College is expensive. Like, really expensive.
Especially here… in the Unites States of guns, fast food, and student debt. It wasn’t
always this way. In 1980, the average cost of tuition for one year at a four year private
college was $3,500. Adjusted for inflation, that’s $10,200 2016 dollars. Today, that
same year of college goes for $32,000—3 times as much as only 36 years ago. So what’s
behind this? Well that’s both a complicated and controversial question.
To understand why college has risen in cost we first have to understand why college has
always been expensive. The biggest fraction of your tuition goes to salaries. The national
average student to faculty ratio is 18 to 1 meaning that for every 18 students there
is 1 faculty member. The average professor at a private college makes $126,981 per year.
Divided by 18 that comes out to only $7,054 which doesn’t seem that bad but you have
to consider that there’s more than just faculty. There’s also coaches, and gardeners
and kitchen staff and dorm staff and maintenance people and admissions staff and marketers
and IT staff and security guards and college presidents. All together, the salaries and
benefits of all these individuals add up to a whopping $24,000 of our $32,000 tuition.
Salaries tend to be high because college functions similarly to many other industries—following
the rules of supply and demand. The most popular college majors vary over time because interests
change to reflect changes in culture. The problem is, you can’t just magically create
new professors. By the time new professors go through their 20 years of education and
specialize in a field, that major will no longer be the popular one so when a major
is popular, colleges have to compete to get professors and the only thing that really
matters is money—money brings more professors, more professors brings more students, and
more students brings more money. At the same time, professors in historically popular majors
receive tenure. Tenure is the idea that in order to promote academic freedom, long-time
professors should have their job guaranteed until retirement. With professors that legally
cannot be let go, there can often be an abundance of professors in less popular study areas.
So, we still have $8,000 of tuition unaccounted for. Colleges need places to teach and their
infrastructure is rather unnaturally expensive. Classes usually only run for eight or ten
hours a day, five days a week, for 40 or so weeks a year. That means that classrooms are
only in use 23% of the time. The college still has to pay for the space the other 77% of
the time which of course adds up. Additionally, colleges really like to build nice buildings
because these attract students. The average cost to build a building varies by location,
but it averages between $115 and $215 per square foot. By contrast, U-Mass Amherst’s
Commonwealth Honors College cost $354 per square foot, U-Mass Boston’s General Academic
Building No. 1 cost $594 per square foot, and Berkely’s Lower Sproul Building cost
$659 per square foot. Of course there are other factors contributing
to the high price of college, but staffing and buildings are the big two. Now for the
reason college has tripled in price. It’s always been expensive to pay highly educated
people to teach in inefficiently used buildings so what has changed in the last thirty years?
Well, college is more popular than ever. In the last 20 years, college enrollment has
increased by 50%. Federal and state funding for colleges has actually increased to an
all time high since 1980 but with the simultaneous increase in students, per-student funding
has hit an all time low. In 1990, Ohio’s flagship public university—Ohio State University—paid
for 25% of their budget with government money while in 2012, only 7% of their budget was
paid for by the state. With less federal and state money, students have to pay more out
of pocket to make up the difference. Additionally, colleges have changed to appeal to the millennial
generation. According to William Strauss and Neil Howe, the millennial generation—born
between 1982 and 2004—are characterized by seven core traits: they are sheltered,
confident, team-oriented, conventional, pressured, achieving, and they feel special. Sometimes
called “trophy kids,” millennials tend to be more ambitious and feel more unique
than the preceding generation which means that they tend to believe more in “the right
fit” idea for college. Colleges responded to this new attitude by adding more and more
amenities to help them stand out to the growing number of students. All these new amenities
required more and more management which contributed to the boom in administration at universities.
According to the US Department of Education, the number of administrator positions increased
60% between 1993 and 2009 which is 10 times faster than the number of tenured professor
positions. So just as I finished my “Why Flying is
so Expensive” video by telling you that flying is not that expensive, I’ll finish
this video by telling you that college is not that expensive. 85 percent of full-time
degree seeking students at four year universities receive some sort of financial aid with the
average grant hovering around $15,500. That’s a significant amount, but I’ll admit there’s
still a significant amount left over, until you consider that going to college is the
single greatest investment you can make in your life, especially today. People who go
to college earn on average 98% more per hour than those who only have a high school diploma
and that number is up from only 40% more 35 years ago. So given that, what’s the true
cost of college? When you look at it holistically, over your whole life, the cost of going to
college is not $32,000 a year or $128,000 over four years, but rather negative $500,000.
By skipping the opportunity to go to college, you will forfeit on average half a million
dollars in potential earnings. Go to college kids.
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