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Why Is College So Expensive? The 5 Biggest Reasons College Costs Are Rising

If you’re wondering, “Why is college so expensive?” you aren’t alone. College costs have increased rapidly. Here are reasons why as well as ways to lower costs.

College tuition costs have increased rapidly, far exceeding the rate of inflation. In fact, according to College Board's report “Trends in College Pricing and Student Aid 2020,” average tuition and fees at four-year public schools increased from $3,800 in 1990-91 to $10,560 in 2020-21. At private schools during the same period, average tuition and fees increased from $18,560 to $37,650. 

This increase in prices has left many people wondering, “Why is college so expensive?” Unfortunately, there are a few potential answers to the question of why college costs so much, and none of them are easy fixes.

Here's why the price tag of earning a degree has gotten so high. 

Why is college so expensive?

There's no one right answer to the question of why colleges are so expensive, but here are five big reasons tuition and fees have increased so much over the past few decades. 

1. Colleges spend a lot of money on marketing

There are some elite schools that don't need to do much to attract students. However, there are many more schools that must engage in marketing efforts in order to entice enough candidates to apply. This is especially true of for-profit schools. 

College recruiting has become a $10 billion industry, and some estimates suggest that the costs of recruiting could grow to as much as $100 billion over time. When schools have to spend a lot of money on marketing, the cost gets passed on to students in the form of higher tuition. 

2. Colleges have added lots of amenities

A quick look at the features many colleges now offer helps provide an easy answer to the question of why college has become so expensive. 

In a bid to attract students, many colleges have invested a lot of money in trying to provide a great living experience. Schools offer state-of-the-art gyms, lazy rivers and a host of other amenities that one might find at a luxury resort.

Of course, adding all of these features comes at a price, and schools end up raising tuition costs in order to fund capital improvements.  

3. Demand for a college degree is increasing

In today's world, many people believe you need a college degree to get ahead — and a growing number of jobs require one, so this belief is not unfounded.

The problem is, as demand for a degree increases, colleges have been able to raise prices. People are willing to pay more to get a degree — even if it means they have to borrow — so colleges increase the cost of attendance accordingly. 

4. There are more administrative positions

According to the Department of Education, there was a 60% increase in the number of administrative positions on college campuses between 1993 and 2009. Adding administrative positions comes at a cost, as these professionals need to get paid a salary and are typically provided with benefits.

These added positions increase the school's overhead, which means students must pay higher tuition to cover administrative costs. 

5. College executives earn higher salaries 

Some of the top-earning public college executives in the United States now earn total compensation packages exceeding $1.3 million. The median pay of college presidents has been increasing, and the number of presidents with salaries exceeding $1 million more than doubled in recent years. 

So, for those wondering why college costs so much, one easy answer is that students are being asked to pay more tuition to fund the salaries of leaders at their academic institutions. 

Is college still worth it?

Now you can answer the question of why college has become so expensive. The next obvious question is, whether it is still worth it to get a degree.

In most cases, the answer is yes. The median weekly earnings of workers with a bachelor's degree in 2020 were $1,305, while the median weekly earnings of someone with just a high school diploma were $781, according to the Bureau of Labor Statistics. That means the typical worker with a college degree would earn around $524 more every single week than someone without one. 

Of course, that doesn't mean college is worth it in every case. Whether you should pay for a college degree depends on the likelihood that doing so will increase your earning potential. Think about your career goals, your academic aptitude and your interests when making the decision about whether college is worth it. 

How can you lower the cost of a college degree? 

Beyond asking why colleges are so expensive, you also should consider different ways that you can make the personal costs of earning your degree lower. The good news is there are options available to you that can help you keep costs down.

First and foremost, choose your school carefully after considering the total cost of attendance. Attending a less expensive school is often a better option unless there's a specific reason to pay higher tuition fees, such as a focus on a particular major that a costlier school excels in. 

You also should explore options for free money, such as scholarships and grants. The more financial aid you can get that you don't have to pay back, the less expensive it will be to complete your academic program.

Finally, you should shop around carefully for student loans. Exhausting federal Direct Subsidized Loans and Direct Unsubsidized Loans usually should be your first step, as they have affordable fixed interest rates and you can qualify regardless of credit.

Private student loans also can provide a low-cost way to help pay for school, provided you do your research and find the right loan for you. Juno can help. We get groups of borrowers together and negotiate on their behalf to help them get the best rates possible from our trusted partner lenders. 

Students can save a lot when Juno harnesses the power of collective bargaining on their behalf, so join Juno today to learn how we can help you get inexpensive private undergraduate loans and graduate loans to fund your college degree. 

Christy Rakoczy Bieber

Written By

Christy Rakoczy Bieber

Christy Rakoczy Bieber is a full-time personal finance and legal writer. She is a graduate of UCLA School of Law and the University of Rochester. Christy was previously a college teacher with experience writing textbooks and serving as a subject matter expert.


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