Why is College so Expensive?

American universities are among the best in the world, however, they are also among the most expensive. In this blog, I will go through a few of the expert opinions that offer an explanation to the constant increase of university prices. These expert opinions vary drastically with no single explanation that is unanimously agreed upon. The only objective truth is that tuition price has increased at a faster rate than both inflation and family income, making this a problem worth exploring.

The first group of experts argue that government aid has allowed universities to increase prices without facing consumer backlash. Since students are not having to pay out of pocket directly, because of government subsidies, they are less likely to react when prices aggressively increase. Furthermore, the lack of competition in non-profit universities has made faculty and administration less productive since they do not have to compete. This has led to an increased need for faculty hiring, while the productivity per faculty has decreased.

A second group of experts blame the problem on the university’s excessive spending habits. Such as spending million dollars on new buildings, amenities, and non-instructional staff. If you look at statistics for university hiring patterns, it is apparent that these institutions have decreased the number of professors they hire while increasing non-instructional staff such as counsels, athletic coordinators, lawyers… To account for the additional expenses, these universities started relying on part time instructors and graduate students to teach classes and save cost, however, the cost savings are not enough which led to the increase in tuition.

A third group of experts, particularly economists, argue that the cause is simply the economy. They assert that the service industries which involve highly educated people have seen a similar price increase to higher education. Notable examples include the price of dentists, lawyers, and doctors. They also argue that higher education suffers from an economic phenomenon called the “cost disease” where the service provided does not change through time, but the price of the service must increase due to the economy. Professors still stand in front of a class and teach, as they did decades ago, however, professors are highly educated people that can commend high salaries and thus even though their function did not change, their salaries have increased which has led to an increase in prices.

This is a very brief and simplified explanation of the most popular opinion regarding the increase in the price of higher education. The topic itself is very controversial and nuanced. However, I hope I was able to deliver a simplified glimpse into the problem.

5 Replies to “Why is College so Expensive?”

  1. The reason why the U.S. universities are expensive is the U.S. economy. After paying for education, educated (graduates) people expect high salaries and good jobs in the U.S and companies expect skilled people and are ready to pay a lot of money in exchange.

    1. This in partly true, and the arguments you make are similar to the arguments made by economists. However, after digging deep into the issue, you will find out that there are much more subtle reasons in addition to what you have mentioned.

  2. I would like to add onto your point about rising costs of tuition–students who are attending for a year or two cannot simply stop attending after a few-thousand dollar increase in tuition and fees, because then they might have student loan debt without the job (and subsequent salary) they thought they would get.

  3. Thank you for presenting this perspective.

    Also, in other developed countries (pick one in Europe), though the excellent services, skilled professors with good salary, well maintained buildings and resources and all exist, which were used as the reasons by the economists presented in your blog, the cost of education is nowhere close to the one in the United States. In fact, in many of them, the tuition is free, and there might even be some stipend for students. The absurd cost of education here, has to have some more reason on why it is so high.

  4. I appreciate this post so much! I also wrote on my blog for this class about the expenses of higher education. I enjoyed reading your perspectives here about potential explanations for the cost of college. I have to wonder if high-cost administration salaries are not a big part of the blame for the high sticker-price of so many colleges and universities.

Leave a Reply

Your email address will not be published. Required fields are marked *