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What is the historical background as to why college is so expensive in the United States?

How did college get so expensive? College used to be nearly affordable, and other countries, especially in Europe, have affordable college. #college #money #unitedstates

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Thank you comment icon Hi Madeson, This is a really complicated question, which I will try to address from a strictly economic standpoint. Primarily, demand for the college experience and a degree has gone up significantly in the past 50 years, which of course results in a higher cost of tuition. Colleges also have many more amenities and services than they did at that time; all of the buildings and services are costly, and those dollars are passed on to students in the tuition they must pay. Eric Makela
Thank you comment icon Not only this, but federal regulations about higher education loans have changed over time. Federal Pell Grants were established in 1972 in an attempt to allow low-income families greater access to college. Over the years, the FAFSA and other federal regulations have opened the floodgates of subsidized college loans, which further shifted the demand for education outward. The result was a massive influx of students. Colleges, in an attempt to service all the students, invested fervently in new facilities. Greater supply, but ever-increasing demand is the tertiary reason why college is so expensive. There are many micro reasons why this might be the case, but I personally want to stay out of the sociological realm if possible. Eric Makela
Thank you comment icon In response to your question about Europe, I would say I know very little. I do know that universities there receive a MUCH greater percentage of their revenue from federal governments, and very little from their students, which is why the student "price tag" is touted as being so low. Eric Makela
Thank you comment icon Regardless of geography, the cost of most colleges are rising also in part because non-profit universities do not face hard budget constraints and are seldom forced to make cost-cutting moves like private companies would. Since there are no stakeholders except the staff and graduates of the university, there is little cost oversight. A university I know of bought a $1 million lot some years ago, and have done nothing with the property since, just left the abandoned buildings where they stand. Why? In addition, the value of their product is also difficult to determine; in addition to degrees, many colleges also produce non-pecuniary goods such as research and fun, which are inherently difficult to value. Eric Makela
Thank you comment icon I hope that helps a little bit. I am not an expert on the history of college cost and debt, just a labor economist interested in your question. There are lots of resources out there, and hopefully I gave you some good starting points! Eric Makela
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James Constantine’s Answer

Dear Madeson,

Understanding the Evolution of College Costs in the U.S.

The steep price of higher education in America is the result of a mix of historical, economic, and policy elements. By exploring the evolution of these factors, we can better grasp why college tuition has skyrocketed in the U.S.

1. Reduction in Government Funding: In the past, state governments would generously fund public universities, making education more accessible for students. However, over time, there have been substantial reductions in government support for higher education. This has compelled colleges to depend more on tuition fees to meet their operational costs, thereby escalating the financial burden on students.

2. Growth in Administrative Roles: Another element fueling the surge in college costs is the expansion of administrative positions within universities. The rise in non-academic staff and administrative roles has inflated the overall expenses of institutions, which are then transferred to students via increased tuition fees.

3. Competition for Amenities: U.S. colleges have been vying to lure students by providing cutting-edge facilities and amenities. While these upgrades enhance the student experience, they also carry a significant cost that adds to the overall expense of college attendance.

4. The Impact of Student Loans: The prevalence of student loans has also influenced the rise in college costs. With more students depending on loans to fund their education, colleges have less motivation to maintain low tuition fees, as students can secure loans to manage the costs.

5. The Influence of Market Forces: The American higher education system functions within a market-based economy where colleges compete for students and rankings. This rivalry can prompt institutions to invest in costly resources and facilities to attract students, thus escalating the cost of attendance.

6. Absence of Price Transparency: Unlike some European countries where tuition fees are regulated or even free, the absence of clear pricing in the U.S. enables colleges to determine their own tuition rates without explicit justification, adding to the overall cost of higher education.

In summary, the high cost of college in the U.S. compared to other countries, like those in Europe, can be attributed to a blend of factors: diminished government funding, administrative expansion, amenity competition, the student loan system, market forces, and a lack of price transparency.

Top 3 Credible Sources Used:

The College Board: This non-profit organization offers valuable data and insights into the trends in higher education costs and financial aid.

U.S. Department of Education: This department provides official statistics and reports on federal education funding and policies that impact college affordability.

National Center for Education Statistics (NCES): As a primary federal entity for collecting and analyzing education-related data in the U.S. and abroad, NCES provides authoritative information on college expenses and trends.

These sources were invaluable in offering accurate and trustworthy information on the evolution of college expenses in the U.S.

May God Bless You!
James Constantine Frangos.
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Noah’s Answer

This is a great question and a great issue. This is a large subject of debate, and we see this come up in politics quite a bit. A few initial thoughts I have are as follows:

1. Everyone wants to go to college - an increase in demand yields higher prices.
2. State funding issues - this is why college is increasing so much. State governments only have so much money in their budgets to support higher education. States end up giving less to their citizens, and we end up paying more. If you think about it, the majority of college students attend public universities, so the price of college in-state is largely made by state governments
3. School budgets - so much goes into operating a university. There are many services an institution provides (counseling, healthcare, a social life, academic success) that it required large tuition fees
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Paul’s Answer

Keep in mind that I am not a historian so this is just my opinion but I would say that the cost of attending college has always outpaced the cost of living and inflation. Over the years the gap has become wider due to tuition increases as colleges compete with each other to attract better students. By better, I'm referring to students with higher GPAs and SAT scores. A few examples:


  1. Colleges have been investing more money in their facilities including bigger and better dorms and larger classrooms. In addition, they have been putting money into amenities to make the campus more appealing to students such as landscaping, fitness centers, gyms, etc.
  2. Colleges have also been increasing the salaries of tenured professors and other staff members for competitive reasons as well. This cost gets passed onto the students via higher tuition.
  3. Colleges know that their rankings in U.S. News as well as other publications weigh heavily on a student's decision on whether or not to attend their school so the colleges will do what is necessary to boost their rankings. This includes spending more money which again gets passed onto the students.
  4. State colleges have seen their funding from state governments cut as the legislatures try to balance the budgets. This shortfall gets passed onto the students.

Again these are just my opinions so you may want to do some research to see if you can find data to support my arguments.
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