Vol. 2 No. 2 (2007): What Does It Cost a University to Educate One Student

A dilemma administrators continually face is whether to continue offering degree programs despite low student uptake, especially because producing reliable cost data to aid decision making can prove difficult. Often, a university determines a standard cost per credit or unit and uses this figure as a basis for computing the total cost of running a degree program. This is then compared to a revenue stream and the difference, whether positive or negative, is used in decision making. However, this method of computing costs, although appealing for its simplicity, may fail to capture the effects of economies that may arise as one school or college services another. In this paper, we use a basic cost accounting methodology applied to the higher education system of the Philippines to compute for a cost per degree per student for a sample of public and private universities. Although the methodology is more time consuming, the computed figures are deemed closer to actual costs and, thus, we argue, are more reliable as inputs to financial decision making.