If you want to have a shot at securing a high-paying job, a degree is a must. And yet, as non-negotiable as it has become for upward social mobility, access to higher education has slowly become increasingly difficult.
The main culprit? Skyrocketing tuition costs, which lead to crippling student debt that can’t be erased even by declaring bankruptcy. A public college student in 2015 paid a staggering 400% more in tuition than one in 1980 (source: College Board). For public schools, tuition rose by 129% over the same period.
A decade ago, the U.S. Department of Education already knew that college costs hinder access to higher education and undermine student success. Here’s how federal policymakers decided to address the problem, what we can learn from it, and how the U.S. ended up facing this issue in the first place.
Why Is College So Expensive Today?
The answer isn’t as clear-cut as you might want it to be. On the one hand, yes, there’s inflation involved. That said, even adjusting for it doesn’t explain the staggering increases in college costs.
Indeed, several other factors amounted to perfect-storm conditions that led to a college affordability crisis. The increase in demand, decrease in public funding, and rising administrative and infrastructure costs are all to blame.
More Students Means Higher Demand
The job market has changed tremendously over the past four decades. For one, a high school degree is no longer enough to get a stable job that pays enough to sustain yourself and your family. On the macroeconomic level, the U.S. also moved from predominantly industrial means of production toward an information- and service-based economic system.
That’s how a bachelor’s degree became a literal prerequisite for entry-level jobs in certain fields. For example, if you aspire to climb the career ladder in business and management today, you’ll need a degree; it’s non-negotiable.
So, the demand for college degrees increased in response to the shifts in the job market. The supply side of the equation, however, couldn’t keep up with the rise in demand. The number of higher education institutions remained relatively static. Their sizes, on the other hand, did increase, but not enough to match the demand.
The rest is easily explained by the basic law of supply and demand: all things equal, a rise in demand leads to a price increase.
Public Funding Struggles to Keep Up
In an ideal world, the U.S. government could compensate for the lack of supply growth with public funding. The logic is simple: more public funding means more spots for students.
On top of that, taxpayer money can also be used to finance part of the tuition costs for students, therefore reducing their out-of-pocket expenses.
That’s not how it all played out in reality, however. State funding for public universities has been declining steadily over the past decades. Ironically enough, the two decades preceding 1980 were marked by a boom in public funding: it skyrocketed by 390% between 1960 and 1980.
Under Reagan, that boom was over. And so, today, public schools have to find other sources of funding. Raising tuition fees is a logical solution from their standpoint. Without sufficient state support, they basically have to play by the rules of the free market, which explains why they operate more like businesses than public institutions.
Administrative Expenses Are Out of Control
Little has changed in the size of faculty staff at colleges and universities since the 1970s; the number of faculty members effectively stagnated. The number of administrative positions, on the other hand, tells a starkly different story. It boomed, increasing by 60% between 1993 and 2009.
It’s not just the number of available positions, however. Colleges and universities, focused on “making a sale”, aren’t incentivized to invest in its faculty staff. So, the share of tenured and full-time faculty jobs has been on a decline as colleges and universities started hiring more part-time and adjunct members.
The incentive to attract quality staff also isn’t there anymore; and so, salaries stagnate. Average salaries among faculty members have even decreased since the 1970s because schools hire more part-time staff!
So, while the faculty staff expenses remain either largely the same or decrease, administrative costs have shot up. That goes beyond administrators, coordinators, and support staff: colleges and universities now have to invest in promoting their programs and campuses. Some go as far as trying to attract students with amenities like luxury accommodation, music practice rooms, and wellness centers.
Infrastructure Costs Keep Rising
Watch any movie released in the 1980s, and you’ll notice just how much technology has changed since then. These advances, however, don’t just make it easier to find sources for your next essay or share memes with your friends. For colleges and universities, these advances turned into overhead expenses and maintenance costs.
Technology can aid in learning and research, and colleges and universities strive to sell themselves as a powerhouse of innovation. That means they have to invest in advanced hardware and software, be it to enable VR-powered surgical training or offer online courses.
How to Make College Affordable
Get a Scholarship
There are two types of scholarships that can help you make tuition costs more manageable:
- Merit-based scholarships reward academic excellence, community service, or talent. In other words, you can get one thanks to your achievements, regardless of your financial situation.
- Need-based scholarships are awarded to students from underprivileged backgrounds to boost diversity on campus and promote equitable access to higher education. When you apply for one of these scholarships, your achievements don’t matter as much as your socioeconomic background.
Scholarships can come in the form of continuous or one-time payments. Unlike student loans, they don’t have to be repaid. That said, eligibility criteria can be quite stringent, and you may need to maintain your eligibility (e.g., GPA) to continue receiving the scholarship.
To secure a scholarship, start by browsing your college’s or university’s dedicated pages and applying for as many as you can. Then, expand your search to local and national scholarships.
Secure Financial Aid
Other types of financial aid include:
- Federal student loans. While these are still loans (meaning you have to repay them later on), federal loans have lower interest rates and a debt forgiveness program. You’ll need to fill out a FAFSA to apply.
- Grants. This is federal or state financial aid that doesn’t have to be paid back. Grants are usually awarded based on financial need. Fill out a FAFSA to find out if you qualify.
- Work-study programs. These programs allow you to combine your studies with a part-time job, often offered on campus by the school itself. Check in with your college or university to see if it offers such opportunities.
If none of these options cover all your needs, student loans are your last resort. Keep in mind that they can’t be forgiven even if you declare bankruptcy, and interest rates can be quite steep.
Consider Online Education or Community College
Don’t want to fall into the trap of student debt? Consider more cost-effective options when window shopping for your degree. While expensive colleges and universities can offer you prestige and unparalleled campus amenities, a community college or online school can be a good option if you want to gain knowledge and skills without all the bells and whistles.
Community colleges offer plenty of courses that allow you to earn transferable credits at a fraction of the cost. While they don’t offer undergraduate or graduate programs, you can usually earn an associate degree there and use those credits to speed up your future academic journey.
Online courses, on the other hand, allow you to earn a degree. (Just make sure the program is offered by an accredited institution.) Since you don’t have to attend in-person classes, the running costs for the school are lower — and so are your tuition fees.
Why Higher Education Matters for Society at Large
There’s a clear correlation between educational attainment on the one hand and median earnings and unemployment rates on the other. According to the U.S. Bureau of Labor Statistics, in 2024, those with a bachelor’s degree earned $1,543 per week, as opposed to $930 for high school graduates. The unemployment rate among bachelor’s graduates was almost twice as low, too (2.5% vs 4.2%).
On a larger scale, the more people earn postsecondary degrees, the more prosperous the nation becomes. A college degree is key to upward social mobility, leading to better health outcomes and higher-quality living conditions. Plus, college grads are also happier with their lives, according to the Pew Research Center.
Federal & Private Initiatives Can Make a Difference
Few higher education institutions can sustain themselves with nothing but their endowment and tuition fees. Most public and private institutions need financial assistance to serve students and prosper.
This assistance can come from two major sources: the U.S. government and private actors (e.g., foundations, corporations).
The U.S. government, in particular, already has a powerful tool at its disposal. Established in the Higher Education Act (HEA), the Strengthening Institutions Program (SIP) finances colleges that lack funds and serve low-income populations. Under the SIP, these colleges can receive grants to improve the quality of education, management, and fiscal stability. In 2023, the SIP was used to distribute $122 million to colleges.
The SIP works. According to the U.S. Department of Education, colleges that received SIP grants improved their enrollment and graduation rates, as well as degree cost-efficiency.
Private foundations, corporations, and nonprofits also support colleges and universities in improving student outcomes. For example, the Bill & Melinda Gates Foundation’s Postsecondary Success Program finances initiatives aimed at helping low-income students earn a postsecondary degree.
4 Success Stories Worth Knowing
While federal and private aid is important, colleges and universities have to take the initiative to improve student outcomes. For example, they can introduce programs like student performance monitoring and alerts, one-on-one advisory, or merit- and need-based scholarships and grants.
Such initiatives, in turn, can lead to better outcomes, as measured by:
- Degree completion rates
- Employment rates among graduates
- Achievement gaps based on factors like income or ethnicity
Here’s how four universities invested in student success and how that investment paid off.
Georgia State University: Monitoring Student Progress
GSU has a long-lasting track record in investing in student success. The university’s six-year completion rate increased by 23% since 2003, and its students now take almost a semester less to earn their degrees, on average. That translates into $21 million less in tuition fees paid annually.
GSU’s GPS Advising program, in turn, uses predictive analytics to alert advisers about at-risk behaviors. Since 2012, the program boosted freshman fall-to-spring retention by 5%.
University of Arizona: Boosting Academic Performance
The University of Arizona has put in place an SSRI Central Team that develops and implements campus-wide student success strategies. Those include early warning tools for at-risk students, academic counseling, and more. Its SALT Center, in turn, offers individual support in navigating the academic journey.
On top of that, the university regularly surveys its students to improve student success programs.
University of Maryland: Supporting Minority STEM Students
In 1989, the University of Maryland, Baltimore County (UMBC) put in place the Meyerhoff Scholarship Program. The program offers financial support for minority students aspiring to earn a STEM degree.
Since then, the initiative has helped over 1,500+ students graduate from STEM programs. Its participants were also 5.3 times more likely to pursue a Ph.D. or M.D. degree than those who declined participation.
Southern New Hampshire University: Offering Flexible Programs
The SNHU offers competency-based education (CBE) that allows learners to earn a degree by demonstrating their proficiency across 60 competencies. CBE programs are a more flexible and cost-efficient way to earn an associate or bachelor’s degree, and it can take as little as 16 weeks to complete one!
Arne Duncan’s Vision for U.S. Higher Education
In 2015, Arne Duncan, the then-U.S. Secretary of Education, gave a speech about his vision for the nation’s higher education system. His vision underscored the reality of higher education in the United States: while more students obtain postsecondary degrees than ever before, too many lack the support they need to succeed.
That starts with financial support: college wasn’t affordable back then, and it still isn’t today. Arne Duncan emphasized that making postsecondary education accessible across income categories was the crucial first step toward the higher education system of the future.
However, affordability wasn’t the only preoccupation in Duncan’s mind. Focusing on completion rates was just as important, since student debt leads to default three times more often if the student never got their degree.
Lessons to Learn from Obama’s Administration Investments
The Obama Administration made college affordability and student debt a key focus of its education policy. For instance, the annual aid for students rose by more than $50 billion under the Obama Administration’s two terms, while targeted annual tax benefits increased by over $12 billion.
But that’s not all. In 2010, the U.S. government ended student loan subsidies for private banks. That effectively diverted more than $60 billion in savings to students and taxpayers. The Obama Administration also increased the maximum cap for Pell grants by $1,000 and expanded the number of its recipients by a third.
The American Opportunity Tax Credit, in turn, was introduced to help families bear the cost of tuition in 2009. The tax credits could reach up to $10,000 for four years of tuition, ultimately helping 10 million students pay their tuition in 2016.
As for student debt, the Obama Administration worked to make repayments more manageable and reduce defaults caused or exacerbated by student debt.
For example, under that administration, all Direct Loan borrowers became eligible for income-based repayment options. These options allow for capping loan payments at 10% of the person’s discretionary income. That led to a quadruple increase in participation in income-based repayment plans and reduced delinquencies and defaults.
Final Thoughts
Enabling equitable access to higher education isn’t just about fairness and values. Put bluntly, it makes economic sense: postsecondary degrees enable upward social mobility, effectively lifting individuals from underprivileged backgrounds out of poverty.
On top of that, those with postsecondary degrees are better off than high school graduates across all criteria. Better living conditions? Check. Better health outcomes? Check. Higher salaries and lower unemployment? Check and check.
At the risk of using a cliché, increasing public funding for higher education does indeed mean investing in the future of the nation. To echo Arne Duncan, however, making college affordable should only be the first step. Postsecondary institutions and government agencies alike should also prioritize education that meets learners’ needs and leads to higher completion rates.
