The number of faculty members has risen slightly faster than enrollments, and there has been an explosion in nonteaching staff. In the fall of 1976, universities nationwide had 31.5 administrators for every 1,000 students. By 1993 that number had grown to 51.4. Actually, they may do less work. Most of us today teach the same way Socrates did more than 2,300 years ago, albeit not as well.
Universities can afford such expensive labor in large part because of government subsidies.
Students who are sensitive to price get scholarships, really a form of price discrimination. Meanwhile, costs soar for those paying full price. A for-profit school can hire people whose main job is to teach, for much less per hour. It can gain efficiencies through technology and have fewer administrators. The University of Phoenix, now in 12 locations and on the Internet, is one of America's largest universities.