Over the years, the price of college tuition and room & board have increased significantly.
Many Americans who don’t have a college savings fund, such as a 529 plan, stored away are left with no other choice than to take out student loans. This has led to student debt in the United States totaling more than $1.5 trillion.
People all over the world are questioning why college is so expensive in the United States. Today, we are going to reveal the top three reasons why college prices have shot up over the last few decades.
Let’s get started.
1. Colleges Have Plenty of Power
It may not be nice to hear, but colleges have a lot of power when it comes to setting steep price tags.
Universities have no restrictions on what they can spend their earnings on, so technically, nothing is stopping them from setting the bar how they please.
It makes it even easier for colleges to raise tuition and other fees when a college education is viewed as a necessity in today’s job market. Young students feel pressured to go to college to earn a degree if they want to stand out among the competition and excel in their career of choice.
All in all, it’s a simple case of supply and demand. Colleges can continue to increase prices as they see fit as long as there’s a high demand of students who want to attend.
2. Higher Price = Better Value
Perception is a tricky thing. Do you think people would take you more seriously with a $5 rubber watch or a brand new, shiny $3,000 Rolex?
In our consumerist society, people believe a higher price means something is more valuable. Colleges want students to think of their school as somewhere with a fantastic education as well as a great social environment. So, they spend money on great professors, fancy dormitories, and new sports stadiums. Not only do colleges want to look the part, but they also need to have the price tag to match.
Setting high tuition prices actually makes people perceive the school in a different light. Students want to go there because of the perception that a more expensive college will provide an incredible value.
If your child is looking at a pricey university and you can’t afford it, try checking out the public college down the street that probably has similar majors for a much lower cost.
3. Rising Staff Wages
Another reason why college is so expensive is due to an increase in staff wages. It makes sense. After all, colleges recruit world-class professors and researchers, marketing and admissions employees, and star coaches to draw in students from all over the country.
In addition to this, colleges provide all kinds of student support from campus security, career services to psychologists. Hiring more staff costs more money, especially when colleges seek faculty members who are the best in their fields.
Of course, there are ways to lower tuition costs, such as increasing class sizes, hiring part-time professors, or providing fewer books in college libraries. However, all of these options don’t sit well with students or parents.
Now that you know why college is so expensive, you’ll be able to help your child choose a university that exceeds their expectations and fits within your budget. We also provide resources to help you learn the best ways to pay for college tuition, and remember, it's never to early to start a college fund for your child.