Why Are American Colleges So Ridiculously Expensive?

Today’s Issue

College is more expensive in America than in almost any other country in the world. In this issue, we discuss why.
One answer, from the journalist Amanda Ripley: “We’re the only country other than Luxembourg that spends more on nonteaching staff than on teaching staff at the college level.” (We’ll get to the Luxembourg question later.)
Amanda Ripley is the author of a story in the new Atlantic series, “The Great College Rip-Off.” We spoke with Ripley about what she learned from writing the piece.

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The Tuition Arms Race, Explained

By Caroline Kitchener and Karen Yuan

Why is the cost of a college education in America at an all-time high? We asked Masthead members what education issue they’d like to know more about, and they zeroed in on the question of cost. Here’s what our writers have to say.

A college education in the United States is uniquely expensive. Americans spend about $30,000 in tuition per student per year, more than double the average amount in other developed countries. (Luxembourg spends more per student, but the government covers the full cost of tuition.)
The reason for the hefty price tag isn’t the push for luxury campus facilities—like lazy rivers and infinity pools—as many have argued. It’s the rising cost of faculty and staff. “College,” Amanda Ripley writes, “is a service delivered mostly by workers with college degrees—whose salaries have risen more dramatically than those of low-skilled service workers over the past several decades.” Colleges encourage faculty to focus on publishing articles and books, and to build a name for themselves—which, in turn, drives up salary. That’s not new, but what has changed is the growing number of staff employed to run nonacademic divisions: alumni affairs, admissions, student life, and, of course, athletics.
Government subsidies for higher education are the highest they’ve ever been, but that hasn’t slowed tuition hikes. From 1973 to 2012, federal aid per student increased more than 500 percent. The government now spends approximately $80 billion per year on direct subsidies, such as Pell grants, tax credits, and tax breaks. But this uptick isn’t necessarily a good thing: Colleges can raise costs, safe in the knowledge that government aid is available. “The pursuit of education has turned into a vicious circle in which students need bigger loans to pay for higher costs, and colleges charge higher costs because students are getting bigger loans,” writes Ronan Keenan.
Some good news: Costs may level off soon. American colleges are nearly 400 times more expensive than they were 30 years ago. But in 2017, U.S. tuition costs rose more slowly than any other year on record. Students aren’t getting as much financial return out of college as they used to. College graduates today can expect a smaller income bump from a college degree than older grads. That’s probably one of the reasons fewer students are enrolling in four-year bachelor’s programs. These factors, writes Derek Thompson, are hitting for-profit colleges particularly hard: “Between the 2010 peak and 2015, enrollment at private for-profit colleges decreased by about 40 percent,” while enrollment in public colleges decreased by only 4 percent.
Some colleges are worth the price; others aren’t. The government could help students and parents tell the difference. At the average American college, almost half of students who take out loans to attend will not graduate within six years. Of those who do graduate, 37 percent will make less than $25,000 per year six years after graduation. “While some college presidents would contend that there are other ways to measure value,” Emily DeRuy writes, “it’s hard to argue that much good comes from sending millions of public dollars to schools that spit out students who aren’t earning a living wage and who can’t pay back their loans.” Here’s where Ripley says the government could help: By evaluating the “value” of each undergraduate institution, and making that information easily accessible to the public, the government could help students and parents make smarter decisions about college spending.
Even within their large budgets, colleges can fix skewed priorities by spending more on financial aid than on amenities or administrative salaries. That would involve changing their spending incentives, argues Josh Freedman. One of the reasons frivolous amenities are constantly in the news is that, by and large, they do make students want to attend the schools that have them. But instead of making the physical campus more appealing, colleges could focus on improving the virtual one. Similarly, the government could help colleges prioritize equity and access by decreasing federal aid to schools that enroll disproportionately fewer low-income students than rich students.

The Sky-High Cost of College

Amanda Ripley is a regular Atlantic contributor and a senior fellow at the Emerson Collective, which owns a majority stake in The Atlantic. She wrote about the rising cost of American college as part of The Atlantic’s recent package, “The Great College Rip-Off.” Ripley talked to Caroline Kitchener about her research. (Caroline’s questions are in bold.)

You attribute ballooning U.S. college costs to rising salaries for faculty and staff. But salaries for highly skilled workers have been rising around the world. Why has that rise in salary ratcheted up the cost of college in the U.S., but not in other countries?

Amanda Ripley: Exactly, that was my question. I think the difference is that we have more high-skilled laborers doing other things unrelated to teaching in our schools. We’re the only country other than Luxembourg that spends more on nonteaching staff than on teaching staff at the college level. Many people feel that’s wasteful, and yields “administrative bloat.” Certainly it’s also true that high-skilled labor is more expensive in the U.S. than in other countries.

This group of nonacademic staff is interesting. What exactly do these employees do?

Ripley: Each big college can be like its own little city. They’re investing in everything you would need for a city—all the infrastructure, all the people. There are benefits to that for the students. If a college feels like its own universe, it can be a much more exciting, satisfying, holistic experience. But it is expensive. For example, the number of legal staff, development officers, fund-raisers, and PR people—marketing, communications—all these kinds of things you probably won’t find in lots of universities in other countries. And certainly athletic staff. Some colleges are just obscene in this regard—while others, like community colleges, are not.

Many people think that loans are what make college so expensive. If students couldn’t get loans, the theory goes, they wouldn’t be able to pay for college, and colleges would have to adjust their pricing. What do you make of that idea?

Ripley: I think this is definitely part of the equation, especially with regard to for-profit colleges, which are voracious in extracting money from students, especially vulnerable students. But for most colleges in America, there isn’t convincing evidence that loans are what is driving up the price of college. Now, you might think: If all student loans instantly vanish tomorrow, it would put pressure on colleges. Yes, it would. But I don’t think the high costs would all come tumbling down.

Other countries have student loans. There are countries that have far more students getting loans than the U.S.—Norway, Australia, et cetera. But college in those countries is still far less expensive. In other countries, student loans are only repaid based on a student’s income, limiting the risk to the individual. Loans should also be more contingent on colleges improving the quality of their performance. The U.K. has a limit for tuition; if you want to go above it, you have to prove to the government that you’re providing something extra special with performance metrics. Every country has struggled with the rising cost of providing higher education to its people. But it’s often a question of who’s going to assume the risk. And in the U.S., it’s the individual.

What surprised you during the process of researching and writing this piece?

Ripley: I was surprised by how few researchers have looked at the cost of college from an international point of view. There’s a huge amount of research done on higher education in the U.S. and there’s some research on higher education in Europe and other countries, but nobody is really looking at where the money's going in the U.S. compared to other countries, which was shocking.

Why has this not been reported on more?

Ripley: In the U.S., we know we have some of the best universities in the world. And therefore, while we’re critical of the price of college, we are not often quick to compare ourselves to other places. It’s funny because we don’t do that in other industries as much. We have some of the best hospitals in the world, but we don’t therefore decide our health-care system is crushing it. We have some of the finest restaurants in the world, but we don’t therefore decide that Vietnam and France have nothing to teach us. Having a few of the best, when 99 percent of people don’t ever see those places, is cold comfort. Weird, right?

Read the full transcript of our conversation with Amanda Ripley here.

Today’s Wrap-Up

Today’s Question: How should Americans try to solve the issue of overpriced college tuition? What do you suggest as a solution? Tell us.
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