Why Is College So Expensive?

There’s no denying the fact that as each year passes the cost of taking college classes keeps going up and up. The cost of earning a college degree is increasing at a pace that is skyrocketing past all other economic activities. It’s increasing faster than the cost of medical care, housing, and just about everything else.

To give you and idea of just how crazy things currently are in the world of higher education, William “Bill” Bennett, former Secretary of Education under Ronald Reagan, recently came out with a new book titled “Is College Worth It?” In Bennett’s book he states that the cost of education has increased at a rate of about 1,100 percent since 1978 (even when adjusted for inflation).

Crazy, huh?

With many students now taking out six figures in student loans just to earn a bachelor’s degree, many students are now wondering – with good reason – whether college degrees are even worth pursuing any more. Does it really make sense to graduate owing six figures in debt in a stagnant job market?

What on Earth Happened?

There was a time – not too far in the distant past – when a person could work a part-time job, pay his way through school as he went, and graduate debt-free. What happened to those days?

You don’t have to have an advanced degree in economics to understand why a higher education bubble developed since the reason is relatively straightforward. The rapid increase in the cost of higher education is a direct result of government interference in the higher education market. 

In previous decades market forces kept tuition relatively low. If a person wanted to go to college but couldn’t afford it, that person simply didn’t go. It was that lack of money (and demand) that kept prices in check. Those in government thought this was a terrible thing and sought to remedy the situation with government grants and easy access to student loans.

And then almost overnight nearly everyone could “afford” to go. And not only that, but everyone was strongly encouraged to earn a college degree, too. It was this sudden injection of “easy money” and high demand for the product (a college education) that caused prices to spike.  

The reason colleges and universities raised their prices isn’t hard to understand. Since everyone could suddenly “afford” to go to college, the schools believed they could raise tuition prices to bring in more revenue. Over the years, every single time the grant amount has been increased, schools have responded by raising their tuition prices. And it has been this way for years.