Why College Education is So Expensive

The College Board recently announced that the average tuition increases outstripped inflation “only” by 50 percent this year, which is actually down from the even more ridiculous excesses seen earlier in the decade. For 2006, the average cost of attending college increased by 6.3 percent at state institutions and 5.9 percent at private colleges and universities. The overall rate of inflation last year was 3.82 percent. So that’s the good news, sort of, but why is the cost of attending college going up so much faster than the rate of inflation?

One opinion is that the higher education lobby and sympathetic politicians regard rapidly rising tuition costs as normal and that the cure is to provide cash strapped students with more and more student loans and other federal financial aid. But isn’t that kind of like lending a broke gambling addict a roll of $20 bills as a way of helping him through his financial difficulties? You have to know that money is going to make his problem worse, not better, because he’ll gamble away your money too. Increasing the availability of financial aid to students has the effect of raising the cost of tuition by insulating colleges and universities from any need to compete on the basis of price.
At some point, parents and students are going to rebel and enrollment will decline at schools which are unable or unwilling to bring their own spending under control and return to offering a quality product at a reasonable price. The answer, perhaps, may come from the increased acceptance of on-line degrees from employers. As more students discover that they need not attend the brand name traditional schools and instead can pick up many and sometimes even most of their credits at lesser known two-year community and junior colleges and some of the on-line schools, the traditional four-year schools will come under pricing pressure and will either adapt or perish.