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Why Has College Gotten So Expensive

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Public Funding Cant Keep Up

Why is College So Expensive?

Another theory suggests that college tuition fees have been pushed up because state funding simply cant keep up with all the students that have been enrolling. In turn, they have to cut down on their support for higher education, which leaves colleges with no choice but to replace that lost revenue with increases in tuition fees, paid by the students themselves.

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Life is much more expensive today than it was 20, 30, or 40 years ago. Thanks to inflation, we have to spend much more now on our homes, cars, food, and clothing than our parents or grandparents did at our age.

But one thing that hasnt kept pace with inflation: the cost of college. Its actually been rising fastera lot faster.

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College Tuition Has Increased But Whats The Actual Cost

More and more Americans are going to college as tuition increases. But whats the actual cost of higher education? Heres an analysis of how colleges finances work and how tuition factors in.

More and more Americans are going to college. According to data from the Department of Education National Center for Education Statistics , in 1980, 50% of high school graduates between the ages of 16 and 24 were enrolled in college in 2016, it was 70%. In 2016, 19.3 million undergraduate students were enrolled in higher education institutions. 70% were enrolled at public schools, 23% at private non-profits schools and 7% at private for-profit schools. The cost of going to college has also changed since 1980 however, how much it has changed depends on whether you look at the sticker price or the net price after financial aid.

Why Online College Is More Affordable

Why College Is So Expensive In America

While it may feel like obtaining a degree is a hopeless dream only available for those with the means, the introduction of online college has provided more equal opportunities to receive higher education.

And although online college does tend to be cheaper, it surely doesnt mean that the quality of education is any less. The costs are simply able to be reduced by studying online since there is no physical campus that needs to be funded, as well as other factors such as a dining hall and other costly facilities.

Online college is an effective way to manage to both study and work part time at the same time, avoiding student debt from building up. Saving on the commute to school also is a major time and money saver.

On top of all of these benefits, overall, online college is far more affordable than traditional institutions. Here at University of the People, we offer degrees that are completely tuition-free creating an ideal option for students who want to graduate without putting a financial strain on themselves.

So why is college so expensive? Because were not looking towards other options.

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Us Colleges Have Extravagant Facilities

No country spends more than the U.S. on student-welfare services what OECD refers to as ancillary services such as healthcare, meals, housing and transportation. In fact, the U.S. spends more than three times what the average developed country spends on ancillary services.

Features like picturesque academic greens, expansive academic facilities, and posh study spaces all cost money to build and maintain, and those costs are also passed along to the student, Ollenberg said.

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Why Havent Market Pressures Reduced The Cost Of College

Over the past 20 years, annual consumer price inflation has averaged a humdrum 2%. But in what many commentators have called the Chart of the Century, economist Mark Perry reveals that the unassuming average masks substantial variation across sectors. The prices of hospital services, child care, and education have risen well in excess of average inflation, and have also outpaced the growth in hourly wages. The Financial Times calculates that 88% of consumer price inflation since 1990 is down to just four sectors: health care services, prescription drugs, housing, and education.

But as Perry shows, many other goods and services have fallen in price over the same period, including computers, televisions, and cell phone services. The first laptop computer debuted in 1981 with a price tag exceeding $5,000 in todays dollars. Since then, the price of computing power has dropped by several orders of magnitude. History supplies many examples of once-expensive products becoming astronomically cheaper when innovation and competition work their magic. But the cost of college remains stubbornly high, and rising. Why?

Observers have proposed several hypotheses as to why the cost of college keeps increasing, especially in comparison to other goods and services. Let us examine each of these hypotheses in turn, going from the least compelling to the most.

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Technology Upgrades Are Expensive

This reason for why college is so expensive goes hand in hand with No. 4. Even as colleges make huge investments in their technological infrastructure, the productivity of the institutions remain basically unchanged.

Let’s use some examples. One of the promises of a modern college education is to give students the skills to thrive in a high-tech workforce. To learn those skills, students need access to the latest technologies at school: computer-aided drafting software, powerful workstations to run advanced calculations, videoconferencing suites for collaborating with international students and faculty and so on . Those technologies not only require investments in expensive equipment, but also the IT staff to install and maintain them.

Again, while these investments greatly enhance the student learning experience, they do not improve the efficiency of the teaching process. It simply costs more money to educate the same number of people. This inefficiency problem is driving the push toward low-cost online education, particularly the advent of MOOCs , in which entire college courses are video recorded and uploaded for free to a worldwide audience.

What Goes Into The Price Of College Tuition

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Tuition and the total cost of attending a school are different, all three experts stressed. Tuition is usually separate from room and board, and other fees. Helhoski encouraged students considering attending a certain school to look at the net-price calculator on the institution’s website, which it’s legally require to have.

Generally speaking, tuition covers “anything that’s delivering the education aspect,” Helhoski said. This usually includes: faculty salaries, institutional support, research, student services, campus maintenance and more.

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But What About The Future Of College Tuition Costs

Todayâs college prices will seem cheap when compared to the price hikes of tomorrow. Still, theyâre rising at alarming rates, and yes you guessed itâfar faster than inflation. As you probably have noticed, in-state public schools have also recently increased tuition costsâa lot! As an example, the University of California announced a tuition price increase of 9.6 percent â on top of an already approved 8 percent increase.

Even at low-tuition schools, college costs are soaring out of control, especially when students add an extra year because they canât handle the workload. They may also lose scholarships or experience a dramatic change in their financial situation because of this. This is beyond frightening.

Critics blame high prices on overpaid professors or unnecessary expenses. But is that the real reason why college tuition is getting so high? Lobbyists tend to blame budget cuts from the state legislature. But a new study tells a different storyâhow easy it is to get federal student aid . They make it very easyâalmost too easy.

Federal student aid accounts for most of the college tuition increases between 1987 and 2010, according to the National Bureau of Economic Research. Itâs simple. The more money students can borrow, the more colleges are able to charge. They are playing off the governmentâs ability to offer student loans to anyone who qualifies. So, who can qualify for federal student loans? Every college student in the U.S.!

How Much Does College Cost

Attending college is a much pricier prospect today than it was in decades past.

However, the amount you have to spend on college varies widely depending on what type of institution you attend. For instance, two-year community colleges offer much lower tuition and fees per year than a four-year university. Out-of-state students will pay even more, while private universities tend to charge the highest rates overall.

For the 2020-21 school year, the average cost of a U.S. college by school type is as follows:

  • Public two-year : $3,770
  • Private nonprofit four-year: $37,650

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How To Fix The Cost Of College

Its impossible to pin cost inflation in higher education on any one culprit, because many aspects of the higher education system contribute to tuition growth. Policy measures to remedy the rising cost of college should therefore attack each of the guilty factors individually. The recommendations of this report fall into four categories defined by four of the principal causes of tuition inflation: rationalizing federal aid policy, lowering barriers to entry, improving price transparency, and creating conditions conducive to disruption.

Increases in federal grant and loan aid can only explain part of the rise in college tuition. However, the portion of tuition inflation attributable to aid is a lever over which policymakers have a great deal of control, at least relative to other causes of tuition inflation such as Baumols cost disease. Congress should take the following steps to rationalize the nations federal student aid infrastructure with the aim of constraining tuition growth:

Lowering barriers to entry is trickier than rationalizing student aid, since barriers to entry often have the reasonable purpose of protecting students from unscrupulous institutions. Still, many of the barriers that currently exist do little to improve the quality of education, while protecting incumbent colleges from competition. States and the federal government can remove many of the unnecessary barriers that keep competitors out and prices high:

Are Expensive Colleges Worthwhile

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When evaluating the cost of various colleges, its important to look beyond the published price. Depending on what types of financial aid you qualify for, the cost could be significantly less than advertised. Be sure to compare schools net cost, which is the institutions price minus any scholarships and grants you get.

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Is College Tuition Too High

Is College Tuition To High? Jeffery J. Selingo stated in The Washington Post, How long can we go with tuition until it is to much? This statement is what many people think, who are struggling to pay off there tuition. The cost of tuition is extremely too high. Earlier in the 1900s the cost of tuition was merely 200 dollars a year, but now tuition can be from 15,00 to 50,00 dollars a year. , University of Pennsylvania University Archives. Web

The Reason Why College Is So Expensive Is Actually Dead Obvious

If you artificially inflate demand for something and don’t let supply adjust, prices will go up.

Some conservatives like to say that liberals don’t understand economics, but that’s not really true. Liberals understand certain macroeconomic issues better than conservatives. And most liberals don’t hate entrepreneurship and innovation. But for some reason, for many liberals, the part of the brain that deals with economics tends to shut down when discussing sectors like higher education .

It would seem that the Economics 101 story around higher education for the past few decades would go something like this: for various reasons, government has decided to increase demand for higher education massively, via increased subsidies and in particular student loans meanwhile, supply has not kept up, because non-profit universities get paid in prestige and therefore have an objective self-interest in not growing the for-profit sector has been designed by regulation such that it exists to vacuum up subsidies rather than provide valuable education and the government sector hasn’t kept up with demand.

As Roosevelt Institute wonk Mike Konczal notes, this means we have “the lowest hanging policy fruit imaginable: save money by not providing aid and lower tuition in the process”. Indeed! But he doesn’t think this makes sense. Actually, maybe he does, but he can’t find evidence for what he calls the Bennett Hypothesis, after Reagan-era Secretary of the Education William Bennet .

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Where Did The Student Loan Crisis Originate

Baby boomers were once able to pay for college with money they made from summer jobs. And for many middle-class families that had students starting college more than 30 years ago, parents were able to step in and help their kids pay for college.

Over the next few decades, public funding for higher education was massacred. These ever-increasing cuts forced colleges and universities to raise tuition more each, which in turn forced millennials to take on crushing educational loans, and we all know how that turned out.

This is the story college administrators like to tell when theyâre asked to explain why, over the past 35 years, college tuition at public universities has nearly quadrupled, to over $9000 per semester in 2014. It is a story that makes you wonder, âIs it really true?â It may in fact actually be the opposite of the truth.

What Is The Average Cost Of Student Loans After College

Why Is Harvard So Expensive?

Roughly 62% of college graduates in 2019 took on some student debt and owed on average a total of $28,950. This is slightly down from the 2018 average of $29,200, according to the Institute for College Success and Access. The average U.S. household with student debt owes $47,671, according to NerdWalletâs 2018 household debt study.

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Is College Worth It

Higher education is founded upon an ironythat the demand for a college degree inevitably drives costs up. This demand, then, creates a paradoxical situation in which college education is increasingly less advantageous, as there will come a moment where the cost of college far outweighs the potential benefits of a degree.

This value of a degree is already becoming apparent. Based on Q4 2019 data, the Federal Reserve Bank of New York found that about a third of college graduates are working jobs that require no college degrees. However, while this does seem counter-intuitive, it is normal to some point as new graduates need a foothold on the jobs market before they can actually be ready for the field they have studied for.

No matter who answers this question, though, college education still opens up many opportunities. Be aware, however, that the American higher education system is due for a change soon. The onus to accommodate increased demand while ensuring that the quality of instruction is on par thus falls on institutions of higher learning in the years to come.


  • AAUP . Trends in Faculty Employment Status, 19752011. Washington, DC: American Association of University Professors.
  • AAUP. . The Annual Report on the Economic Status of the Profession, 2017-18. Washington, DC: American Association of University Professors.
  • Colleges Are Expanding Their Offerings

    As entry-level jobs increasingly require undergraduate degrees, colleges are competing with each other and, as a result, are making changes on campus to increase the value of the student experience.

    “That means hiring more faculty, building more dorms, making other types of capital and technological improvements,” Helhoski explained. “These are very real costs that colleges are taking on, and unfortunately, they put more responsibility on the students to meet those costs.”

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    A Billionaire Campaigned To Kill Tuition

    Prior to the 1900s, college was largely costless for students. In the minds of 19th century Americans, higher education served the greater good. As detailed by Thomas Adam, a professor of transnational history at the University of Texas Arlington, graduates generally trained to become teachers, preachers, and leaders in their communities. As a result, colleges were “considered a public good,” and “society was willing to pay for it.” This typically happened in one of two ways: institutions didn’t charge tuition or students received scholarships.

    So what changed? In the 1900s, students from well-to-do families flocked to private institutions. They could afford not to take higher education seriously and tended to approach it as a “social experience.” Afterward, they “experienced” prestigious jobs, thanks to the swanky degrees they received. As rich kids reaped big benefits, poor kids would pay a steep price. In 1927, oil baron and history’s first billionaire John D. Rockefeller waged a campaign to force students to pay for college. Rockefeller argued that higher education had ceased being a public good and was now a personal pursuit. He also championed the student loan system that metastasized into the financial cancer that it is today. Rockefeller’s voice was joined by real estate magnate William E. Harmon. Together they urged educators, administrators, and donors to quit covering the tuition of students. Their efforts effectively ended the age of free college in the U.S.

    The Psychology Of Shopping For A Degree

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    Perennial headlines announce an ever-growing collective student debt $1.4 trillion, $1.5 trillion, $1.6 trillion. The stories underneath explain that students borrow more than ever before to pay for college.143 College graduates struggle to make ends meet, much less to acquire assets.144 Millions of Americans know that student debt is a huge problem. Why are students and families still willing to take out student loans?

    Why are so many people going to school? Because they are looking to hopefully improve their financial situation. It shouldnt be a rare achievement that you graduate with college debt-free. But I dont know many people who have pulled that off. Cornell University Graduate145

    In this chapter, we will first examine how students and parents decide whether to attend college. We will then study how students and parents who have decided on college then choose which institution the student will attend. Finally, we will explore student regrets regrets about going to college at all and regrets about which sort of colleges they attended and investigate why they regret those decisions.

    These interviews allow us to make the following generalizations:

  • Students and parents view college as an insurance policy.
  • Some parents see college attendance as a necessary rite of passage.
  • When students choose between colleges, they are willing to pay dearly for life opportunities.
  • Few people regret going to college or not going to college.
  • To Attend or Not to Attend

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