Capital and Capital Service Costs in 2700 US Colleges and Universities

Using data generated for a study of student subsidies (in WPEHE Discussion Paper No. 32), this paper reports on the distribution of capital stocks and the costs of capital services in 2700 colleges and universities in 1991. The $330 billion in physical capital estimated for these institutions imply that $40 billion in yearly capital service costs are incurred in US higher education, adding roughly 33% to reported current costs. While private Research-I Universities have the most capital per student ($143,557) and public Two-Year Colleges have the least ($14,540), a greater disparity in capital stocks appears when schools are differentiated by wealth -- their average subsidies per student. The top decile of private schools have over $150,000 of physical capital per student and the bottom decile of public schools have less than $10,000. The distortion of educational costs that results from omitting capital services range from roughly 25% for Research-I Universities, both public and private, to more than 40% for private Liberal Arts Colleges and public Comprehensive Universities. Clearly, capital service costs are large and unevenly distributed within higher education, creating serious distortions in any economic analysis that ignores them. The data are available as FoxPro files.