Open in App
  • U.S.
  • Election
  • Newsletter
  • GOBankingRates

    Why Is College Tuition So Expensive?

    By Caitlyn Moorhead,


    The American higher education system is a complex beast — it’s actually 50 different systems spread across every U.S. state. Within each system are three subsystems of college costs: private colleges, public colleges and for-profit colleges. In the United States, higher education in colleges and universities is as expensive as it is complicated .

    Sponsored: Owe the IRS $10K or more? Schedule a FREE consultation to see if you qualify for tax relief.

    Why Is College Tuition So Expensive: Quick Take

    Student loan debt is through the roof and it seems state funding has not been adjusted for inflation.  There’s a tremendous amount of pressure on high school students to attend college, especially the more prestigious universities. Here are some key takeaways for the rising costs:

    • Demand for higher education and specialized training has increased steadily over the years adding extra education costs.
    • If you search programs at a university, a college, or a technical school, you’ll see they come with expensive equipment and training facilities. These costs now come out of the students’ pocket where formerly it was common for the employing company to fit the bill .
    • The result of that dynamic is that college graduates now out-earn high school graduates by $1 million over the course of their careers, according to a study from the Manhattan Institute. Those income aspirations can drive a blind pursuit of college based on what the study calls the “golden ticket” fallacy, which increases enrollment and therefore, cost.

    Other Reasons College Is So Expensive

    The very complicated question about why tuition has gotten so expensive boils down to the most basic economic principle: supply and demand. In American colleges, and through the Department of Education, the price is anything but cheap — and it’s gotten much more expensive over the last two decades.

    1. 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. Here are some of the bigger facility expenses that are passed on to the students:

    • Picturesque academic greens
    • Expansive academic facilities
    • Posh study spaces
    • State-of-the-art tech facilities
    • Upgraded libraries

    2. Labor Costs at Colleges Are High

    Fancy dining halls and game rooms are actually just a drop in the bucket. The OECD report shows that high-priced employees — university staff are almost all college-educated themselves — gobble up much of the average college’s budget. Taking on or hiring specialty faculty members also comes with a hefty price tag.

    Other contributing factors include:

    • Cuts to education: Many cash-strapped states have cut funding to public college boards and systems, particularly afer the wake of the 2008 recession. Many pivoted by focusing on wealthy out-of-state and foreign students who pay full tuition. The Atlantic cited Purdue University, which lost 4,300 in-state students in the 2010s but gained 5,300 outside students who pay triple the tuition.
    • On-campus culture: American students are much more likely to live away from home during college, which is far more expensive than living at home.
    • Nonteaching staff: Colleges employ legions of coaches and athletic staff, lawyers, admissions officers, maintenance staff, food-service workers, diversity liaisons and marketers.
    • Confusion and uncertainty: The MI study found that pricing is confusing and value is hard to ascertain, which makes comparison shopping difficult.

    There’s No Inflation Like Tuition Inflation

    Tuition costs have dramatically outpaced normal increases in the cost of living. In fact, tuition is in an inflationary category nearly all its own. According to the American Enterprise Institute, the cost of college tuition has increased more in the 21st century than all other goods and services except for hospital care — tuition inflation beat out other high costs like medical care, child care and housing.

    Final Take To GO: Is College Still Worth the Cost?

    There has never been a time when the cost of college wasn’t rising. The Atlantic dug up a New York Times editorial from 1875 where the author griped that the cost of a single year of college could have paid for all four years a generation before.

    The U.S. spends more on college degrees than nearly every other developed nation. Americans spent approximately $30,000 per year per student. Only tiny Luxembourg spent more, but the government there covers the cost of college, as governments do in one-third of the developed world.

    Andrew Lisa contributed to the reporting for this article.

    This article originally appeared on : Why Is College Tuition So Expensive?

    Expand All
    Comments / 0
    Add a Comment
    Most Popular newsMost Popular

    Comments / 0