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Why Does College Cost So Much?

April 23, 2018

Five reasons why college is so expensive.


When you first start researching colleges, the cost of attendance can seem staggering. There’s the tuition bill itself, then all the ancillary costs: room and board, student activity fees, textbooks, lab fees, and travel to and from campus, to name just a few. Even if you’re awarded financial aid, got a tuition discount, or received a reduced net price, the cost of college can still be overwhelming.


These changes haven’t happened overnight. In fact, the cost of college has been steadily going up for nearly 30 years. Starting in the 1990s, according to CNBC, the cost to get a college degree started outpacing the rate of inflation. This trend is partially responsible for families taking on more student loans to pay for college, leading to our current student debt crisis.


So, why does college cost so much? It’s not just one reason, but a confluence of factors that have made college so expensive. Read on: In no particular order, here are five major contributors to the rising cost of college.


  1. The Pursuit of High College Rankings

As college has become more expensive, students and families want peace of mind that their investment is going to pay off. The perception of a good school can go a long way to make parents feel their money is well spent, so a college’s reputation becomes increasingly important--and college rankings (such as U.S. News and World Report, The Princeton Review, etc.) wield incredible power over the perception of quality and institutional clout, for better or worse. To boost (or maintain) their rankings, colleges invest in making sure the gatekeepers and evaluators at U.S. News and their ilk continue (or begin) to view the school favorably. These investments lead to our next two factors:


  1. Excessive Spending on Campus Facilities and Amenities

A good college ranking is, in part, measured on the modernity of its campus and amenities, so recent college investments address these criteria. Colleges spend money (a lot of money) on sleek dining halls, state-of-the-art athletic facilities, high-end dormitories, and even recreational amenities such as lazy rivers and water parks, both to be favorably ranked and to attract new students. And when money is being funnelled into ranking and recruitment initiatives, it means less money to put toward affordability and/or access strategies. The cost of that gourmet meal plan or new water polo facility gets passed on to students and families in the form of higher fees.


  1. Increased Payroll for Faculty and Staff

As competition increases for best college rankings, colleges have behaved more like businesses, especially when making hires to better market the school and its offerings. Many marketing and admissions employees, recruited from corporate sectors, require salaries similar to what they earned in their previous field. As such, colleges often find themselves with a swelled, expensive staff--and enrolled students help offset those additional HR costs via their attendance bill.


It’s not just new staff that’s earning more: Public college administrators’ median salaries rose 39 percent from 2000 to 2010, according to the American Association of University Professors. Private colleges administrators saw an even greater bump, at 97 percent. (Presidential salaries rose a whopping 171 percent!) Full-time faculty salaries have grown exponentially, especially those for prominent faculty and researchers, both in recruitment and to retain their affiliation with a given school.


Perhaps no staff is more expensive, however, than coaches, especially at schools with prominent football and basketball teams. According to ESPN, the highest-paid public employees in 39 states were either university football or basketball coaches (and of the remaining states, seven of the highest-paid public employees worked in other types of higher education roles). It’s not just head coaches, either--high-paid public university assistant coaches often earned more than $500,000 in 2016. While taxpayers foot some of the bill for public universities, of course, these inflated salaries certainly add to the increasing costs of college. And speaking of taxpayers…


  1. Slashed Budgets and Subsidies at the State Level

After the Great Recession of 2008, many states revisited their higher education funding allocations and cut investments accordingly, putting more of a burden on individual schools to cover their operating expenses, financial aid, and similar expenditures. The result? Tuition increases and spending cuts at schools around the country.


When colleges become less affordable, their student body inevitably shrinks--at exactly the time when tuition is needed most to keep a school afloat. So students who are able to pay (or are willing to take out more student loans to get their degree) will be accountable to make up the difference, via the cost of tuition and fees, for both the reduced subsidies and fewer people paying tuition.


  1. Shrinking Endowments at Private Colleges

As income inequality grows nationwide, the same economic factors play out at U.S. private colleges. Colleges with modest endowments may become more tuition dependent, while schools with healthy endowments and generous alumni donors will thrive. (Note that the new tax law may penalize some of the highest-endowed schools.) However, Moody’s reports that wealthy private colleges will continue to pull ahead of those schools that don’t have a wide pool of resources to draw from--and that, similar to public schools, those private colleges with limited endowments will become more expensive in order to make up the difference.


So, Can You Find an Affordable College?


We’ve gone over just a few of the factors contributing to the rising cost of college. Does that mean you won’t be able to find an affordable college? Not at all! It does mean, however, that you have to invest your time to research a college’s net price and find schools that want students like you (and will offer grants and scholarships to attract and keep you). It also may mean considering schools that are smaller or don’t have that instant name-brand recognition. But by putting in that initial effort and approaching the college decision like a consumer, you can buck the current expensive higher education trends and find a college that suits you and your finances.