College nowadays costs about 30,000 dollars and the average student in the U.S. will be in 28,000 dollar debt. Colleges in the 1950s, 60s and 70s were cheap. Even private schools costs weren’t that high. My great uncle attended UChicago at 100 dollars a semester. What happened to the cost of college? Why does it cost so much???
There are mountains of data about why college costs more. Compared to the 1970’s it is about 200% more in real terms. Here are some of the reasons:
- No cap on demand - federal loans increased the ability to pay so colleges have no incentive to control costs
- Lower state subsidies - States built prisons and paid for social services instead of spending on education
- Financial aid - High prices paid by some subsidize low prices for others and increase the sticker price.
- Excessive regulation and administration - Federal regulation has increased compliance costs and led to a higher percentage of non-instructional staff.
- Higher labor costs. Labor is 70-80% of a college's budget. Higher salaries and medical inflation both contribute.
- Student demand for luxury items. - Improvement in accommodations, food, support services, etc all cost more.
- Higher marketing costs - In a quest to improve their rankings and perceived value, colleges spend a lot more to get you to apply. 8 Little application of labor saving technology. - This is just starting to become common. Tuition inflation varies a lot, and tends to be less in the conservative Midwest and more on the coasts.
Military service and the GI bill were much more commonly used back in the day when loans were not common.
I’m sure all the above is accurate, but I recall when I attended a private university in the early seventies, my father was appalled at the 5K/yr. tuition, room and board. In the context of those years, it was a huge amount, not “affordable” to most. I also remember that he was absolutely convinced that in a few more years, college costs would get so high that no one could afford them and the federal government would have to step in to subsidize the cost. Still waiting on that!
@MommaJ, the Federal government is subsidizing (through student loans). Not as much as other countries, but you’ll see income-based repayment with loan forgiveness become more common.
@Chuol10 My parents bought a 4 bedroom house in 1969 in a nice suburb for $15,000.
@PurpleTitan The government is currently making a fortune from student loan interest payments. Interest for my daughter’s student loan (not dischargeable in bankruptcy) is higher than my mortgage interest and three times the interest rate on our car loan.
@KKmama, high default rate as well, though. Your D is paying for all the deadbeats.
I agree with all the factors listed in post#1.
But also add: vanity pricing
How to Raise a University’s Profile: Pricing and Packaging
I think there’s a perception now that if a private school doesn’t charge a high sticker price, then you’re getting Walmart goods.