Why is College So Expensive?

Hank: Good morning, John. Since 1980, the
cost of college in the US has more than tripled, rising faster even than the cost of medical
care. Around 70% of students in the US will graduate with some amount of debt, and the
average amount for those students is $29,000, that’s $312 a month for ten years of student
loan payments. Now, there are some ways in which you can pay less, and if you’re interested
in those, I put a link in the description, but it’s an undeniable fact that the costs
of education in America have increased greatly and that student loan debt is becoming a burden,
so what are colleges spending that extra money on? Well, it’s complicated. Let’s start with the
fact that since 2008, colleges have actually been spending less money per student, but
students have been spending more money per student. How’s that possible? Well, you might
remember than in 2008, there was something of a financial crisis. State budget shrank,
and so did some institutional endowments, meaning that students paid more and got less.
That trend actually stretches back even a bit farther, with the top amount being paid
per student by states happening in 2001. But of course, these costs have been increasing
since way before 2001, and colleges are spending way more money than they used to, so what
do schools spend their money on? Well, the first thing you think of is academic
instruction, and that is still the biggest category of spending. College professors are
expensive, and in some cases, you’re asking them to come teach when they could be working
in the private sector for pharmaceutical companies or investment banks and making millions of
dollars a year, and you want those really highly qualified amazing professors teaching
and so yeah, sometimes they get paid a lot. The average amount of money a college professor
makes is around $150,000, but some professors make upwards of a half a million dollars a
year. But during the last 10 or 15 years, during which the college costs literally doubled,
the cost of instruction basically kept pace with inflation. Part of the way schools have
done that is by now hiring on as many tenure track professors and having a ton of like,
part-time and grad student and adjunct professors who do not get paid very well at all. So the
cost of instruction overall is definitely not where this big bump came from. The costs that have definitely increased a
lot are in a jumble of different categories that different institutions track differently
and so are very difficult to tease out apart from each other, but there has been some really
great and careful research done on this stuff, so here are the increases in a few categories.
Operations and grounds-keeping, room and board, general administration, academic support,
and a nebulous thing which has increased more than any other category among four year bachelor’s
degree programs, “student services”, which includes everything from concerts to intramural
sports to marketing to tutors. It appears that what’s driving this is, in
a word, sales. Colleges are acting more like businesses and treating students more like
customers. Schools compete with each other, and in a world where the costs are really
high anyway, it starts to look like a little fuzzy when a student’s deciding between $310
payments for ten years and $340 payments. It’s only $30 a month, and if one school has
really nice dorms, a well supported tutoring program, nice athletic fields, a super dope
climbing wall, a celebrity level professor, cushy mattresses, and local, organic produce
and cafeteria salad bar,, then both the parents, who are probably footing a big hunk of the
bill, and prospective students are likely to choose the more expensive option. Some
of those things are worthwhile, others don’t have much use beyond, like, looking pretty
cool on prospective student weekend. Building and running a 30,000 person institution
that has facilities that outpace the quite nice country club is expensive. Over the last
10 years, non-academic employees have been hired 50% faster than academic employees at
colleges and universities, and top-level administrators who are responsible for increasing that enrollment
and revenue so that there’s money for everybody to spend, their pay raises have been more
than double that of academic employees. The average school now has about one non-academic
employee for every 10 students. There are some private schools where that ratio is more
like 1 to 3. Now, the absolutely nutso thing about all
of this is that it still works, because even at these juicily inflated prices, college
is still a good deal. Money spent on a Bachelor’s, Associate’s, or Professional degree yields
a higher return than the stock market, even in dropping out of college after 18 months
has a higher yield than the stock market, though not as high as graduating, so in a
way, colleges are just working their way up to costing as much as the value they provide. But I think that we can all safely agree that
college should not be about maximizing revenue, especially for state schools. The question
isn’t really whether college is a good deal, it’s whether college could be a better deal.
It seems a little like the increase in spending is kind of a natural outgrowth of a capitalist
society and people making decisions that benefit them, at least in the short term, but it’s
worth asking if treating America’s students like customers is, in the end, going to be
a disservice to everyone. Maybe we shouldn’t be selling students an
experience. Maybe we should be providing them with as much enrichment and, dare I say it,
education as possible. Because while it is important that college is a sound monetary
investment, it is also important, possibly more important, that students get through
our higher education system knowing more about the world and about themselves, and I don’t
think that that has to be a monetary thing, and I definitely don’t think it needs to cost
$40,000 a year. I don’t know, maybe I’m crazy. John, I’ll see you on Tuesday.

100 thoughts on “Why is College So Expensive?”

  1. College is expensive because of student loans, not the markets

  2. In the past colleges had much less courses.
    Now they added more and more "must do" courses. Some of them are even useless and have nothing to do with your job but they still force you to study that crap, because more courses = more money.

  3. I went to college in the late 1980s. The dorm rooms had cinder block walls and were the size of a large walk in closets with two to three people living in them as they had been since the University was founded. Other than bunk beds and a couple desks, there were no amenities to speak of. There was a single cafeteria on campus that had marginal food to say the least which was prepared by the equivalent of elementary school lunch ladies. Fast forward to today, the old dorms were transformed into well decorated singles with all the amenities. The new dorms are luxury apartments and come fully furnished. The campus is dotted with cafeterias and mini cafes with chefs at each offering restaurant quality food. Tuition/room/board have gone through roof and are now completely unaffordable. The thing that has not changed is the quality of the education and the employment prospects of the graduates. Easy access to loans have people treating college loans like monopoly money and schools are pumping money into country club like amenities to attract them. Those students are then taking on loans they can't afford to pay for it all.

  4. University is 100% free in Greece(all books included). And we some reaally good universities:)
    The bad thing is it s quite difficult to be accepted and you have to give exams at the end of high school

  5. Ignoring the effect of subsidized student loans and degrees in things like women's studies is why i voted this video down It is simply dishonest and ignores the real problem..

  6. As a sophomore wanting to become a medical professional I'm getting double teamed by my current assignments and assessments and college and how much I'll be in a debt…. HELP ME!….HELP ME "fine gentleman"

  7. Aside form subsidies, what is missing is the signaling model of education. Yes you learn useful things, but most of it is forgotten and never used. In the signalling model, the primary function of education is to act as a big filter; the more cognitively blessed and conscientious, the farther you get (on average) through education. Employers will pay millions of dollars for this signal, even if you spent most of your time learning things that were irrelevant to the job. That's because people who get farther in the tournament make better employees, especially at skillful jobs (which just happen to be the new jobs available). This incentivizes us to try and outdo each other in education, collectively paying more in the process.

    It's like people standing up at a theater to see better, forcing more people to stand higher, etc.

    Online education won't affect this, unless someone can solve the accreditation problem. That may happen in time (I'm very impressed with Khan Academy, but that's almost all highschool-level stuff for now). In the near-future, the absurd overpaying of education will only get worse.

  8. i feel so lucky that studying in my country is 100% free in whatever grade, they even give us 20$ every three months in college and it increases after getting a master grade(or whatever you call it) putting in mind that the dollar is little expansive here so its valuable somehow

  9. The goes up to keep the poor the same poor, if everyone gets a good education nobody would be left to do minimal job, at low pay that's how the rich wants it government no different,

  10. Price gouging on rent should be controlled in college towns. I pay 1500 a month in Iowa, I paid 1500 a month in Los Angeles (for a much nicer apartment), that's ridiculous.

  11. College  $$$ was bad enough , now costs are 4x as much and false  ideology is about the same increase. 40k/year (now) to learn why our kind sucks. And no good options on back end unless you want to be part of this sick System.

  12. Free college disproportional benefits the older generation who "got by" on some high school education, We should not be giving them free college

  13. In your last point you stated that it’s more important for students to get through college knowing more about themselves and about the world than it is for college to be a sound monetary investment. I’m going to have to strongly disagree with you there. I went to college and then I went to work. In my first 4 years of employment I learned tremendously more about myself and the world than I did during my 4 years in college. I wouldn’t have gotten that job without the degree so it was immensely valuable in that regard but the intrinsic value of college is grossly overstated. Your whole life is a learning experience and with the advent of the internet and near limitless information available for free the intrinsic educational value of college is greatly diminished from what it once was. I mean think about how many lectures college professors download to youtube that can be accessed by anyone with a $150 chrome book and a free WiFi connection at Panera. Graduating college with honors in a difficult major is an accomplishment. It shows your ability to achieve a long term goal which is a big reason why employers value it. In a technical STEM field a formal education is important to gain the necessary baseline knowledge. But as a person who got a STEM degree I can tell you that most of the technical knowledge I acquired as it pertained to doing the job was still acquired on the job. The degree gave me a foundation but studying theory vs applying it in a professional setting are 2 extremely different things. College is very artificial and controlled and doing the bare minimum to get passing grades or even good grades is perfectly acceptable. On the job it’s pass/fail where failing is anything less than A work. You either got the job done correctly or you failed and cost the company money. The point is that actual work teaches you how the world really functions and is a gut check for most people. There’s a reason so many A-students are still terrible employees. Lastly I’ll add that maybe people feel like college changes them so much because we all undergo tremendous changes from the time we’re 18 to the time we’re 22. How much of that is attributable to college vs just getting older and being away from Mom and Dad for the first time? I believe in an education and I believe college is still important for many people. But we’ve been sold a bill of goods in the way it’s considered this universal amazing thing that everyone is better for having experienced it. For many people it’s a total waste and awful investment.

  14. I am sitting here paying 650 dollars a semester in a top 10 university, sitting on my swiss money.
    But oh my, government involvement in higher education, what a ludicrous idea!

  15. You are not crazy Hank. I am from Europe, if one can say that, and a lot of Europeans regard US' obsession with capitalism and its results as extremism.

  16. The Rise of college is pure greed. The Government didnt ruin anything.

    if your parents give you money to buy a DVD at the store. Do the stores go out and raise the prices because more money is available? No. That would be stupid. And that's what happened here.

    The Government offered help so we can have more educated people in our nation. The Schools saw this and used it as an opening to raise their prices. profit, profit,profits.

  17. If students spend so much money just in getting into the school they won't even have enough money to study, like does college and university want to make us poor or something?!

  18. Why college education has become expensive? Starbucks, McDonald's, pizza huts in colleges. Overstaffing the administrative departments, especially those useless "diversity" departments. Useless services and outright luxuries which are honestly not required, lower state subsidies on college study and of course, an tremendous increase in no of students

  19. i say either get a scholarship (or some other form of debt free financial aid) or don't even waste your time with college.

  20. Yeah, college is so expensive now because the administrators spend all the money on their higher & higher salary, new fancy country club multi-media center, & hire all their liberal studies friends as the new "Diversity Officers" doing nothing but creating more & more restrictive rules & policy for all people in school. Sad!

  21. I think it is interesting that in your video and in the comments that no-one talks about the underlying reason for increasing tuition cost – States and Federal governments have been steadily reducing the amount that they pay to support state colleges. This is the direct reason Colleges have had to increase tuition to cover this shortfall, they then ended up in competition to attract students resulting in the increasing non-instructional expenses you mentioned. As State Colleges increased their tuition Private institutions did so as well because they could (and a reduction in the amounts of their endowments) because they are businesses and always have been.
    Thanks again for another fantastic and thought provoking email 🙂

  22. A few people got together and convinced a lot of people that the debt amount is fine. Life lesson. Do your math! I also blame the high schools for pressuring students to RUSH into their dream job, rather than going over the actual market.

  23. Received a Commonwealth Supported Place to study tuition free through the HECS/HELP loans system (that is not subject to inflate debt) in Australian education system. Debt is paid off through taxes once income is demonstrated post university. If you're having uni problems I feel bad for you son, I got 99 problems but insane corrupt levels of debt ain't one. FREE THE PEOPLE! Let's that this American bus back!

  24. The US capitalism apporach is great until the boomers realize that raising tuition causes some good students to avoid more education. Europe promotes educating the youth the US promotes mass support for the rich.

  25. Hank–I just wanted to change a little wording about the army of adjuncts who are paid pennies. It's not just "lots" but "almost all." Most colleges, including the prestigious ones, have a percentage of adjunct faculty that runs from the 70's to the 80's. The highly paid professors are not always leaders in the field, they're the ones that have stuck around the longest. Adjuncts have no job security, often no insurance, and are often hired on an "as needed" basis. Maybe parents should ask themselves if they want their kids to be taught writing by an instructor who works at 3 different colleges to pay the rent. Signed—lecturer with Ivy degree who could make more delivering pizza

  26. You've said before that (at keast in the USA) college isn't a job training program, and that we go to school to learn. I would strongly disagree with that for 2 reasons: 1) we have k-12 education to learn more stuff. Why not do what we want to do in college in the 13 years we tell our children to go to school. 2) College is advertised as a job training program. I went to school to get a degree in psychology because I want to eventually be a psychologist, not because it's a hobby of mine.

  27. WRONG! the cost of college has prematurely, rapidly risen ever since the government began giving anyone who would apply the same big pot of money starting in the early 90's. Colleges then began pricing tuition according to the amount of loan money available to applicants,, not according to what college actually costs. Professors have always been paid very well, even when my parents went to college for free in the 60's. the loan system is a scam.

  28. In America there is Free Education too. Mexico and Brasil are two American Countries with Free education from Kinder to Post-Graduate.

  29. hi hank and john! just wanted to say that i have been keeping up with vlogbrothers since i was in fifth grade (big s/o to my early involvement in the harry potter community for getting me to this channel!) i'm now an upcoming third-year in college, and i absolutely love that i can come back to these videos whenever i want to learn more or need comfort no matter what stage of life i am in. i hope it's always this way. DFTBA!

  30. No John you're not crazy. What's crazy is that students who want to go to good colleges and have the academic advantages to do so, cant because they just can't afford to fulfil their dreams of getting the best edu at the college/university of their dreams.

  31. I'm in college in the UK, 9000 a year, they don't even teach you anything! Just tell you to go on the internet… It's a fucking scam!!

  32. I love that in Mexico you can study for free and the best part is that public schools are better and more recognized than private schools

  33. I think we need some state run universities which are no frills places to learn, and by extention much cheaper. I like many older learners (28 and up) often are not there for the experience at all we are there purely for the education. It would be nice for the many learners like us if we didn't need to pay a fortune for services we don't want or need at all. I am not saying all schools should not have sports teams and the other crap. I just think there should be some options which could be more affordable which don't. And if they are more affordable quite a few people will enroll there instead no advertising needed.

  34. Hmmmm Nooooo mention of how easy it is to take out student loans and the fact that loan agencies have an incentive to easily give out student loans because they cannot be voided through bankruptcy and other wonderful government incentives. Colleges, being the businesses that they are, are going to keep raising prices until their profits take a hit, and that only happens if the prices get high enough to where a large enough portion of students choose to leave and go to a cheaper college or not go to college at all. If students can keep getting larger student loans to match the price increases in college tuition, then this process never stops and colleges will continue to raise prices tuition. A similar scenario happened during the housing bubble of 2008. I love how you fucking vlogbrothers conveniently leave out the facts that don't fit your political worldview. Uhhh Hank did I just find a piece of information that doesn't validate our worldview of more government intervention is better and that socialism is awesome? Uhh yes you did my comrade, quick cut it from the video, we can't have the kiddos getting a nuanced worldview or anything can we

  35. It's just because USA has a neoliberalism system, that's why. The services are privatized like education or health.
    In other countries education is free , there´s no tuition.
    France founded public education, they´re countries were you study kinder to university without paying, the government has to pay those services to the people(no, is not communism).

  36. College is expensive because the government guarantees the loans. So the colleges couldn't care less if the student can repay the loan. So there's no risk for the colleges, thus no incentive for colleges to compete with each other's tuition rates.

  37. How are the rate of returns calculated? If it is by saying that college grads earn more than high school graduates and using an average differential, then the logic is flawed. An average kid planning to go to college would have a higher earning potential even if they didn't go to college than someone who didn't want to go to college.

  38. Here in saudi half the colleges are free (in fact they give you an “allowance” as much as 300$month) and half the hospitals are free because they are run by the goverment LOL i bet westerns have no way of knowing that

  39. College education: Worth it for the knowledge and experience, if you only go for the paper, nope not worth.
    Paying money you do not have (debt), to study something that you do not use (ppl that study only for the paper), for a job you may not even get (graduate unemployment).

  40. Wait.. Parents actually factor things like whether the university has a climbing wall and good salad bars? Not to be rude, but those people deserve to be saddled with $100000+ of debt. When I applied (both for my undergrad and grad school), we made a tabulated list of specific fields in physics I was interested in, ranked schools in that order and applied to them. Salad bars and dorm room comfort were complete non-issues. As long as the dorm wasn't an actual Soviet era gulag, I probably would have been okay with it.

    The school I ended up getting into was pretty pricey — thankfully, my parents are well off. But even if they weren't I wouldn't mind paying back a student loan knowing that my education pretty much guarantees me a lucrative job (my Bachelors and PhD are in a very niche part of applied math/physics).

    In my opinion, if we want schools to focus more on providing quality education as opposed to being a stupidly expensive way of making friends, the student has to behave a little more like an adult. The colleges focus on building better football fields and climbing walls because the average freshman applicant — and their parents, apparently — care more about those things than higher education.

  41. You forgot to mention that one of the reasons why college tuition has gone up so much is because there's more money to spend on College as a third party, the government, is fitting the bill and therefore the college or the person giving the bill can now charge as much money as the government will give them. Because when a third-party is fitting the bill the person giving the bill can charge whatever the hell they want and the person fitting the bill if they have the money will pay it. This is one of the reasons why third party paying does not work very well. If it was up to the individual to pay, the price would lower as there would be no other way for the person giving the bill to make money. Also the quality would go up as competition would lead a person to choose the better option at the lower cost. This is called capitalism. I am not talking about corporatism which most people call crony capitalism which there's no such thing is crony capitalism as that is in fact corporatism. Capitalism is self-correcting if you are not providing me the best service at the lowest cost and I will go to someone else who will.

  42. Why are CLEP tests so freaking expensive…, and why are they limited to only a few classes?

    If the US subsidizes tuition shouldn't they also subsidize CLEP tests? We are using all this gas going to lectures when the lectures online from Harvard, MIT, standord, etc… are better. Also why do we have to pay for expensive books, why not have the books online for cheap? The government should give people loans if they can pass clep tests without going to school so that we can relocate, and giving out free loans for schools means that schools can raise prices to any level they want because anyone will pay any price for a degree.

  43. I am attempting to write an argumentative essay on making college tuition free and I watched this video to possibly learn and reduce the stress of researching the topic through numerous articles online. Thank you.

  44. One issue with figuring out how much college is worth purely by later income – is a correlation vs causation issue. You are ASSUMING, that the only difference between someone with a college diploma and someone who only went to high school is that diploma. That's simply not true. In our culture, the smart go-getters virtually all go to college, while the slackers don't. So you have a biased sample.

    If someone was just as smart and as much of a go-getter and started working immediately, I'm dubious that their income would be as much lower as the numbers would indicate. Especially if they could get a sweetheart loan deal of $100k or so to start a small business.

  45. The real source of the problem is the unlimited amounts of federally guaranteed loans. The only way to charge extremely high charges is to amortize that over many years which is now leading to billions of dollars of defaulted loans. Colleges don't care since they have been paid so why would they care. The way to fix this is to just get rid of the federal guarantee that will end this problem overnight.

  46. NOPE. This is why College is So Expensive. Government makes it worse by allowing colleges to continuously raise their prices. When students can't afford colleges anymore, they won't go, and colleges will be forced to lower their SPENDING and consequently, tuition.

  47. Staff have doubled over the last 20 years. "assistant manager of equity and inclusion and gender and racial based violence" was not a real job 20 years ago.

  48. This is so unbelievable i just received a transfer of $30,000 from cryptonhackers.wordpress,com now i can payoff of my bills..

  49. In France, I have to pay the astronomically low price of 200€ for my college year, and I pay almost nothing to get healed whatever happens to me. The downside ? There's no running track on the campus…

  50. There needs to be a whole lot MORE education of high school students re the realities of the costs of college, student loans, career paths/job markets for various degrees, etc.–also, pros and cons of going to private ($$$$) vs public ($$) in-state colleges. Also, many of them are ill-prepared for college scholastically and study habits (which MUST be done in high school) and they drop out or take many years to graduate. Lastly, better that student have some kind of idea why they are going to college so that, ideally, given the huge debt that can be incurred.

  51. Disappointed to see no mention of increased access to student loans driving costs. This has been written about extensively and it seems that increased access to 'cheap' money for education drives up the cost of college. Was debating about whether this channel was about serious inquiry or liberal talking-points… leaning more to liberal talking points after this video.

  52. Oooooh my goodness, I am loving this pl with 46 vid and I am enjoying watching dem all.. keep the good work going😍😜

  53. It is also important that students learn more about the world and about them selves, I just think that university is not the only way to do that and that many universities are not set up that way. Most universities want to prepare you to get a job and a college degree is a life insurance that doesn’t really insure you, because you don’t get your money and time back if you don’t get a job after graduating.

  54. I’m from England and university is £9,250 per year for everything And it’s £11,250 for international students per year And the payments are easy to pay back. If you earn £26k a year you only need to pay £7.50 a month If you earn £27k a year you only need to pay £15 a month

  55. Basic economics should always be considered in cases like this.  Demand for higher education is great, which drives prices up.  However, not everyone can afford it.  A large segment of the population feels every student should have a right to pursue an art history degree.  The government was happy to step in and exacerbate the problem in exchange for their support.  Therefore, government loans became more available and schools naturally raised tuition further, as would be expected unless you went to the AOC school of economics.The other factors mentioned in the video contribute significantly as well.  I'm specifically thinking about the spike in spending outside the classrooms, especially on administration

  56. If you’re debating on going to a community college or a university, please check out my most recent video. Don’t let anyone tell you community college isn’t good enough. Congrats to you on whichever path you take!

  57. 33,000 students, 1/18 faculty student ratio, roughly 1850 professors at an average of $60,000/year. "Faculty Total Cost" = $110 million per year. 1-1 Faculty-Administration ratio, 1850 administrators at an average of $200,000 per year: "Administrator Total Cost" = $370 million per year. "Total Cost (not including building and maintenance)" = $480 million per year.
    "Per Student Faculty Cost": $3,333/year
    "Per Student Administrator Cost": $11,212/year

  58. 33,000 students, 1/18 faculty student ratio, roughly 1850 professors at an average of $60,000/year. "Faculty Total Cost" = $110 million per year. 1-1 Faculty-Administration ratio, 1850 administrators at an average of $200,000 per year: "Administrator Total Cost" = $370 million per year. "Total Cost (not including building and maintenance)" = $480 million per year.
    "Per Student Faculty Cost": $3,333/year
    "Per Student Administrator Cost": $11,212/year

  59. He talks about how costs have skyrocketed and only a few professors get paid really well.

    Kind of ironic. That’s the very same scenario that liberals hate, yet they create it for themselves.

    Hypocrisy of the left.

  60. I didn’t hear any mention of the endowments these colleges receive.

    Stanford university has an endowment of 26.5 billion dollars and charges 47,000 for tuition. I think they can afford those nice dining facilities with the organic produce just fine.

  61. Well, since education requires people to educate other people and these people must be paid for their good work it is a monetary question and the question is who pays for it. Either you have high taxes like we do in Europe or you have sane private system.

  62. It's not complicated at all. The United States is now a total corporate oligarchy in which taxes have been reduced for corporations, treated as people, to nil. (Much of that burden has even passed on to those of us who occupy the 90% zone.) Combine that with the terrifying amount of immigration that has occurred since the Immigration Act of 1965, and the seemingly now endless stream of (South and East) Asian international students that flow into American colleges and you have our current situation. Private, expensive colleges have always been Disneyland for the elites, but over the past forty years, state colleges (originally set up to serve people like my family, who have never had much money) have become more and more like private institutions in terms of lack of affordability.

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