Experts say reduced state funding and how colleges spend tuition dollars contribute to the high costs.
Tuition and fees at Columbia University in New York total more than $61,000 for the 2019-2020 academic year. While its tuition makes it the most expensive private university in the nation, according to U.S. News data, Columbia is just one of many institutions that may leave prospective students and their families baffled by the cost of a college education. But why is college so expensive in the first place?
While the sticker price is rarely what students actually pay after grants and scholarships, researchers at The New Center, a bipartisan think tank in Washington, D.C., set out to understand the root cause of the rising cost of tuition and the student debt crisis facing the U.S. in a report released in August.
It’s easy to see why there tends to be a reliance on student loans to pay for college: Tuition prices increased 36% from 2008 to 2018, while the real median income in the U.S. grew just over 2.1% in the same period, according to data from the Center on Budget and Policy Priorities. To afford college, many students take on debt, resulting in more than 1 million people defaulting on their student loans every year, with average monthly payments close to $400.
Zane Heflin, policy analyst at The New Center and author of the report titled “The New American Dream: Alleviating the Student Debt Crisis,” says the ramifications of the 2008 Great Recession are still hitting the higher education world, and students are paying the price.
“The two main drivers of the rising cost of tuition are reduced state funding and the incentive for tuition raises as an unrestricted revenue to benefit colleges,” meaning colleges can choose to spend tuition money however they wish, Heflin says. “States and local communities are spending less per student. Someone has to take on that cost, and unfortunately it’s been the student.”
His report outlines a few other reasons why college is so expensive, including a need for schools to devote more money and staff toward complying with regulations set by the U.S. Department of Education; high prices at for-profit colleges; and a competitive drive among some colleges to raise prices to create a perception of quality – a sort of marketing technique, Heflin says.
“These colleges are trying to raise tuition to appeal to a broader group of students by allowing that to take the place of actual quality,” Heflin says. “It’s one of those situations where there are a lot of perverse incentives on the part of the colleges to raise their sticker price.”
The cost issue has been tracked, too, on an international level by the Organization for Economic Cooperation and Development. The U.S. had an average tuition price of nearly $9,000 per year at public institutions in 2017-2018 – the second highest in the world after England. The differences reflect the different investments in postsecondary education and the various systems in practice globally, according to OECD’s “Education at a Glance 2019” report.
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