How Did the Cost of College Get So Expensive?

There were demonstrations around college campuses in the U.S. recently protesting the rise in the cost of college. Many states have recently announced major increases in the cost of tuition due to state budget shortfalls. For example, Colorado announced increases of 9%, and California will increase college tuition costs by a whopping 30%. These types of increases are particularly significant when one considers that the cost of higher education has been rising at twice the rate of

inflation for the past 30 years! So these large increases are on top of all that.

Another major reason that the cost of college has gone up so much is simply supply and demand. College enrollment increased from 7 million students in 1970 to 14 million in 2002, but the number of young people stayed pretty even, increasing from 36 million to 39 million in that period of time. It is clear that many people consider even a graduate level degree a necessity to finding a decent job and having a solid career. And at prestigious private colleges the prices have been going through the roof for a long time. The average cost of a year at a private college these days has grown to about $50,000. And that figure applies to all private colleges, not just the most prestigious ones. The bottom line is that parents of students who can get into top prestigious schools think that the cost will be worth it for their children, even if that cost is astronomical.

The cost of attending college has also risen because along with the fact that states have cut higher education budgets, the federal government has increased the availability of student loans. So instead of states paying the cost of college education for their residents, there has been a shift of the burden to the students and their families through loans. The problem with this is that student loans have become a huge problem for millions. The student loan industry has lobbied Congress to pass laws that make these companies literally billions of dollars in profits and make their executives rich, at the expense of student borrowers. Congress has passed laws to make it impossible to dismiss student loan debt even in bankruptcy. Credit card debt and even gambling debts can be dismissed in bankruptcy but not student loan debt. Apparently all it takes to get laws passed like this is to offer campaign money to our elected officials and perhaps throw in a job for a family member, as was the case with Congressman John Boehner, a leading Republican who was chairman of the House Education Committee from 2001 to 2006. A few free “fact finding” trips to exotic locations probably don’t hurt either.

Colleges have also been competing with one another for prestige and many have built extraordinary stadiums, gyms, and other facilities to attract students. They have also raised the salaries of administrators and athletic coaches. Free perks are sometimes offered to students, like free ipods or computers. The rising cost of implementing hew technologies has also been a factor in increasing the cost of attending college.

Not surprisingly the cost of college has gone up for a number of reasons. Even at state schools the average cost for a year of college is $20,000, and that was before the latest round of increases that was mentioned above. These costs will undoubtedly continue to increase in the future as will the number of people who take on student loan debt and the amount of that debt. This will inevitably lead to an ever growing number of people who default on student loans and who subsequently have huge penalties assessed upon them by the student loan companies. Many of these people will be paying off student loan debt for most of the rest of their lives. Certainly many young people today will be still paying off their own student loans when their children are ready to start college. That is a sad but sobering thought.