Why Is Higher Education So Expensive?

College tuition costs have gone up 945 percent since 1980. The increase in tuition places a heavy burden on young people and their families. What has made college tuition so expensive? Professor Daniel Lin  explains that tuition prices are rising so quickly because of supply and demand. As demand for college increases, universities can respond by increasing either enrollment or tuition costs. Since most universities are limited in the number of students they can enroll, they have largely responded to higher demand by increasing tuition.

Demand for a college education has increased partly because graduating college dramatically increases job prospects and partly because of government subsidies. Although many believe subsidies will make college more affordable, government subsidies actually contribute to rising costs. “When you subsidize something, it’s cheaper for people to consume. So people consume more of it and demand rises,” Professor Lin says. A rise in demand will mean a rise in costs.

Colleges have no trouble filling seats, even with rising costs, so they keep spending and increasing tuition. Improvements to campus facilities and the addition of more administrative staff make college tuition even more expensive without necessarily improving the quality of education students receive. We now know the root causes of rising tuition—promises of higher wages and increased subsidies. Professor Lin contends that this information should be used to seek solutions.

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