Why is College so Expensive?

By Beth Dumbauld

College has always been viewed as a major life expense. Yet a college degree has also always been seen as a ticket to professional success, financial security, and a key to learning how to learn throughout your life. Throughout the years, paying for college, though requiring sacrifices for many, was doable -- and considered a wise investment with a high return. Yet somehow, somewhere along the college pathway to prosperity, there came a shift in that investment-to-value ratio. In other words, college changed from being a smart investment for getting ahead to becoming a very expensive necessity needed just to get by.

And here’s why:

College has become more expensive relative to current income. 

It’s not your imagination: when it comes to college, the “good old days” really were the good old days. Today, the cost of college is rising at such a rapid rate relative to income, 130% over last 20 years, that college costs comprise a far more significant financial burden than they did on students only 20 years earlier. Consider this: when adjusted for inflation, Americans in the middle class actually earn a few hundred dollars less than they did 20 years ago.1

You need a college degree just to be eligible for an entry-level job

A college degree has become the bare minimum educational credential for many careers that, not long ago, didn’t require any college education at all, let alone a bachelor’s degree.

It’s too easy to over extend yourself financially with student loans

Over-financing your college education can lead to lifelong debt issues. According to the most recent data looking at 2011 college graduates, the average student leaves school with $26,600 in student debt.2 

Where You Go to College Makes a Difference in How Much You Pay for College. 

Where you choose to enroll in college and ultimately plan on earning your degree makes a huge difference in your overall cost of college. Common sense says that more expensive colleges (generally private and for-profit colleges and universities) with higher published tuition rates should be more expensive to attend than less expensive colleges (generally state colleges and universities) with less expensive published tuition rates. A pretty simple concept – yet one that’s not always accurate.

While it’s true that, on average, state colleges and universities cost considerably less (published price), what you end up paying at a private college or university (net price) may be considerably less relative to the published charges for full-time enrollment at a public college or university. The difference comes down to a school’s ability to offer financial aid packages that can meet or exceed the difference in tuition prices.

The average published college tuition and fees rates for undergraduates for 2012-2013 is as follows3:

  • Public 2-Year (In-State): $3,131
  • Public 4-Year (In-State): $8,655
  • Public 4-Year (Out-of-State): $21,706
  • Private Nonprofit 4-Year: $29,056
  • For-Profit: $15,172

Expensive? Yes. End of the college tuition story? No.

The Cost of College Continues to Rise Each Year – No Matter What Kind of College or University (Public or Private) You Choose to Attend.

In spite of the fact that some private colleges and universities may be able to offer some students a lower net cost of going to college because of significant financial aid packages, the majority of students receive their degree from a public institution. In fact, for 2010, the breakdown among degree-granting institutions was as follows4

Of the 18 million undergraduate students (2010):

  • 76% attended a public institution,
  • 15% attended a private nonprofit institution, and
  • 10% attended a private for-profit institution 

It’s also important to keep in mind that college tuition fees are rising at both the public and private levels. Comparing the published tuition and fees between the 2011-2012 academic year and the 2012-2013 academic year, college costs have risen 4.8% for public 4-year colleges and universities and 4.2% for private ones.5

1CNN Money, Surging College Costs Price Out Middle Class, 6/6/2011, p.1

2The Institute for College Access & Success, The Project on Student Debt, 10/18/12, p.1.

3College Board, Trends in Higher Education, 2012, p.1

4National Center for Education Statistics, The Condition of Education, Section 3, 2011.

5College Board, Trends in Higher Education: Average Published Undergraduate Charges by Sector, 2012-2013, p.1.

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