Tuition Costs

Why College Costs So Much

 

When I went to a state university law school from 1972 to 75, the in-state tuition was free.  There was a $200 per semester activity fee.  My brother in law got a PhD from UCLA at about the same time.  His in-state tuition: free.  I recently visited my law school.  Same ivy covered building, same library with free law books, law reviews, and periodicals provided by the publishers to teach budding lawyers how to use their books.  Same professor-types teaching about 6 to 9 hours per week, spending the rest of their time working at their  house, chatting with kids and colleagues, drinking coffee and pondering questions of the universe. (I’ve taught, so don’t tell me I’m wrong)  I don’t know the tuition at my law school now, but my kids at a state university pay about 5k per semester per person. Why?  I am sure the buildings are already paid for; probably decades ago.  Or go visit Harvard, Yale, Cambridge or Oxford.  These buildings were built centuries ago.  The professors stand in front of the same blackboards used by Nobel Laureates to pass along information.  Do professors make so much more money that we need to raise tuition from zero to $5,000 a semester?  Hardly.  I used to teach a course 3 hours a week in a medium sized lecture hall.  For ease, I will say there were one hundred students.  Each student was paying $900 for the course.  So, for that semester, the University made $90,000.  I was paid a tiny fraction of that for teaching that course.  By the way, there were some courses that I would have taught for free because they were so much fun.  So, back to my original question, why has tuition gone up so much?

The simple economic answer to that question is because people will pay that.  The price for any good or service is the amount that will maximize gross revenue to the seller.  It has nothing to do with the cost of the good or service, or the value of the good or service.  If I create a painting, and trust me, I cannot even draw a circle without help, and if a million people will buy one of my paintings for 1 dollar, I will make and sell one million paintings; however, if I only make one painting, and one person will pay me 2 million dollars for it (as long as there is only one) I will make and sell only one painting.  I will maximize gross revenue.  Back to tuition, if 20,000 kids will pay 200 per semester for college—because college is valuable to them—then,  if the government gives each kid an additional $5,000 per semester for college, tuition will rise to $5200 for semester.  If the government gives loans of $15,000 per year for their living expenses, kids will borrow, and they will end up with $60k in debt. Unless they have a bachelor’s degree in engineering, math, physics, chemistry, biology, accounting, or nursing, they will not be able to pay it back without significant hardship.  All of the college costs have gone up because the government has thrown money at it for decades.  If you throw money at a product, the price will go up.  So, the reason costs have gone up is because WE “INVEST” IN EDUCATION.  What does the university do with the money?  It builds buildings:  five story gyms, spas, aquatic centers, and resort like facilities.  It advertises, because the more students they get, the more money they make.  It tries to drive students to their door by building an environment kids want.  And it finds more sneaky ways to keep kids there for 5 years or six years instead of four.

Without the Federal largesse, college costs should have decreased.  Technology has made it much easier to teach more kids cheaper, better, and faster.  The internet has revolutionized university teaching.  I was a part of the “migration” from traditional classes to online.  Really, record 30 hours of lectures, make them available on line, have tests on line, which are graded automatically, and have some online interaction with the professor.  That’s it.  If there was competition for these courses, and no federal money to pump up prices, the cost per student would be ridiculously low.  Not everything could be taught this way, but quite a few courses could be.  Even elite colleges are getting into this game, and on line courses are getting better and better.  Make education cheaper, stop throwing money at it.




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