In 2023-2024, the average cost of attendance for full-time undergraduate students living on campus at four-year institutions was as follows:
• Private nonprofit institutions: $60,420
• Public four-year, out-of-state institutions: $46,730
• Public four-year, in-state institutions: $28,840
Multiply that amount by at least four years, and you’re looking at a sizable investment in your future. But why is college so expensive, exactly?
Keep reading to learn five reasons why college is so expensive, what contributes to the rising cost of college, efforts to control costs, and more.
Factors Contributing to Rising College Costs
Several factors contribute to rising college costs, including faculty salaries and benefits, campus facility construction and maintenance, student services and amenities, administrative costs, and technology integration. We’ll dive into the details of each of these.
Increase in Faculty Salaries and Benefits
Faculty salaries increased an average of 4% between 2021-2022 and 2022-2023, which was a fairly substantial increase.
Faculty also receive benefits like employer contributions to retirement plans and health insurance, college tuition, Social Security contributions, disability income protection, unemployment insurance, group life insurance, workers’ compensation premiums, on-campus parking, and fringe benefits, like athletic event tickets. Non-salary benefits can amount to up to one-quarter of faculty member compensation.
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Construction and Maintenance of Campus Facilities
Studies have found that prospective students reach their decisions within the first ten minutes of walking on campus. Therefore, campuses must do more than just satisfy the basic needs of their students. They must convey emotion, create positive reactions, and offer “extras,” like aesthetics, all of which results in high construction costs to create a lasting positive environment for faculty, staff, and students, which can include:
• Code requirements, including stair towers, fire-rated corridors, fireproofing, fire alarm systems, sprinklers, and more.
• Legislative mandates related to the ADA, EPA, OSHA, and ASHRAE, which dictate accessibility, dust control, occupancy, ventilation, air filtration, and more.
• Institutional requirements, like minimal disruption to campus life, job site cleanliness, limiting noise, complex phasing-in schemes, and more.
• Short timelines that protect athletic event schedules, residence hall occupancy, and other conditions.
• State-of-the-art facilities, such as high-occupancy performance and athletic venues, technology-infused learning environments, and highly functional classrooms, labs, meeting rooms, offices, and other complex mechanical systems.
• Higher-quality finishes, including hardware, carpets, flooring, restroom fixtures, and more to maintain durability.
• Sustainability requirements, such as Leadership in Energy and Environmental Design (LEED) metrics based on campus sustainability commitments.
• Technological advances and other additions, such as hearing loops in public assembly spaces, gender-neutral restrooms, prayer rooms, locking systems, security cameras, motion sensors, and more.
Many smaller pieces go into creating a great environment for students now and into the future.
Student Services and Amenities
Student services programs create an additional expense. These programs support students in overcoming barriers, including underrepresented groups, first-generation or low-income students, those with limited English proficiency, and students with disabilities or learning differences. Services can include:
• On-campus events and workshops
• Guest speakers
• Tutoring services
• Academic resources, including those in the library
• Technology rentals
• Career services
• Academic advising
• Mental and physical health services
• Transportation
College costs may also go up due to various amenities on campuses, which can include extravagant campus gyms with lazy rivers, whirlpools, and saunas; fancy student unions and dining options; movie theaters, arcades, ski resorts, swanky condo-like residence halls, and more.
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Administrative Costs and Staffing
Administrative costs and staffing are another reason why U.S. colleges are so expensive. Administrative costs refer to institutional support for those who operate the day-to-day functions of the institution, which could include the following:
• Executive management
• Legal department
• Fiscal operations
• Public relations
• Development office
The American Council of Trustees and Alumni survey found the following per-student administrative costs:
• Oklahoma: $1,970
• Hawaii: $2,230
• Tennessee: $2,450
• New Jersey: $4,982
• Alaska: $6,224
• Wyoming: $7,830
Colleges and universities must also cover auxiliary expenses (including parking facilities, housing, and food services).
Cost of Technology Integration
The pandemic increased the costs of student information systems after declining in previous decades. A large university with 20,000 or more full-time students might spend between $30 million and $100 million during the first five years of a new system.
Naturally, the cost of implementation depends on a few factors, including:
• School size
• Data processing
• Hiring requirements to manage the technology
• Data migration and implementation
• Customization preferences
• Third-party integrations
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Role of State Funding Cuts
State funding cuts for higher education are a key factor in rising college costs. While state appropriations for colleges saw overall gains year over year, 28 states have in fact cut their support for higher education.
As states reduce financial support for public universities, institutions raise tuition to cover budget shortfalls. This shift places more of the financial burden on students, contributing significantly to the overall expense of college.
Additional Expenses for Students
Students also pay for additional expenses, such as the costs of living on campus, textbooks, course materials, and tuition increases. We’ll walk through each cost below.
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Cost of Housing and Living
Housing and living costs vary depending on whether you choose to live on or off campus. Here are the differences between living off-campus versus on-campus:
• Off-campus: The median monthly cost of rent surpassed $2,000, and the average college-aged male spends an average $374.10 per month on food. Don’t forget to factor in transportation, utilities, internet, and furniture to get the full costs of living off campus.
• On-campus: The average cost of housing and food for full-time undergraduates at a public two-year in-district college was $9,970. On average, it also cost $12,770 for both public four-year in-state and out-of-state institutions and $14,650 for private, nonprofit four-year institutions.
Ultimately, you may pay far more for on-campus housing, but consider the tradeoff between living on campus vs living off campus. Living off campus can have its disadvantages, despite the cost savings.
Textbooks and Course Materials
Unfortunately, textbooks and course materials have gone up dramatically over the past two decades. Textbook costs have increased 162%. Students paid the most at public two-year colleges ($1,470) versus at public and private four-year colleges ($1,250).
Students might also avoid buying course materials due to these steep prices and might even choose different classes based on high textbook or supply costs.
Tuition and Fee Increases Year-Over-Year
Tuition and fees usually increase from year to year, and scholarships often don’t increase to match.
The average 2023-2024 tuition and fees for college students increased by the following percentages for full-time students:
• Public four-year colleges for in-state students: 2.5%, for an average of $11,260
• Public four-year colleges for out-of-state students: 3%, for an average of $29,150
• Public two-year colleges (in district): 2.6%, for an average of $3,990
• Private nonprofit four-year colleges: 4%, for an average of $41,540
There’s nothing students can do to change the tuition increases, so you must learn other ways to compensate, including applying for more scholarships or having parents pay more.
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Efforts to Control College Costs
The government has attempted efforts to control college costs. The House Committee on Education and the Workforce passed the College Cost Reduction Act to change college costs for the better by adjusting the student loan and Pell Grant programs. The bill would save students at least $150 billion over a decade.
In addition, colleges themselves have tried to slow down the cost increases. However, many colleges say they can no longer afford to cut costs due to inflation (food, services, labor, and more). Therefore, many colleges use third-party consultants to identify where they can cut costs, including looking deep into their institutional operations.
The Long-Term Impact of High Costs
Many colleges have begun to see the long-term impact of high costs, including overall decreased enrollment. The U.S. has seen a waning public belief in the importance of college.
In an Edge Research survey of 1,700 high school juniors and seniors and more than 3,100 non-enrolled adults aged 18 to 30, the majority of respondents still see the benefits of college. However, compared to results from last year, the rate of perceived importance has gone down by as much as six percentage points. Adults not currently enrolled in college were less likely to believe in the benefits of college than high schoolers.
The Takeaway
Asking why colleges are so expensive opens up a whole Pandora’s box of reasons — it’s impossible to pinpoint just one. College administrative offices must work hard to balance and manage costs.
Unfortunately, families bear the brunt of the costs, but learning how to pay for college can go a long way in helping you understand what to do. Options for paying for college include cash savings, scholarships, grants, and federal and private student loans. Federal loans should be pursued first, as they come with federal benefits, protections, and income-driven repayment plans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
What is the most expensive part of going to college?
Tuition, the price you pay for teaching or instruction from a college or university, is the most expensive part of going to college. According to the Education Data Initiative, the average cost of tuition at a public, four-year institution is $9,750. At a four-year out-of-state institution, students spend an average of $28,386 on tuition, and at a four-year nonprofit private institution, that number averages $38,421.
Why do private colleges cost more than public?
Private colleges cost more than public universities because they rely on donations, an endowment, and tuition to keep them running. However, most private colleges offer generous financial aid awards for students to bring costs down. Public institutions, on the other hand, rely on state government funding, which can help alleviate the cost burden for families.
How can students reduce the cost of college?
Students can reduce college costs by applying for merit-based and institutional scholarships and by looking for other types of aid, such as grants. Scholarships and grants are free money that you don’t have to repay, unlike loans, which you do need to repay after you graduate.
Students can also look into jobs that pay for your degree, which offer a huge benefit because some jobs will completely take care of your tuition bill.
Are online degrees a cheaper alternative?
Online degrees can be a cheaper option, but it’s important to figure out what kind of college experience you’re looking for. Getting an online degree is a vastly different experience from attending college in person. Therefore, sometimes it’s worth paying extra to get the experience you desire, rather than just “getting through college.”
Photo credit: iStock/Ibrahim Akcengiz
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