Why Is College so Expensive? What Colleges Don't Want You to Know

Leslie Tucker PhD, May 22, 2021

Discover why college is too expensive and how to earn your degree without breaking the bank



Whether you’re a senior comparing financial aid awards or a junior researching colleges, you’ve probably asked yourself this question: “Why is college so expensive?” 


It’s a question that plagues many students, graduates, and their families. College is too expensive these days, and it’s hard to figure out how to afford the education you want. 


Should you take out lots of student loans? Should your parents drain their savings or retirement accounts? How are you supposed to pay for expensive colleges? And how did it get like this?


We find ourselves in a frustrating—but not hopeless—situation. You’re heading into college soon, and I want you to be well-informed about why colleges cost so much. Maybe you can save yourself some money and help fight the trend of rising college costs. 


Keep reading to explore why college is so expensive, look at how colleges spend your tuition, and learn how to make smart, affordable college choices.


Important statistics about college costs

Let’s start by talking about the current costs of college. Here are the average college tuition rates in 2021.


  • Private colleges—$35,087
  • Public universities, out-of-state—$21,184
  • Public universities, in-state—$9,687


Please note, these numbers include college tuition and fees only. If you live on-campus, you can expect to pay between $10,000 and $15,000 per year in room and board costs. 


These amounts may seem somewhat high at first glance, but they’re even more disturbing when put into historical context. In the past 20 years, the average college tuition has increased nearly 200%. And in the same timeframe, the average hourly wage has risen only 80%. 


How are families supposed to afford tuition when college costs are increasing twice as fast as their salaries? It’s no surprise the average student loan debt of college graduates has risen to $32,731.



Why does college cost so much?


The problem of increasingly expensive colleges is getting out of control. You must be wondering, why is college tuition so high? Let’s examine a few of the biggest factors.


Reduced state funding for higher education

Public colleges and universities today receive less state funding per student than they did a decade ago. This is partly due to higher education budget cuts, but also because more students are attending college.


Here’s what I mean. If 100 students attend College A, and the state gives it $10,000 in funding, that’s $100 per student. However, if 125 students attend College A the following year but the state doesn’t increase its funding, College A only receives $80 per student. 


And who do you think is asked to make up the missing $20? You guessed it, the students. When state funding fails to increase with enrollment numbers, colleges raise their tuition rates. So it’s important to advocate for better funding in higher education!


Excessive college spending

Did you know that on average, American colleges spend over $30,000 on every student? That’s twice the amount most other developed countries spend. It’s almost no wonder state funding can’t keep up. 


So what do colleges spend their money on? Faculty salaries, for one. Although, those have hardly risen in the past fifty years. In fact, colleges often hire more part-time than full-time professors to save money.


What else? Colleges spend money on student services, which are important. These are your tutoring, counseling, health, and career development centers that help a lot of students.


What about administrative salaries? How much goes to college presidents, VPs, and deans? Unfortunately, this is where we see a significant rise in college spending.


In fact, while tenured faculty positions have increased about 10% since the 1990s, administrative positions have increased by 60%. And some college presidents shockingly bring home 7-figure salaries. Let’s not even talk about college coaches!


And lastly, let’s not forget the cost of college amenities. You might appreciate the updated science building, but do you really want your tuition dollars going to fund new rock walls and splashy, high-tech student centers? 


Expensive buildings, amenities, and equipment are meant to enhance your college experience. Just be aware they come at a cost—and you’re the one who pays it.


Limited college competition

While colleges have become increasingly expensive over the past two decades, TVs have become more and more affordable. Why is this? There are a lot of TV manufacturers, and the market competition drives the prices lower.


So why doesn’t this same principle work for colleges? After all, there are over 1,000 four-year colleges in the nation.


One reason is most students stay somewhat local when they attend college. So even though there are a lot of college options nationwide, individual colleges usually only compete with their local competition—maybe a handful of schools. It’s often not enough competition to drive prices lower.


Another reason why we don’t see enough competition to reduce college costs is that it’s increasingly difficult for new, more affordable colleges to gain accreditation and respect. The playing field is limited.


That means we’re mostly stuck with old institutions that have settled into the trend of skyrocketing their prices year after year. And as more and more students want to enroll at these existing colleges, the demand overwhelms the supply, causing college costs to rise.


Students (and parents) are willing to pay the price

And here’s another reason why colleges are so expensive—because we let them be. Every year, students pay those high college costs through a combination of scholarships, family savings, and loans. But in many cases, they pay without truly knowing what they’re getting into. 


It’s been well-documented that earning a college degree leads to greater lifetime earnings. So students are taught to blindly believe their college investment will be worth it. 


Just because getting a college degree is a wise investment doesn’t mean paying an arm and a leg for that degree is a smart choice! 


Before you commit to a specific college, it’s important to do your research on how much your degree will cost you. Then look around. Can you find a more affordable option somewhere else?


The problem is sometimes colleges aren’t transparent about their financial aid until late in the game. If you don’t receive your financial aid award letters until March of senior year, you don’t have a lot of time to compare college costs and look for better options. 


Colleges hook you, tell you what you’ll owe at the last minute, and expect you to work it out. It’s a vicious system



Tips to cut college costs and protect your financial future


If you want to avoid taking on massive amounts of student loan debt by having an affordable—and still meaningful—college experience, pay close attention to these suggestions.


1. Use net price calculators to predict your college costs early 


Juniors, you don’t have to wait until after you apply and get accepted to colleges before figuring out how much they’ll cost. On each college’s website, you’ll find a net price calculator, which will predict more or less how much financial aid you’ll receive.


Be prepared to answer questions about your GPA, test scores, and family income in order to get a more accurate financial aid prediction. If a college is way too expensive, you might consider taking it off your college list. 


2. Ask the hard questions


When talking to specific colleges, ask how much tuition has increased over the past five years. Then you can estimate how much you’ll have to pay throughout your college career.


You can also ask if the college is planning any new construction soon. If a new building is on the books—unless it’s 100% funded by donations—you can be sure tuition will increase to help cover the construction costs.


3. Compare your college costs with your expected starting salary


After you’ve calculated the total cost of your college years, look up the average starting salary for the career you want. Is the amount you’ll have to pay or take on as debt worth the salary you can realistically expect after graduation? Will you be able to afford your loan payments?


For instance, STEM careers are currently proving to be a better return on your investment than most public service careers, such as education. So if you want to go into public service, do it! Just don’t attend expensive colleges.


4. Consider more affordable college options


Attending a local public university and commuting from home is one of the most affordable college routes you can take—if that’s a possibility for you. Of course, you could also commute to a nearby private college, or stay with out-of-town relatives if you want to move away from home. 


You could consider starting at a low-cost community college and transferring to your more expensive dream school after two years. After all, paying for two years of expensive college tuition is better than four. 


Remember, affordable and even tuition-free colleges do exist. Just because there are many expensive colleges out there, doesn’t mean you have to pay an arm and a leg for your college degree.


Final thoughts on expensive colleges


Getting a college degree is a worthwhile investment. However, if you pour tons of money into your degree, the return on your investment decreases. On the other hand, if you follow some of my advice and choose an affordable college option, you’ll be able to enjoy much greater financial returns.


I’d love to hear from you! Are you stressed out by college costs? Drop a comment below and we can brainstorm the best affordable college path for you.