Rise in higher education costs stems from many sources

Ben Zhao, Executive Features Editor

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When senior Ana Sabic first toured the University of Illinois at Urbana-Champaign, she did not expect to see a 340-square-foot gym with a climbing wall, a 35-person sauna and 10 basketball courts.

“I was really looking for academic buildings and maybe some impressive libraries,” said Sabic. “I had no idea they would provide workout facilities that were so nice.”

Since the mid-1980s, college tuition prices have risen at a rate higher than inflation. Part of the reason prices have grown at a high rate, around three to four percent annually, is the addition of facilities like the one Sabic observed.

During a phone interview, Douglas Webber, assistant professor of economics at Temple University, said many American colleges and universities are willing to invest in non-academic buildings to attract prospective students, contributing to the hike in tuition rate.

“Schools, particularly private schools and your flagship state schools, will increase their budgets for better amenities,” said Webber. “Climbing walls, lazy rivers, fancy buildings and atriums all add to rising budgets. It’s like an academic arms race between universities.”

Grey Gordon, assistant professor of economics at Indiana University  Bloomington, said in a phone interview that school ranking systems, such as U.S. News and World Report, factor in per-student spending in their ranking criteria, which further incentivizes schools to spend more.

During a phone interview, Richard Vedder, director of the Center of College Affordability and Productivity, said another reason university budgets have risen is the trend of adding administrative positions.

“In the early 1980s or 1970s, you would maybe see one provost and one vice president,” said Vedder. “Today, you see schools with 15 to 20 vice provosts, 10 vice presidents and many more bureaucratic roles. In some schools, I’ve seen over 15 people whose dedicated job is to manage recycling on campus.”

Although Vedder said more administrators and facilities do give students additional opportunities, higher spending does not always benefit students.

“A bloated bureaucracy and student amenities have very little to do with the quality of education [students] are receiving,” Vedder said.

According to Sabic, college should be about more than academics and should also include experiences that extend beyond classes. More extracurricular activities justify the higher cost of attending college.

Webber said that the rise in tuition particularly applies to public schools.

“States have begun to drain money from their universities and educational funding,” said Webber. “Instead of having much of [a state school’s] budget subsidized by the state, now only a small percentage of their budget is from the state, and most of their budget is paid for in tuition.”

According to Grey, the rise in availability of government student loans has contributed to increasing tuition.

“In the past, you needed a pretty impressive resume and academic standing to obtain a U.S. [student]  loan,” said Grey. “Since 1993, anyone who is willing to go to a college — private, public or for-profit — can more or less have a loan if they qualify financially. Schools are finding they can charge more because of the availability of loans.”

Vedder said the wide availability of loans ultimately harms students.

“Every extra dollar the government spends in loans, tuition will rise 65 cents out of that dollar,” Vedder said.

According to Webber, American families have been saving their money at a historically low rate, which puts them at a vulnerable place when needing to pay for increasing college costs.

“Low amounts of saving combined with higher loans will ultimately harm those who cannot afford the loan,” said Webber. “Low-income students and some middle class students, those who are most susceptible to default on their loans, will have that shadow follow them for the rest of their lives.”

Grey said college is still the best investment a family could make.

“In the late 80s, those who have a [bachelor’s] degree earned 60 percent more than their non-degree counterparts,” said Grey. “Today, that figure is close to 90 percent.”

Webber said a situation like the 2008 financial crisis is not likely to occur due to rising tuition costs, but if trends continue, a financial “bubble,” or overinflation of prices, is possible.

“Your return on investment from a college degree is, on average, $800,000,” said Webber. “That far outweighs even the most expensive tuitions. But if prices continue to rise, then price may overtake value, and a bubble is formed.”

Sabic said she is willing to pay the rising cost of college.

“College is an experience you get once in your life,” said Sabic. “I think the cost is completely worth something you’ll never have the opportunity to have again.”

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Rise in higher education costs stems from many sources