Why is College So Expensive?

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Why is college so expensive? There are a lot of reasons — growing demand, rising financial aid, lower state funding, the exploding cost of administrators, bloated student amenities packages. The most expensive colleges — Columbia, Vassar, Duke — will run you well over $50K a year just for tuition. That doesn't even include housing! The cost of college is out of control. So what can you do to fix it? Well, nothing really, but if you’re smart, you can work around it, especially with the opportunities afforded by the growing online college sector. We'll find out why college is so expensive, and we'll tell you how you can cut costs.

The cost of college is crazy. Take it from us. This is all we do and we’re constantly blown away by the eye-popping pricetag for some college degrees.

Do you know that tuition for public colleges alone more than quadrupled between 1980 and 2015?

According to CNBC, college tuition was far more affordable for older generations. Citing figures from College Board, CNBC reports that, adjusting for inflation, the cost of private schools rose by 129% since the 1980s. The cost of public school rose by an even more staggering 213%.

By contrast, wages across the board have increased by just 67% since the 1970s. A college degree still provides advantages to its holder, but Business Insider, concedes that these advantages are lesser than they were just a decade ago.

Meanwhile, according to CNBC, students graduate with an average of $37,172 each. All of this amounts to $1.5 trillion in collective student loan debt shared amongst 44 million Americans.

Since we’re all here to learn, I’ll ask a purely academic question. Why is college so freakin’ expensive? And why does the cost continue to climb if the value proposition is on the decline?

I’m not an economist, so I won’t make any bold predictions about this big education bubble bursting any time soon. Even with these shrinking advantages, graduates still earn more than non-grads over the course of a lifetime.

But what are some of the causes behind this explosion in cost, and what can you, as the consumer, do about it?

If you just want to skip to the part where we tell you about the cheapest online schools, go ahead and check out The Most Affordable Online Colleges for Bachelor’s Degrees.

If, instead, you’d like to learn more about the deeply ingrained and overlapping reasons college is so expensive, here they are:

 Amenity Madness

It turns out that the insane cost of college is a condition somewhat unique to the United States. An article from The Atlantic points out that the combined contributions of individuals, families and government amount to roughly $30,000 in expenses per student per year. This, reports The Atlantic, is about double the average amount per student across the rest of the industrialized world. There is no evidence that this expense has produced superior academic outcomes or professional opportunities.

There is, however, some evidence that our collective desire for the all-frills college experience plays a role. American universities are unique for the residential comforts they offer (and charge for). Items classified as ancillary services — climbing walls, state-of-the-art mega-student centers, seriously pimped-out dormitories — these things do cost money.

According to The Atlantic, American taxpayers float more than $3,000 per year per student for these ancillary services alone. This is three times the average for such expenses in the rest of the developed world. The Atlantic does point out that residential campus experiences are more commonplace in the U.S. — that a largely proportion of students in Europe and Canada may not leave home for an on-campus living experience. In other words, college is different here. College is intended as a more comprehensive life experience as opposed to just an academic one. This experience does carry with it the inherent costs of widespread on-campus residency.

Of course, online education has transformed the landscape a bit, and is increasingly creating pathways to an accredited college degree that does not carry the expenses of campus living. If you can live without the climbing wall and the campus center, you do have some affordable options:

  Administrative Salaries

The Atlantic warns, however, that amenities do not alone account for the reason our costs are so much greater here. Even if we were to remove those costs from consideration, we’re still outspending our friends around the world.

So where’s all that money going? The Atlantic terms it “routine educational operations — like paying staff and faculty.”

These costs account for roughly $23,000 per student every year. This is double the amount that Finland, Sweden or Germany — all boasting top-performing education cultures — spend on the same essentials.

But before you storm into your professor’s office hours to express your righteous indignation, be aware that in fact, professor salaries have barely budged since 1970.

According to the New York Times, “salaries of full-time faculty members are, on average, barely higher than they were in 1970. Moreover, while 45 years ago 78 percent of college and university professors were full time, today half of postsecondary faculty members are lower-paid part-time employees, meaning that the average salaries of the people who do the teaching in American higher education are actually quite a bit lower than they were in 1970.”

By contrast, “According to the Department of Education data, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, which Bloomberg reported was 10 times the rate of growth of tenured faculty positions.” The New York Times uses the massive California State University system as a case example, noting that between 1975 and 2008, the number of faculty grew from 11,614 to 12,019. By quite a sharp contrast, the total number of administrators grew from 3,800 to 12,183. That’s a 221% increase.

If you’re curious where the greatest cause for rising educational costs comes from, administrative personnel are probably the best target for your resentment.

Need a little more kindling for that internal fire? Here are some college employees that make a boatload of money:

  Public Demand

So what’s the justification for all of these administrators? Well, for one thing, schools are definitely taking on more students. Though there are some year-to-year trends that reflect a decline in the pace of growth, by and large, the public demand for higher education simply continues to expand.

Business Insider says "According to the Department of Education, US colleges expected a total of 20.4 million students in fall 2017, about 5.1 million more than in fall 2000."

It’s true that the advantages afforded by a college degree are shrinking. Business Insider says "The return on investment has fallen and 40% of kids don’t graduate within six years."

Despite this shrinking return on investment, the driving forces behind college enrollment remain powerful. In fact, CNBC reports that a college education is coming increasingly to be seen as a baseline necessity for a competitive role in today’s economy. A study from Georgetown estimates that 65% of all jobs will require more than a high school degree by the year 2020.

In other words, despite its exorbitant cost, the pressure to go to college is actually growing. This creates greater competition, both among students seeking access and colleges seeking applicants. Increasingly, colleges and universities have come to behave like businesses, competing for the attention of students, offering more compelling perks, and vying for higher spots in rankings just like the ones we do here.

Among the many byproducts of this shifting orientation has been the expanding sector of schools that literally are just businesses. The for-profit sector seized on changing attitude, as well as growing public demand, in order to flood the marketplace with expensive degrees that in many cases hold no real value. The result has been an across-the-board increase in average yearly tuition.

To make sure you’re getting the most out of your higher education investment, check out The Affordable Colleges Source: Online, Public, Private, Best ROI.

  Lower Public Funding

Ironically, even as the cost of education itself continues to rise, the willingness of state and federal governments to dedicate public funding to higher education has lagged.

The Atlantic notes that outside forces — like the growing popularity of "small government" ideologies among certain voting demographics and the rising cost of healthcare — have produced a diminishing interest in public funding for even the finest public universities. Then the Great Recession struck in 2008, and the hit was particularly severe on schools that depended on public investment.

States tightened their coffers. And in some instances, universities passed the financial pinch along to their students, and they continue to do so. In truth, there is some debate about just how much the decline in public funding has impacted tuition rates. An article in the New York Times makes the opposite case, observing that public funding for higher ed leapt by a massive 390% between 1960 and 1980, and that more recent cuts reflect something more akin to a correction than an abandonment of principles.

Of course, today’s educational infrastructure is exponentially larger, more expensive, and more bloated. And in the absence of state funding, colleges and universities have shifted their strategies. Again, we can see a cascading impact on the higher education sector — a heightening importance of business priorities as a mere matter of survival. Higher education has grown into an increasingly competitive business sector, one in which effective marketing, top-flight professors, competitive amenities, and other features can be important differentiators.

Regardless of the conclusions reached in the New York Times article cited above, Business Insider says that during the 2015-2016 school year, public appropriations from government sources were 11% lower per student than they were a decade prior. Business Insider notes that "Roughly 80% of America’s students attend public colleges, so it’s not an exaggeration to say that the biggest determinate of the price they will pay for their education is the budgetary decisions made by state governments."

While there may be some disagreement on just how direct an impact these cuts have had on student tuition, it seems pretty obvious that they have coincided with a continued rise in tuition. This places the onus on you, the student, to find ways of cutting down your own costs. Check out our resources on scholarships and financial aid to navigate your way to a more affordable education.

 Why Online College is More Affordable

So now that we’ve dealt with some cold hard facts about the cost of a college education, you may be left with a feeling of futility. I mean, these are big, systemic problems that you can’t fix, right? If you have a secret plan for trimming administrative bloat, stimulating better public funding, and stamping out for-profit abuses, we’re all ears.

Otherwise, it’s entirely up to you to find ways of making your college education affordable. In other words, a college education can be crazy expensive, but your college education doesn’t have to be.

For many students, especially those with strong economic motives for earning a degree, online college is proving a valuable pathway. Last year, as part of our search for deserving scholarship applicants, we asked more than 1000 students what motivated them to attend online college. The answers we received were illuminating, especially regarding the ways that an online education can cut down on costs.

For instance, Katelyn, who is earning a social work degree from Huntington University, said "I choose to take an online degree program because I am my only financial supporter and I understand the value of a college education but also understood I could not do it without working full-time. Therefore, I became a full-time student and a full-time worker."

Katelyn didn’t simply use online college to balance the demands of her job. She used it as a way to graduate without accruing the crushing debt that follows so many students out of college. Wisely, Katelyn noted that she "wanted to stay as far away from debt as possible. I knew working hard would only help me stay away from $40,000 of debt. I am trying to keep my debt under $10,000 by graduation."

For other students, online college may open pathways to more cost-effective distance learning options. Bethany, a Brescia University Bachelor in Social Work notes that "There were no affordable accredited schools with my program near my location plus I worked two jobs."

With online college, Bethany says that "I have been able to learn how to use technology for class meetings and projects and I have been able to meet people from all over the country."

And Elizabeth, a Business Administration student at Charter Oak State College, acknowledges the improved value proposition of a college education without some of the traditional campus expenses. Elizabeth noted that "there are so many advantages of taking online courses that will definitely benefit me in achieving my degree."

Among those benefits, she highlighted the fact that "online courses are affordable" and that it allowed her to "save on commuting, especially where there is bad weather."

If you’re looking for smart ways to save — and avoid traveling in bad weather — we’d advise starting your search at The Best Online Colleges for 2019.

For more on paying for college, comparing costs, and finding the most affordable colleges both on campus and online, check out the following resources:

Take the next step towards your future with online learning.

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