Why is college getting more expensive?

Since 1980, the cost of college in the United States has more than tripled. Around 70 percent of US graduates will graduate with some amount of debt. Moreover, the average amount of debt is $28,000. The cost of education in America has increased substantially, and student loan debt is becoming more and more of a burden.

What are colleges spending all that extra money on?

Since 2008 colleges have spent less money per student, but students have been spending more money per student. This is because of the financial crisis in 2008. After the crisis, the college budgets shrank, but the students had to pay more. So, what do colleges spend their money on?

The biggest category of spending is on academic instruction. College professors are expensive, and every college wants to have the highly qualified teachers. They take a lot of money from the college budget. The average amount a college professor makes in a year is around 150,000 dollars. However, some teachers even make an average of a half a million dollars per year.

During the last ten or fifteen years in which the cost of college doubled, the cost of instruction kept pace with inflation. The way schools do that now is by hiring on as many tenure-track professors and having a ton of part-time and grad students and adjunct professors who do not get paid very well. This means the cost of instruction is not where this big increase came from.

The costs that are increased most are in many categories, different institutions track differently and are difficult to separate from each other. But there has been some excellent and careful research done on this topic, so here are the increases in a few categories.

Operations and grounds-keeping, room and board, general administration, academic support, and, the thing that has increased more than any other group of four-year bachelor’s degree, student services. Sales are what’s driving this trend. Colleges are acting more like businesses and treating students more like customers. Schools compete with each other and in the world where the cost is high anyway, it starts to be a little unclear when students deciding between $310 payments for ten years and $340 payments. It’s only $30 a month, and if one school has nice dorms, a well-supported tutoring program, good athletic fields, even a celebrity-level professor, then both the parents who are probably paying a big chunk of the bill and the prospective students are likely to choose the more expensive option.

While some of the expensive options are worthwhile, others don’t have much use beyond looking kind of cool on a student weekend. Building and running a 30,000 person institution that has facilities that outpace some clubs is expensive. Over the last ten years, non-academic employees have been hired 50% faster than academic employees at colleges and universities, and the top level administrators who are responsible for increasing the enrollment of students and the revenue of the college. Their pay raises have more than doubled compared to academic employees.

The average school now has about one non-academic employee for every ten students, some private schools even have a ratio of one to three. The thing to note here is this works because even though prices are high, college is still a good deal, college is worth it. Money spent on a Bachelor’s, Associate’s, or professional degree gives a higher return than the stock market. Even dropping out of college after a year and a half has a higher return than the stock market, though not as high as graduating. So in a way, colleges are working their way up to costing so much as the value they provide.

We can all agree college should not be about maximizing revenue. The question here isn’t really whether college is a good deal, the question should be can college be a better deal. This society tends to make decisions that can benefit them, at least in the short term. However, it is worth asking if treating America’s students like customers is, in the end, a disservice to everyone.

Colleges should stop selling students an experience. They should be providing them with as much education as possible. While it is important colleges remain sound monetary investments, it is more important students going through the higher educational systems know more about the world, themselves, and so on.


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