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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

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

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

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

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

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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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.