The College Board reports that, once again, tuition and fee costs at both public and private colleges have increased at a rate faster than inflation. For private four-year colleges in the United States, costs for the 2009-2010 year increased by an average 4.4 percent. Average costs for public universities increased by an even larger amount — 6.5 percent.
There seems to be endless elasticity of demand for degrees from elite American colleges. There undoubtedly are people who would gladly pay $100,000 a year for the privilege of seeing Junior get his sheepskin from Harvard or Yale. As a result, there is no effective incentive for such schools to really try to control costs. Why make cuts that will anger faculty and staff when tuition increases can be implemented without meaningful opposition? Hiking tuition is simply the path of least resistance.
Interestingly, although politicians often talk about how important it is to try to make college affordable, they always do so in the context of government-backed loans to pay the tuitions and related costs set by the educational institutions. In contrast, they never criticize college administrators for failing to control costs. Colleges and universities have worked out a pretty sweet deal — they get lots of research funding and grant money from federal and state governments, and those governments then guarantee loans, at favorable interest rates, to help students pay the constantly increasing price tab for tuition and room and board.
Kish and I are now in our fifth year of paying college tuition costs, and the annual tuition increase notices come with the same certain regularity as the swallows returning to San Juan Capistrano. In reality, the ever-increasing cost of a higher education will not be reined in until the law of supply and demand once again comes to apply to the process of getting a college diploma, and that day still appears to be a long way off.