The problem of college affordability is not a new preoccupation in America. In fact, scholars have been tracing this growing issue since the late 1990s. Today the major components of the problem remain the same, concerns about: the growing cost of education, student indebtedness and the financialization of higher education.
The Growing Cost of Education:
It is impossible to deny that the cost of education has increased over the years. According to the US Department of Education’s National Center for Education Statistics, the average cost of attending a 4-year, either public or private, institution doubled between 1990 and 2010. And according to the research, the cost also doubled for the same data set between 1980 and 1990. The difference between the 1990s and now, however, is context. Over the last decade our economy has suffered through a national terror attack, two wars, numerous natural disasters, labor outsourcing via globalization, a housing market collapse, a recession, and we finally became cognizant of corporate deregulation and the extent to which corporations were extracting economic rents from our economy. These events, especially the latter ones, have directly contributed to the ever-growing income divide in our nation, which compounds the college affordably question, including the lower and middle class’ ability to pay.
Institutions claim that the cost of education is rising because state and federal governments have slashed spending on higher education and as a result, that cost has been transferred to students. While this is true in most places across America, there are other factors that subscribe to rising costs. Athletic programs, extravagant recreational facilities, and specialized food services have all contributed to growing costs. Moreover, basic economic theory tells us that colleges have an incentive to limit access to their universities by keeping costs high. When a product, like higher education, is costly, demand is higher than universities that are not as expensive. In this way, universities can use an economic factor, like cost, to increase their selectivity.
Additionally, non-classroom costs, like administrative overhead and payrolls, have ballooned, adding another line item to student’s college bills. Professor salaries have not increased with administrative salaries and higher college costs, which makes us question a university’s intent and, what appears to be, unbalanced fiscal allocations.
From a policy standpoint, Congress needs to take steps to ensure that colleges are held accountable for their soaring costs. The value-add of an expensive college should be palpable immediately after a student graduates from the institution in the form of transferable skills, job prospects, and career guidance. But, instead, universities are spending on ostentatious dining and athletic facilities for the student’s in-residence use, a venture that has marginal impact on a student’s return on investment post-graduation. Policymakers can financially incentivize universities to tie their costs to their post-graduates’ success levels. This will 1) hold colleges accountable for their costs and 2) improve college effectiveness with emphasis on post-graduate opportunities.
The key to understanding the growing cost of education is internalizing that higher education is a business that provides a specific, and in most cases, covenanted product. Like all consumer products the government and the citizenry should hold educational enterprises accountable for the effectiveness of their product.