations. Photo Credit: <a href="http://en.wikipedia.org/wiki/File:Alabama_Capitol_Building.jpg" target="_hplink">Carol M. Highsmith</a>

  • Arizona - No Increase

    After double digit tuition <a href="http://www.pewstates.org/projects/stateline/headlines/states-struggling-to-slow-tuition-growth-85899383588" target="_hplink">hikes in each of the past four years</a> at the University of Arizona and Arizona State University, college students have some good news for the fall of 2012; a freeze on tuition for the first time in 20 years. Actually, the state will be <a href="http://www.azcentral.com/news/politics/articles/2012/04/27/20120427brewer-legislative-leaders-announce-budget-deal.html" target="_hplink">pouring $21 million</a> in their public higher education institutions. Photo Credit:<a href="http://en.wikipedia.org/wiki/File:University_of_Arizona_mall.jpg" target="_hplink"> Jscarreiro</a>

  • California - 9 Percent

    The University of California approved a 9 percent fee increase for next year. If a ballot proposition to raise taxes in November isn't approved, they may increase by <a href="http://www.huffingtonpost.com/2012/05/08/university-of-california-tuition-hike_n_1501050.html" target="_hplink">another 6 percent</a>. UC got a 20 percent cutfrom the state this year. California State University was cut by 27 percent.

  • Florida - 8 To 15 Percent

    The University of Central Florida<a href="http://knightnews.com/2012/03/gov-rick-scott-i-dont-believe-in-tuition-increases-florida-universities/" target="_hplink"> has lost $150 million</a> the last five years, leading to job losses and the end of certain majors. Now they're <a href="http://www.naplesnews.com/news/2012/jun/03/guest-column-to-raise-or-not-to-raise-fgcu/" target="_hplink">going to implement</a> a <a href="http://articles.orlandosentinel.com/2012-05-22/features/os-ucf-tuition-increase-20120522_1_ucf-trustees-ucf-administrators-plan-ucf-s-college" target="_hplink">15 percent tuition increase</a>. The University of Florida is looking at a <a href="http://www.ocala.com/article/20120608/ARTICLES/120609708/1402/NEWS?Title=Machen-UF-will-seek-9-percent-rather-than-15-percent-tuition-hike&tc=ar" target="_hplink">9 percent tuition hike</a>. Florida A&M University voted to raise tuition by 8 percent. Florida State University approved increasing tuition by <a href="http://www.firstcoastnews.com/news/article/259403/483/FSU-trustees-approve-tuition-hike" target="_hplink">15 percent</a> across the board, but the actual cost is going up only 11.3 percent because fees aren't increasing at the same rate. Gov. Rick Scott said he is against tuition increases was, according to a spokesman, "confident [universities] can find a way to ... avoid tuition hikes that will put a greater financial strain on students and their families." He vetoed a bill that would've allowed the state's major universities to raise tuition without limits.

  • Hawaii - 35 to 46 Percent

    When it comes to tuition increases, many states have scaled back this year. However, <a href="http://www.staradvertiser.com/news/breaking/132657263.html?id=132657263" target="_hplink">Hawaii is an exception</a>: <blockquote>[A]nnual tuition at UH-Manoa will rise by 35 percent over the next five years for a resident undergraduate student -- to $11,376 a year in 2016, from the current $8,400 a year. Tuition next year will rise by $264, to $8,664. Resident tuition at UH-West Oahu will go up 49 percent over five years, to $7,656 in 2016-2017, from $5,136 this year, equal to what UH-Hilo students would pay.</blockquote> Photo Credit: <a href="http://en.wikipedia.org/wiki/File:UniversityHawaiiManoaCampusRoundtop.jpg" target="_hplink">Travis.Thurston</a>

  • Illinois - 4.5 Percent

    The<a href="http://capitolfax.com/2012/06/08/big-cuts-for-education-while-prison-funding-is-restored/" target="_hplink"> state legislature in Illinois</a> slashed $152 million from the higher education budget, or about 6 percent. Western Illinois University approved a <a href="http://www.wgil.com/localnews.php?xnewsaction=fullnews&newsarch=062012&newsid=84" target="_hplink">4.5 percent increase</a> on tuition for next year. The University of Illinois <a href="http://herald-review.com/business/local/illinois-state-university-considers-percent-tuition-increase/article_2c1f7974-9a62-11e1-8eb1-0019bb2963f4.html" target="_hplink">approved</a> a 4.8 percent increase and Illinois State University sought a 4.4 increase. <em>Photo Credit: <a href="http://en.wikipedia.org/wiki/File:Alma_Mater,_Lorado_Taft.jpg" target="_hplink">Daniel Schwen</a></em>

  • Iowa - 3.75 Percent

    The Board of Regents <a href="http://www.indystar.com/article/D2/20120601/NEWS02/306010031/Regents-Universities-will-make-extra-46-million-tuition-revenue?odyssey=nav|head" target="_hplink">approved a 3.75 percent tuition </a>increase this fall for the state's public universities. After having their funding from the state legislature slashed by 25 percent over the past three years. But this year, they're getting a $23 million increase from the state legislature.

  • Louisiana

    Thanks to continued budget cuts, Louisiana students can expect to get some significant tuition increases and watch out for mid-year cuts. <a href="http://www.nola.com/politics/index.ssf/2012/06/university_of_louisiana_system.html" target="_hplink">According</a> to the <em>Times-Picayune</em>, since 2008, Gov. Bobby Jindal and state lawmakers have stripped nearly $427 million in state general funds from higher education. Nicholls State University lost $4.4 million, a 7.6 percent drop in funding from the state. They're hinting at tuition increases. The University of Louisiana System is got a cut this year of $55 million, and will likely implement tuition increases to avoid any layoffs. Community colleges will feel a pinch too. The Advocate <a href="http://theadvocate.com/home/3091481-125/colleges-poised-to-raise-tuition" target="_hplink">reports</a>: <blockquote>The Board of Supervisors at Louisiana Community and Technical Colleges ... approved an across-the-board 10 percent tuition increase at their 16 campuses, including the five technical college campuses in the Baton Rouge area.</blockquote> Photo Credit: <a href="http://en.wikipedia.org/wiki/File:Lsuaerial.jpg" target="_hplink">Stuart Adams</a>

  • Maine - No Increase

    The University of Maine system lost $2.3 million in state appropriations this year, but they <a href="http://www.cbsnews.com/8301-505245_162-57438555/u-maine-system-budget-with-no-tuition-hike-okd/" target="_hplink">decided against</a> implementing tuition hikes. Photo Credit: <a href="http://en.wikipedia.org/wiki/File:UMaine_StevensHall.jpg" target="_hplink">NightThree</a>

  • Massachusetts - 4 Percent

    The University of Massachusetts Board of Trustees plans to impose a 4.9 percent tuition hike, but Gov. Deval Patrick <a href="http://news.bostonherald.com/news/politics/view/20120606umass_panel_recommends_49_percent_tuition_hike_patrick_objects/" target="_hplink">objected the night</a> before they were to vote on it: <blockquote>"Like the rest of state government, UMass must demonstrate that it is doing more with less before asking more from students. And I am not convinced that UMass has yet done enough to find efficiencies and reduce costs so that any new revenue is dedicated to teaching and learning," Patrick wrote in his letter that was hand-delivered on the day of the vote.</blockquote> The Board passed it 10-2. Photo Credit:<a href="http://en.wikipedia.org/wiki/File:UMass_Amherst_Pond.jpg" target="_hplink"> Lion Hirth</a>

  • Michigan - 3.95 Percent

    Eastern Michigan University are getting a 3.95 percent tuition increase. The <em>Free Press</em> <a href="http://www.freep.com/article/20120619/NEWS06/120619052" target="_hplink">reported</a> on June 19: <blockquote>University of Michigan and Michigan Technological University will set tuition rates on Thursday. Michigan State University is expected to do so on Friday. Wayne State University is expected to set its rates June 27.</blockquote> Photo Credit: <a href="http://en.wikipedia.org/wiki/File:Biomedical_Science_Research_2010.jpg" target="_hplink">AndrewHorne</a>

  • Nebraska - 3.75 Percent

    The University of Nebraska is considering <a href="http://lexch.com/news/regional/unl-tuition-hikes-outpacing-inflation/article_be5c43ae-ae52-11e1-9b0e-0019bb2963f4.html" target="_hplink">a 3.75 percent </a>tuition hike for next year. During the past four years, UNL students have seen their tuition increase by 15 percent -- more than double the rate of inflation: <blockquote>Looking back further, to 2000, tuition and fees have grown by 115 percent, or about three times the rate of inflation. During that time frame, the consumer price index rose 34 percent.</blockquote> Photo Credit: <a href="http://en.wikipedia.org/wiki/File:University_of_Nebraska-Lincoln,_Hamilton_Hall.jpg" target="_hplink">Bkell</a>

  • New Jersey

    When Gov. Chris Christie took office he imposed a 4 percent tuition increase cap. Then he decided he <a href="http://www.nj.com/news/index.ssf/2011/01/gov_christie_hopes_to_abolish.html" target="_hplink">didn't like that idea</a> a year later. Currently, New Jersey's public colleges have been in a bit of chaos as the<a href="http://www.nj.com/gloucester-county/index.ssf/2012/06/senate_panel_passes_rutgers-ro.html" target="_hplink"> state considers a major overhaul and merger</a>.

  • New York - 31 Percent Over 5 Years

    City University of New York is <a href="http://thechoice.blogs.nytimes.com/2011/11/29/cuny-protests/" target="_hplink">currently raising tuition by 31 percent </a>over five years. Undergrads will pay $6,330 in 2015-16, with about $500 a year in additional fees. Despite being much lower than nearby public universities in the Northeast, students still took to the streets to protest. State University of New York is undergoing a <a href="http://www.bupipedream.com/news/7309/suny-tuition-to-increase-300-annually-over-next-five-years/" target="_hplink">similar five-year plan</a>. Photo Credit: <a href="http://www.facebook.com/photo.php?fbid=309102482476333&set=a.309102479143000.75516.152766071443309&type=3&theater" target="_hplink">CUNY on Facebook</a>

  • Ohio - 3.5 Percent

    Ohio State University, the University of Toledo and Cleveland State University are all planning a 3.5 percent tuition hike -- the maximum they are <a href="http://www.bizjournals.com/columbus/morning_call/2012/06/university-of-toledo-hikes-tuition-by.html" target="_hplink">allowed under state law</a>. Photo Credit: <a href="http://en.wikipedia.org/wiki/File:University_Hall_UToledo.JPG" target="_hplink">Xurxo</a>

  • Oregon - 6.1 Percent

    The University of Oregon will have a 6.1 percent tuition increase. However, with decreased fees, it will amount to a 5.9 percent increase. Students weren't happy about that and held protests on campus. Dozens of students <a href="http://www.kmtr.com/news/local/story/UO-students-protest-tuition-hikes-earn-meeting/ui1Pddx11E-7CrALWDkJ1Q.cspx" target="_hplink">made their way into the UO president's office</a> to voice their opposition to the tuition increase.

  • Pennsylvania - 3.9 to 10 Percent

    Gov. Tom Corbett (R) put forward a budget proposal that<a href="http://pennbpc.org/pa-budget-will-spend-twice-much-prisons-higher-education" target="_hplink"> would cut the state's 14 public universities</a> by 20 percent in 2012-13, with a 34 percent reduction over two years. It's been met with <a href="http://www.post-gazette.com/stories/local/state/11-arrested-as-200-protest-governors-education-funding-637309/" target="_hplink">multiple protests</a>. The state spends nearly twice as much on corrections as it does on higher ed. When asked about <a href="http://philadelphia.cbslocal.com/2012/03/12/gov-corbett-defends-higher-education-funding-cuts-in-pennsylvania/" target="_hplink">the cuts to higher education in mid-March</a>, Corbett had this to say: <blockquote>"We are reducing the funding to education because we do not have the money -- it is that simple. And I ask anybody who talks about [the fact that] we're reducing education, from the education side, to tell me where would you have me take it from? Would you have me take from the social services? Would you have me take it from law enforcement?" </blockquote> Penn State's appropriation is now equal to the amount it received in 1995, and Corbett wants to cut their budget further by taking away 50 percent of what it received in their 2011-12 appropriation. Penn State students can expect to <a href="http://www.pamatters.com/2011/06/30/tuition-will-increase-at-pennsylvanias-14-state-owned-universities/" target="_hplink">pay 7.5 percent more</a> in tuition next year. It's the highest increase since 2002. The Morning Call <a href="http://articles.mcall.com/2012-05-27/news/mc-pa-state-college-tuition-20120518_1_state-universities-tuition-increases-tuition-hikes" target="_hplink">reports</a>: <blockquote>This year, in the face of record budget cuts, state-owned universities such as Kutztown and East Stroudsburg ratcheted up tuition by 7.5 percent while Temple University's tuition spiked 10 percent.</blockquote> The University of Pennsylvania will increase tuition by <a href="http://www.upenn.edu/almanac/volumes/v58/n23/tuition.html" target="_hplink">3.9 percent</a>. Photo Credit: <a href="http://commons.wikimedia.org/wiki/File:Harrisburg_Pennsylvania_USA.jpg" target="_hplink">Pollinator</a>

  • South Carolina - 1 to 3.15 Percent

    The University of South Carolina is planning <a href="http://www.charlotteobserver.com/2012/06/15/3321706_usc-to-hike-tuition-by-315-percent.html#storylink=cpy" target="_hplink">its smallest tuition hike</a> in recent years for in-state students, with a 3.15 percent increase. Out-of-state students will see a 4.9 percent increase, which is the largest tuition increase in the state this year. Despite the smaller increase this year, the price of tuition has more than doubled since 2002. The Charlotte <em>Observer</em> reports state support of USC Columbia has fallen to $90 million from $230 million since 2008. South Carolina State will have no change this year. Other South Carolina public colleges will increase tuition by 1 to 3 percent for next year. Coastal Carolina is actually reducing its tuition by 1 percent. Photo Credit:<a href="http://en.wikipedia.org/wiki/File:WestQuad.jpg" target="_hplink"> Florencebballer</a>

  • South Dakota - 5.8 Percent

    The average tuition increase this year <a href="http://madvilletimes.com/2012/05/south-dakota-has-regions-highest-tuition-increases/" target="_hplink">will be 5.8 percent</a>, the highest in the northern Midwestern Great Plains states. Photo Credit: <a href="http://www.facebook.com/photo.php?fbid=10150624980810939&set=a.10150624980665939.381444.267498065938&type=3&theater" target="_hplink">USD's Facebook</a>

  • Tennessee - 3.4 to 8 Percent

    The University of Tennessee <a href="http://www.therepublic.com/view/story/f2ceabb8772d4a708f40a89905bbf54b/TN--UT-Tuition" target="_hplink">proposed tuition hikes</a> of 8 percent at the Knoxville campus, 6 percent at Chattanooga and Martin, and 4 percent at the Health Science Center. The Tennessee Board of Regents recommended tuition increases across the state. The AP <a href="http://www.wpsdlocal6.com/news/local/Tuition-hikes-recommended-at-Tennessee-colleges-158838055.html" target="_hplink">reports</a> East Tennessee State University would get the highest increase at 7.2 percent. Austin Peay was the lowest at 3.4 percent. Photo Credit: <a href="http://en.wikipedia.org/wiki/File:UT-mall.jpg" target="_hplink">Zereshk</a>

  • Texas - 2.5 to 3.8 Percent

    Students at the University of Texas could be <a href="http://www.chron.com/news/article/A-amp-M-UT-tuition-hikes-3524968.php" target="_hplink">facing tuition increases </a>of between 2.5 percent to 3.8 percent in the coming years. The Houston <em>Chronicle </em>reports "that would mean an increase from the current $4,896 per semester to $5,154 by fall 2013. Non-resident students would see tuition jump from $16,190 per semester to $17,377 by fall 2013." But the UT Board of Regents voted not to implement tuition hikes, leading a <a href="http://www.burntorangereport.com/diary/12249/aggie-governor-who-cannot-count-to-three-trying-to-oust-university-of-texas-president" target="_hplink">faceoff between UT president Bill Powers and the board</a>. The Texas Legislature deregulated tuition in 2003.

  • Virginia - 3.7 to 4.7 Percent

    The University of Virginia's Board of Visitors <a href="http://www.virginia.edu/uvatoday/newsRelease.php?id=18076" target="_hplink">approved the smallest increase</a> in a decade for in-state tuition and mandatory fees with a 3.7 percent hike. The high from the past decade was in 2004 when they implemented a 19 percent increase. <a href="http://hamptonroads.com/2012/05/va-tech-instate-tuition-increase-39-percent" target="_hplink">Virginia Tech increased tuition</a> by 3.9 percent. Virginia State University decided in a special meeting to lowered the increase in tuition and all mandatory fees from 6.6 percent to 4.7 percent for in state Virginia undergraduates. Gov. Bob McDonnell urged the state's universities to <a href="http://www2.timesdispatch.com/news/state-news/2012/may/23/tdmet05-vsu-lowers-tuition-increase-ar-1935437/" target="_hplink">keep increases at or below the Consumer Price Index</a> (2.7 Percent) which is lower than the Higher Education Price Index.

  • Washington

    Washington State University is raising tuition by 16 percent for the <a href="http://seattletimes.nwsource.com/html/education/2018144362_tuition05m.html" target="_hplink">second year in a row</a>. The University of Washington plans a 16 percent increase after raising tuition 20 percent last year. The AP reports Western, Eastern and Central Washington universities, and The Evergreen State College, all made two-year tuition decisions last summer after the Legislature decided to put tuition increases of up to 16 percent into the state's two-year budget.

  • West Virginia - 5 Percent

    West Virginia University students are looking at a 5 percent tuition bump. However, the total cost per semester for in-state residents will only be $3,045 <a href="http://www.cbsnews.com/8301-505245_162-57449091/wvu-board-oks-5-percent-tuition-increase/" target="_hplink">after the increase</a>: <blockquote>The increases are slightly smaller at Potomac State College in Keyser and the WVU Institute of Technology in Montgomery. Both resident and nonresident undergraduates at Potomac State will pay $72 more per semester. At WVU Tech, residents will pay $107 more per semester, while nonresidents will pay $268 more. The board also approved a one-time fee of $63 per semester to replace all the individual course fees that students were once charged.</blockquote> Photo Credit: <a href="http://en.wikipedia.org/wiki/File:Woodburn_hall_wvu.jpg" target="_hplink">Swimmerguy269</a>

  • Wisconsin - 5.5 Percent

    If the Board of Regents approves a <a href="http://www.jsonline.com/news/education/uwmadison-tuition-would-top-10000-if-increase-okd-kj5lae6-156998885.html" target="_hplink">5.5 percent increase</a>, the University of Wisconsin-Madison tuition and fees may top $10,000 for in-state students, and UW-Milwaukee would be close behind. It would be the 6th consecutive year UW System President Kevin Reilly has recommended a 5.5 percent increase for all UW campuses: <blockquote>Higher tuition has helped offset less than a third of state funding cuts, according to UW System officials. Universities gained savings from state budget provisions that imposed higher costs on state employees for benefits. They also gained savings through flexibilitities from state rules regarding purchasing, contracts and other areas.</blockquote> Photo Credit: <a href="http://en.wikipedia.org/wiki/File:Memorial_Union_and_quadrangle.jpg" target="_hplink">Vonbloompasha </a>