Saturday’s New York Times contains an article headlined “Why the Cost of College Rises, Even in a Recession.” The real subject of the article, however, is different: why running a college is so expensive. Most of the piece consists of an interview with the president of Lafayette College, who explains that teaching costs a lot, and tenure makes it hard to reduce staff, and then there are all those administrative expenses.
Fair enough, but (a) why do teaching and administration cost so much, and (b) more to the point, why does tuition always rise faster than the rate of inflation? The gist of the piece seems to be that college administrators have little or no control over many budget items, but even if that’s true (which is questionable), it fails to address point (b). Just because costs are high doesn’t mean they have to keep getting higher.
The real reason, which the article never mentions, is that colleges raise tuition as much as they can because they know an indulgent federal government will always shell out for it. As the Wall Street Journal wrote a couple of years ago:
Government handouts are creating the tuition problem. Tuition has risen about three percentage points faster than inflation every year for the past quarter-century. At the same time, the feds have put more and more money behind student loans and other financial aid. The government is slowly becoming a third-party tuition payer, with all the price distortions one would expect. Every time tuition rises, the government makes up the difference; colleges thus cheerfully raise tuition (and budgets), knowing the government will step in.
Brian Riedl of the Heritage Foundation has a fine summary of the economics behind the tuition/financial aid vicious circle here.
To read the Times article, you would think that all the diversity deans and transgender studies departments and student interaction facilitation coordinators were ordained by nature, and thrifty college presidents are vigilantly squeezing out every penny of savings they can. In fact, colleges overspend because they know they can always rely on Uncle Sam’s checkbook to bail them out. And since shutting that checkbook would mean that some institutions would contract or shut down, and fewer marginal students would go to college, you can bet that tuition will keep on rising — and we’ll all keep on paying for it.