Analysis: Federal Regulation and Compliance Takes Time, Billions


A recent study from Vanderbilt University has taken a closer look at how much time is being devoted to federal regulation compliance among institutions of higher education across the United States.

The study, “The Cost of Federal Regulatory Compliance in Higher Education: A Multi-Institutional Study,” was conducted at 13 colleges and universities across the country ranging in size and type from a public Tier 1 research institution with 40,000 students to a private liberal arts college that enrolls just over 1,600 students.

Findings suggest that regulatory compliance amounts to between 3- and 11% of higher education institutions’ nonhospital operating expenses.  In addition, it was determined that faculty and staff spend around 4- to 15% of their time complying with federal regulations.

It is estimated that higher education institutions report to 18 separate federal agencies and comply with nearly 30 different areas of regulations, as well as over 200 federal laws and guidelines.

In addition, research-related federal compliance was found to take up between 11- and 25% of all research costs, while compliance to higher-ed specific and all-sector regulations made up between 2- and 8% of all non-research expenditures.  Smaller institutions were found to spend more per-student in non-research related areas than larger institutions.

“My higher education colleagues and I strongly believe that smart, efficient regulations provide important protections for students, families and taxpayers and hold institutions accountable for the federal dollars they receive. At the same time, we have an imperative to do everything in our power to keep costs down for students and their families,” Vanderbilt University Chancellor Nicholas S. Zeppos, who commissioned the study, said. “We undertook this research to more fully understand one of the most important variables in our overall costs – complying with federal regulations. We found that cost to be significant—for all types of colleges and universities.”

The study found that when costs were taken from the 13 colleges represented in the study and applied to the entire higher education sector across the country, an estimated total of $27 billion was found to be spent on overall annual compliance costs.  Of that total, $17 billion was spent on higher-education and all-sector compliance, and $10 billion was found to be due to research-related compliance.

Within the higher-education compliance, $3 billion went to regional accreditation and another $2 billion went to financial aid compliance.  Meanwhile, research compliance included $6 billion toward grants and contract compliance, writes Melanie Moran for Vanderbilt News.

Researchers collected data from August to October 2014 at Vanderbilt and from February to April 2015 for the remaining 12 institutions.  The 2014 fiscal year served for compliance costs used.  In all, 600 interviews were conducted and 3,500 respondents were surveyed.

10 21, 2015