Why is college so expensive?
It’s news to no one that the cost of attendance at U.S. colleges has risen dramatically over the past thirty years, leading more students to rely heavily on student loans and become burdened by debt.
In the video below, David Lin, an economics professor at American University, explains why tuition costs have increased so quickly and how financial aid and other government subsidies and the demand for a college degree have contributed to the rise.
According to Professor Lin, one of the reasons that college has become so expensive is that government subsidies (federal and state student loans and grants) have increased. While most students want to increase financial aid to make college more affordable, this, ironically, has the opposite effect. Though government subsidies have increased access to college and made it more possible for low-income students to attend, they have also contributed to rising tuition costs.
Because colleges have no problem filling seats, even with record-high tuitions, they felt no pressure to cut costs. Instead, colleges have spent more–fancy student centers, dining halls, athletic facilities, and many more administrative staff than ever before. These additions make college more expensive without increasing the value of a diploma.”
While the cost of college has grown, so has the value of a college degree. While unemployment has risen among high school graduates, it has actually decreased among college graduates. Government subsidies have also fueled the demand for a college degree by making college cheaper to “consume.” It’s basic supply and demand–and with such a high demand by students for a college degree, colleges have had no reason to try to reduce costs.
So what can be done to stop college costs from rising even more? Government subsidies only act as a Band-Aid and actually contribute to higher tuition. Instead, colleges need to address bloated spending habits and do their part to reduce costs.
As students become more weary of taking out student loans for degrees at expensive schools, colleges will, hopefully, be forced to reduce tuition in order to compete for the best students. While this won’t help the thousands of borrowers out there with high student debt, steps must be taken to reduce the burden for the next generation of college students to prevent more people from being trapped by their student loans.