The Cost of Education

Making high quality educational services available at an affordable price per student is a challenging task. Consider the costs (in 2011) of offering one course at a school:

Teacher Salary

What is the market salary for a highly skilled teacher with good experience teaching a particular subject? The answer to this question usually depends on the grade level and geographic location, but I will assume it might be $45,000 for a teacher in areas of the United States with an average cost of living.

School Year Length

The above salary number reflects a 185 day, or 37 week school year. It will probably vary a bit if the school year is longer or shorter than 185 days.


Schools are complex organizations that require leadership, personnel administration, student health oversight, admissions/guidance staff, etc. Employee benefit costs grow as a percentage of total costs each year, and payroll taxes must also be paid.

Classrooms need to be heated and cooled, furniture and equipment needs to be paid for, etc. Many businesses assume that overhead costs for each employee are about equal to their salary, however one teacher usually requires considerably more physical space and furniture than one office worker, so I will assume that administrative and infrastructure costs are equal to 1.5 times each teacher’s salary. This means that the “fully burdened cost” of a teacher (including facilities, administrators, benefits, etc.) will be equal to their salary plus 150% of their salary in overhead, or 2.5 times their salary.

Course Load

How many classes is each teacher expected to teach?  Most teachers are salaried employees who work considerably more than 40 hours per week both at school and at home, but many tasks have to be accomplished during school hours. Assuming at least an hour of preparation and grading time for each hour of class time (often accomplished outside of school hours), plus time for course team and administrative meetings, working with individual students, supervising study halls, etc. that leaves about 4 hours of class time available in a typical work day.

Total Costs

The above assumptions result in a total cost of $152 per classroom hour of teaching, or $22,500 for a full-year course that meets for 4 hours per week .

Class Size

Optimal class sizes vary depending on the philosophy of the school and the composition of its student body. Few schools can afford to have class sizes smaller than about 8 students, and most schools seem to try to keep class sizes under 25 or so students.  Based on the above total costs, an 8 student class would cost about $2,810 per student, while a 25 student class would cost about $900 per student.

Course Load

If a student takes 5 classes, and no athletics or extra-curricular activities, the total cost of a school year would work out to $14,060 for a school with very small class sizes, and $4,500 for a school with larger class sizes.

If programs outside the academic school day (typically clubs and athletics) are added in, costs increase further.

Financial Aid

Private schools often offer financial aid to families who could not otherwise afford to attend the school. Total financial aid costs vary considerably between schools, and also depend on the overall state of the economy. Assuming that Financial Aid costs are between 10% and 25% of tuition, the school must fund Financial Aid using either donations or cost shifting.

Cost shifting entails setting tuition to be higher than expenses per student before Financial Aid, in order to cover the cost of financial aid. If Financial Aid is not subsidized by fundraising efforts or previous surpluses, total tuition would have to be set at:
$5,000 for a school with larger classes and low (10% of gross tuition) financial aid
$18,750 for a school with small class sizes and high (25% of gross tuition) financial aid


The above numbers are intended to convey how difficult it can be to make a quality education “affordable”:
– If we wish to have “the best” teachers, my salary assumptions may be low.
– If we wish teachers to have adequate preparation, collaboration, and planning time, four hours of teaching per day may be too ambitious.
– If we wish our classrooms to have a minimal environmental footprint and also offer whatever resources can increase teacher effectiveness and productivity, my overhead assumptions may be too low.

All of the above push costs up further.

While efforts to limit salary and benefit costs, use space efficiently, purchase only resources that are effective and used heavily, and minimize overhead will all help… there are practical limits to how much such efforts can reduce costs, particularly when enrollment numbers can fluctuate significantly from one year to the next, or from one grade to another, yet we wish to retain experienced and familiar teachers for our children.

How Can Costs Be Reduced?

The factor with the greatest potential to reduce cost per student in both strong and weak economic times is class size. While there is certainly an “optimal” school size that will tend to minimize the overhead per student, above which the school is likely to need another nurse or guidance counselor for example, such changes probably represent an additional cost of under $500 per student, per change, per year. Even if three new administrative positions had to be added to support increased enrollment beyond the “optimal” school size, they would probably affect the total annual cost per student by less than $1,500. This is a much smaller number than the $13,750 difference between the two cost estimates above based on class sizes and financial aid.

Increasing the number of students per class can have the following negative effects:
– increase the time needed by teachers to review student work
– reduce the amount of one-on-one time between the teacher and each student
– more potential distractions in class

and the following positive ones:
– greater probability of  having a classmate that learns the same way I prefer to
– more people I can rely on for help

Larger class sizes can work brilliantly, and they can also fail miserably. Their effectiveness depends on:
– the dispositions of the students in the class
– the teacher’s skills and teaching style
– the students’ ability to help each other learn the material
– the curriculum and teaching resources available
– the classroom space

If we wish to reduce the cost of education per student while retaining our traditional model of face to face interaction between teacher and student, we need to focus on ways of improving the probability of larger class sizes being effective for student learning, while reducing the time per student needed to do an effective job of assessing student work.

Effective student learning typically depends on a combination of engaging curricular materials and a teacher who uses them well. Teachers need preparation time, practice, and good peer collaboration to reach the point where they are using the curricular materials “well”. Yet financial pressures usually prevent schools from giving teachers all of the time and support needed to reach this point – particularly after changes in curricular materials or approaches have been made.

One impediment to larger class sizes is the greater amount of time needed to review student work and assign grades. If useful (see Note 1 below) formative and summative assessment tools for the curriculum can be automated, they will greatly reduce the amount of teacher time that must be devoted to correcting student work, while making it easy for a teacher to quickly determine where mastery has and has not been universally achieved. This would have many benefits: it would make more frequent use of formative assessments practical, reduce the time needed by the teacher to correct and review student work, and thereby also make larger class sizes more practical.

I expect that the frequency of formative assessment would be directly correlated with the effectiveness of teaching and student mastery of material. Without it both teacher and student risk mis-allocating their time.

I wonder… if formative and summative assessment tools could be automated in a way that provided accurate and low-cost diagnostic information about all students to each teacher… would that allow class sizes to be increased to that point where schools could both reduce their cost per student and give teachers more time to continually improve curricular materials and approaches?

Note 1

I define a “useful” assessment tool to be one that:
– makes efficient use of a student’s time by minimizing the number of questions on topics the student answers correctly
– has a large enough question bank to be valid and not repeat questions even if used several times per week by a student
– adapts its difficulty level and topics continuously to the student’s results so far today and on previous sessions
– provides both raw and diagnostic data (which skills/concepts are mastered and which are not – based on answers to multiple questions) to the student, teacher, and administration (by student, class, and teacher)
– tracks and reports on improvement over time for every student, thereby providing encouragement to every student, and accountability for both student and teacher

By Whit Ford

Math tutor since 1992. Former math teacher, product manager, software developer, research analyst, etc.


    1. My post included many assumptions, any of which may or may not apply to a particular situation. My intention was primarily to outline how such a calculation could be made, then the consider the implications of the “ballpark” estimates that resulted.

      In re-reading what I wrote, I don’t know if my overhead assumption was as clear as it could have been… I was assuming overhead to be 150% of salary as follows:

      $45,000 annual salary
      divided by 185 school days per year = $243.24 per school day
      times 2.5 to add in 1.5x overhead = $608.10 per school day
      divided by 4 classroom hours per day = $152.03 per classroom hour

      Does that help?

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