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As far as I know, in the majority of countries in the world, especially in Europe, undergraduate education, even at the top universities, is almost always significantly less expensive than at prestigous US universities.

For example, for the 2018-2019 academic year, the standard cost of tuition and fees at MIT was $51,520. Add in room and board and other fees, and the price tag reaches $70,240 annually. The average cost after aid was around $ 22,549.

At Cornell, the cost after aid was $30,498 and at NYU $37,362.

This is representative of most of the Ivy League schools as well as many liberal arts schools which are less well known internationally.

The average tuition cost at my school in France is a mere 2000 euros per year whilst other French schools have tuition ranging from 300 euros per year to 15,000 in one extreme case. In several European countries, tuition is either free or students are payed to study.

The student debt crisis in the US is a recent phenomenon, but how recent? I suspect that that students at Ivy League schools in the 1930's weren't paying anything close to their present counterparts, adjusting for inflation.

So when exactly did top tier American schools start raising tuition and board fees to the astronomical levels we see now?

I will leave out the question if whether this is sustainable or what the consequences will be, as this is speculative and opinion-based.

  • 4
    There are very many books and articles on this phenomenon. I think it's too broad for a Stack Exchange post. One important point to note, however, is that the "sticker price" for tuition is commonly offset by various forms of scholarships, financial aid, and discounts. So the net price of tuition varies from one student to the next and can be substantially lower - in some cases $0. There's no doubt that the typical cost is still much more than in Europe, but not as much as the sticker price might lead you to believe. – Nate Eldredge Jun 4 at 1:24
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    To show how meaningless the tuition price is for private schools, MIT says "For students with family incomes under $90,000 a year and typical assets, MIT guarantees that scholarship funding from all sources will allow them to attend the Institute tuition-free." – user71659 Jun 4 at 1:43
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    @JoshuaBenabou No your number is not the average, it's the full tuition, which is the maximum anybody pays. If you look at the numbers, 59% got need-based scholarships, which on average, covered nearly everything. – user71659 Jun 4 at 1:49
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    The question is broad, but not unanswerable. Sure, going into detail on why would make answers very long, but one does not have to go into detail. One could simply give an outline and direct the interested to further resources. For example here're 210 reasons the Western Roman Empire fell in one page: courses.washington.edu/rome250/gallery/ROME%20250/…. Voting to reopen. – Allure Jun 4 at 9:52
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    The short answer to the new title question is it roughly started at the end of the 1960s for a slow start, steady increases throughout 1970 (which is hard to be clear on because of the rampant inflation that occurred at that time really blew up the dollar amounts, it was a crazy time for the US economy), and then it really started to take off in the 1980s. Forbes gives a nice chart: forbes.com/sites/prestoncooper2/2017/05/10/… Tuition varies by citizenship/region though, so take numbers with salt. – BrianH Jun 4 at 13:38
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This article in USA Today from 2017 shows the graph below, which is average tuition and fees adjusted for inflation from '71-'72 to '16-'17.

Average cost of tuition and fees

To answer the question in the title: it looks like it started rising above inflation in around 1983.

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    Very interesting chart. Although, it would be good to see how far back the 'flat' period between 1971 and 1981 extends before that. Also, it begs the question as to why prices started increasing so much in 1983. – Time4Tea Jun 12 at 13:37
  • @Time4Tea Yes to both older data and why. The data here seems to have come from this spreadsheet on collegeboard.org and it only goes back to '71-'72. – Peter K. Jun 12 at 13:47
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    There's another interesting graph on the Wikipedia page for College tuition in the US that compares the growth in tuition cost to the cost of living. The same page suggests that student loans did become much more important during the 1980s. – Anyon Jun 12 at 13:48
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    @Time4Tea Answering why the prices started to increase so much sounds like a research project rather than a Stack Exchange post, in that it's unlikely that there is a single, easy-to-identify, and well-documented reason. Usually, these things stem from the interplay of a bunch of complex factors, the importance (or existence) of which is often subject to considerable academic and political debate. In short, I think the current answer is perfect for Stack Exchange - it answers the question, and only the question, using fairly uncontroversial data. – xLeitix Jun 12 at 14:32
  • @xLeitix I agree and I think this is a good answer. I admit that my answer focuses more on 'why' than 'when'. – Time4Tea Jun 12 at 14:56
2

The simplest explanation I've heard is that proliferation of student loans have allowed the costs to skyrocket by spreading the cost to the student over time. Similar effects have occurred in other areas where loans have become prolific, such as 30 year housing loans and mortgages. The bank can afford to wait years, even decades, to reap the benefits, as it operates by volume and in the long-term. As such the sticker price rises to account for the fact that people can now "afford" to pay large amounts for things. Amounts that will take them many years of budgeting to actually cover. It is the loan itself that grants and permits them that time.

So while a historically normal transaction might be "pay now, get what you pay for now", loans (and things like credit cards) turn the transaction into "get what you pay for now, pay for it over the next several years". A one-time cost of $100, say, can be ballooned into charging $200 instead and then with interest costing you $240; but spread out over a year that's just 20 bucks a month, which at least feels easier to afford than turning over 100 bucks right away.

The issue is not one-dimensional, of course, as the proliferation of scholarships, financial assistance, and moreover the commercialization of these things (wherein organizations seek to profit off these matters, and so work to proliferate them), also allows costs to be deferred away from the individual student and the immediate moment. For example, government assistance would move the costs onto the tax base, which is again a deeper pocket to plumb than the student's.

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    That simplest explanation doesn't hold, because such loans are available in other countries too, and many US public universities are much cheaper, in particular for in-state students. – gerrit Jun 4 at 7:39
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    @gerrit That's when I fall back to Nate's position and note that entire books can be written (and have, and presently are being) on this matter. We'd have to delve into their economies and politics, discuss the US's aversion to socialism and nigh-religious embrace of capitalism, the historical trend of a politically powerful sector of people who hate big government, degree of government regulation and control, where the actual costs go (e.g. are in-state students getting a discount or the real market price? if a discount who's actually paying for it, and what's it really cost all told?) etc. – zibadawa timmy Jun 4 at 8:29
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    Actually, you have the cart before the horse. Student loans increased because the costs escalated and weren't compensated. Not the other way around. Colleges and universities didn't increase tuition etc. because they could but because they had to as other funding disappeared. It was a combination of political philosophy and also geopolitical issues. For example, a lot of funding dried up immediately upon landing on the moon and beating the Russians to that goal. – Buffy Jun 11 at 16:00
  • I don't agree with this answer. Are student loans a new concept, that has only been introduced in the past 30 years? – Time4Tea Jun 12 at 10:45
  • @Time4Tea That's a bizarre criticism, because it fundamentally supposes that everything must be taken to 11 immediately. Things usually don't immediately ramp up to their most extreme and exploitative forms; that's not realistic. It takes time and the right environments to allow it. Exactly what circumstances had to come about is, again, something I have to defer to the "we can write books about this, and I'm not going to write a book for an answer" line. Though I do understand why it is desired. – zibadawa timmy Jun 13 at 12:00
0

I didn't attend a US University (although my wife teaches at one), but I would think a big part of the reason is down to simple supply and demand economics (which after all is what governs the price of pretty much anything in a free market).

Ivy league US Universities, in particular, are widely considered to be some of the absolute top Universities in the world. Plus, the US is a very desirable country to live in, in general. So, the level of demand is very high, and has only been increasing when you consider the huge increase in both the US and worldwide populations over the past 100 years.

However, on the supply side, the number of US Ivy league schools is very limited and has not increased significantly over the past 100 years (at least, not anywhere near the rate of the population increase).

So, I think it is natural to see significant increases in the price of something, when the demand is ever-increasing, but the supply is relatively fixed.

The free-market capitalist nature of the US has probably exacerbated the situation, since the freer a market is, the more susceptible prices will be to supply/demand forces. Regulation and state intervention can help to 'dampen' the supply/demand effect, which may be what is happening to a larger extent in other countries.

I disagree with this answer, that loans are a significant part of the problem. They may be enabling people to pay higher prices, but it is not as if loans are a new concept that has only emerged in the past 50 years. Also, loans are available for pretty much anything else that people might want to buy, so the simple existence of loans doesn't explain why the price of US college education has risen so much faster than inflation.

To address the OP's question of when the price increases occurred: I think it is highly unlikely there was any 'watershed' moment where prices saw a sudden 'step change'. Prices have been creeping up gradually over many decades, as the population-driven demand has increased.

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As others have mentioned, there are numerous reasons. Here's a couple more:

Universities have been competing with each other. Room and Board have gone up because the amenities have improved. Part of the improving is matching the improving in non-academic life, part of it is acting as a benefit to make one university more appealing than another. Another way to compete is for the faculty; faculty is (on average) paid better than they used to be. (Policy Report)

Another sort of competition is in showing how exclusive they are; part of that is by having a large sticker price, but then actually charging less on average. (Forbes article.)

Lastly (for me and my answer, anyway), financial support for public universities and colleges has been decreasing. They have to make up the revenue differences somewhere; cuts to programs can only go so deep. (Washington Post article.)

  • Usually, competition in a market should reduce prices, not increase them. – Time4Tea Jun 12 at 10:43
  • @Time4Tea The competition he's talking about here is in providing more stuff. It's not focusing on competing on the core product, but on providing the shiniest ancillaries. It's like if competing pocket knife makers decided that rather than trying to make the best pocket knife at a lower price, they will instead start making Swiss Army Knives. – zibadawa timmy Jun 12 at 12:20
  • @zibadawatimmy Competition is competition. If there were any kind of serious competition between Ivy league institutions for undergraduate talent, that would imply that tuition fees should be coming down, which doesn't seem to be the case. Imo, this answer has something of the 'cart-before-the-horse' - universities are spending more on amenities because they have more money to spend, because they are able to charge more, because of the supply/demand effect. – Time4Tea Jun 12 at 12:42
  • @Time4Tea Sure, the price of the pocket knife in the Swiss Army Knife is going down. But then there's the corkscrew, and the Flathead screwdriver, and the Phillips screwdriver, and the bottle opener...Those have costs, too. One component might get cheaper, but when you stop trying to sell just that component, because it's increasingly difficult to distinguish yourself on that alone, and instead try to sell a huge package of things the entire cost goes up. You just add more things and fundamentally higher quality versions (boat replaced by yacht, etc.) to keep it going. – zibadawa timmy Jun 12 at 12:45
  • @zibadawatimmy those examples are very different to top-flight US universities, and operate at very different supply/demand points. For a start, those are all mass-produced products, the supply of which can be increased fairly easily by expanding or building new production plants. I would think it should be possible to expand a school, to create more places, but it's not quite so simple, especially if a school is in a city and so can't easily expand its campus footprint. – Time4Tea Jun 12 at 13:06

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