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.
Thank you for watching!
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