Why Are College Costs So High?

If you have been touring college campuses you have likely experienced “sticker shock” when you hear the rates for tuition and fees, room and board during the information sessions. Even the price of textbooks will make you wince. If you went to college yourself, you’re bound to wonder why the college costs have gone up faster than the costs of a house, a car, even the price of gas.

It’s very easy to place blame for high college costs on the salaries of the presidents of the schools, the faculty and the football coach. But even if your school paid presidents little more than full-time professors, which many were before they moved into administration, and paid football coaches the same as academics with the same number of years of experience, that would not get around to cutting the more serious college costs.

College cost drivers include:

+ Retirement benefits. This is becoming a particularly serious problem at public universities, since they have more former faculty members who opted for retirement than the private schools.  While they often participate in TIAA-CREF,  a privately managed retirement plan, former faculty members are in public employee retirement programs. These former academics retired with higher salaries than, for example, policemen or firemen, so the costs of maintaining their retirement are extremely expensive.

+ Retrofitting and replacing buildings. Older schools have old buildings that were not designed with 21st century technology in mind; the structure has to be adapted to it. Or a building that no longer fits its original use has to be re-purposed for another use. For example, last year Rutgers closed an older dorm that had been popular for suite-style living as well as its proximity to classrooms. That building was not up to modern building codes as a residence hall, so it has to be converted to office space or another non-residential use. Two college costs are incurred. The first is to replace the  beds lost with new beds in another residence hall. The second is for the renovations to the original building.

+ Technology. Students enter college with more mastery of computer technology that they expect to bring into the classroom as well as their social lives. This means, for example, WiFi-enabled classrooms, labs and residence halls, as well as desires for more computing power and speed. It also means higher training costs; the technology staff has to learn how to manage new networks, equipment and software. Offices that rarely needed computing power in the past, including the registrar’s office and career services, do more and more online transactions with students. And technology does not always reduce jobs. A good system might replace a clerical person with few skills, but there may still be a need for a technology professional to help run system operations.  Colleges and universities face many of the same technology issues as the private sector.

+ Specialists have replaced faculty in non-academic jobs. In the earlier days of colleges, faculty served as headmasters and dealt with issues in academic affairs, student health, and career development (this used to be called career placement). While professionals who perform those services today may have masters degrees, and sometimes doctorates, they are not faculty members. Full-time faculty are actually freer to teach and do research because these specialists do the other work. But the addition of these specialists has raised the size of college payrolls. While someone might call this “bloated bureaucracy,” it also means that students receive full-time attention from these specialists that may, for example, help them choose a major, graduate on time or find a job. We’ve heard no good suggestions for replacing these services, nor have we heard calls for their elimination from parents or students.

+ Parking. More people have cars, and cars need parking. While college administrators have done a great deal to discourage students from driving, they cannot fight the limitations placed upon their school by the geography of their campus.  This means schools acquire more land for parking and try to earn an income from it, if they can.

+ Health care. Colleges and universities employ high-salaried people who have had long careers. Academics, in particular, receive privileges and respect based on seniority and longevity. They cannot be terminated as easily as upper middle managers of a corporation. The higher the salary, the higher the age is likely to be, and the greater the demand for medical care.

+ “Follow the leader” pricing. Most private schools follow a high-tuition model, which means that some students get discounts and others do not. But the tuition and fees are not always set by the true cost of educating everyone. They are also set by the marketplace. For example, imagine two liberal arts colleges. One is considered highly selective and extremely expensive. Its science labs are state-of-the-art; they have the same equipment as flagship state schools and its recreational facilities are quite like a country club.The school that has been popular with bright well-to-do students for generations. The school charges $50,000 in tuition and fees; price symbolizes prestige. They could fill a class with people who can pay, but social responsibility dictates they not.  The second school, while less selective, is still very good. It pursues the students the first school cannot take with vigor, especially those who can pay. And if it can get them, why not charge the same? Their parents were willing to pay for the first school, why would they be less willing to pay the same for another?

+ Loss of subsidies. State schools are subsidized by state governments, who are entrusted by the state’s taxpayers. It is too popular to cut subsidies over cuts to more broadly used programs such as K-12 education, public safety or Medicaid. If the taxpayers pay less to support higher education a greater burden falls upon the colleges, students and their families to make up the difference. Publicly supported colleges and universities are only willing to cut so much. Tuition increases are the greater reality.

So, there are good reasons, and sometimes bad ones, as to why college costs are so high. It is your responsibility to keep them your college costs as low as possible, though sometimes your chosen school will be willing to help.

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