Why are College Costs so High Right now? Here are 5 Reasons

Why are College Costs so High Right now? Here are 5 Reasons
  • Opening Intro -

    With the student-debt crisis going on, the question inadvertently arises: why exactly are tuition costs this high?

    For the endlessly soaring prices, what seems expensive today will be a staggering cost by tomorrow.


To put things into perspective, tuition at Harvard costs about 17 times what it did in the early 70’s. This is an obvious and worrying trend of college outpacing inflation – it should have been 15 grand instead of the current 45-thousand figure, if following inflation rates. And at least for the foreseeable future, these high college costs don’t seem to be going down anytime soon.

So why is this happening? What is commonly believed is that public funding is being cut for higher education, meaning more money has to come from students’ – or their family’s – pockets. In other words, cost shifting.

While a perfectly reasonable explanation, with per-capita state funding decreasing from its peak at 1990, this is not the only cause, especially in the face of the big picture. Compared to the $11.1 billion in 1960, funds in 2009 are an inflation-adjusted 81 billion. It is clear that more reasons are at work than this.

So why exactly is college so expensive?

1. Increasing Loan Limits

One proposed cause is the US Congress’ raising of loan limits for students. Consequentially, students can potentially afford more than they could have without the loans. Now, see where this is going? Due to the free market, the costs are thus hiked up to the level where students can still afford it due to loans.

2. Rapid Expansion of University Administration

The number of administrative positions have increased by 60 percent from 1993 to 2009, which is ten times the increase in full-time faculty members. While this is warranted, to an extent, by the increasing number of college-going students, the troubling part is that the salaries of these administrators are increasing just as fast. Which means increasing college costs to pay for the support.

3. Tuition Discounting

Now, before you get confused, the “discounting” here refers to financial aid provided by colleges. In assisting lower-income students, others have to make up for the difference. As such, average spending per student decreases, and spending on aid for freshmen rises.

The money does not only go the lower-income group, either. Athletic programs are heavily subsidized to make the increase sports competitiveness.

4. Competition Among Schools

Top institutions are pressured to attract students by getting the best faculty members, building more facilities, and having the best services. As such, the budget for student services have rose by 17 percent to 20 percent, according to the Delta Cost Project.

Yes, the more attractive the campus tours are, the more money you will probably have to pay.

5. Removed Consumer Protection

The recent change in federal law included the removal of standard consumer protection, of which bankruptcy protection is applicable here.

As students are now defenseless to declare bankruptcy, loan vendors no longer feel compelled to help the students avoid defaulting. Lenders can now lend freely, hence increasing the amount of loans, allowing more students to afford tuition, and causing tuition prices to rise in response.

Tuition is expensive, no doubt. But at the same time, students’ pressure to get into higher education is no less taxing on our mind. Many students hate the costs, but how it all came to be is less apparent.

If you found this article useful, why not share with your friends who have yet to understand the real reasons behind these exorbitant costs?




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Categories: Student Loans