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Why is College So Expensive?

2015-06-12 · explainer · Hank · 4:54 · watch on YouTube

Topic: Economics · mode: Explainer

Hank explains that US college costs rose not from instruction, which kept pace with inflation, but from administration, student services and amenities as colleges compete for students as customers; college is still a good deal, but he argues it should be a better one focused on education.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Greeting; US college costs tripled since 1980; student debt figures; link on paying less

  • ★★★ Hank says US college costs have more than tripled since 1980, rising faster even than the cost of medical care. — 00:00:01 · United States
  • ★★★ About 70% of US students graduate with debt, averaging $29,000, which Hank says means $312 a month for ten years of loan payments. — 00:00:07 · United States
  • ★ Hank links in the description to ways to pay less on student loans. — 00:00:18
  • ★★ Hank calls it an undeniable fact that US education costs have greatly increased and that student loan debt is becoming a burden. — 00:00:20

00:00:31 — Since 2008 colleges spend less per student while students pay more: shrinking state budgets and endowments

  • ★★★ Since 2008 colleges have spent less per student while students pay more, because the financial crisis shrank state budgets and some endowments; state funding per student peaked in 2001. — 00:00:32

00:01:03 — Instruction is the biggest category but kept pace with inflation: professor pay, fewer tenure-track hires, adjuncts

  • ★★ Hank says academic instruction is still colleges' biggest spending category; some professors could earn millions in the private sector; the average is about $150,000 and some earn over half a million. — 00:01:03
  • ★★★ Over the last 10 or 15 years college costs doubled while the cost of instruction kept pace with inflation, partly through fewer tenure-track hires and more poorly paid part-time, grad student and adjunct teachers. — 00:01:29

00:01:50 — Where costs rose: administration and student services; colleges selling to students as customers with amenities; non-academic hiring and administrator pay

  • ★★ Hank says the costs that rose most are hard-to-separate categories: operations and groundskeeping, room and board, general administration, academic support, and above all student services. — 00:01:50
  • ★★★ Hank argues the driver is sales: colleges act like businesses competing for students as customers, and amenities like nice dorms or a climbing wall make families choose pricier schools when payments differ by only $30 a month. (hedged) — 00:02:21
  • ★★ Hank says some amenities are worthwhile while others mainly look cool on prospective student weekend; running a 30,000-person institution with country-club facilities is expensive. (playful) — 00:02:58
  • ★★★ Over the last 10 years non-academic employees were hired 50% faster than academic ones, and top administrators' pay raises were more than double academic employees'. — 00:03:11
  • ★★ The average school now has about one non-academic employee per 10 students; some private schools are closer to one per three. — 00:03:27

00:03:34 — College is still a good deal versus the stock market, but should not maximize revenue: education over selling an experience; sign-off

  • ★★★ Hank finds it nutso that it still works: even at inflated prices college is still a good deal, so in a way colleges are just working up to costing as much as the value they provide. — 00:03:34
  • ★★★ A bachelor's, associate's or professional degree yields a higher return than the stock market; even dropping out after 18 months does, though less than graduating. — 00:03:42
  • ★★★ Hank thinks college should not be about maximizing revenue, especially state schools; the real question is whether college could be a better deal. (hedged) — 00:03:56
  • ★★ Hank says rising spending looks like a natural outgrowth of capitalism and short-term self-interest, but asks whether treating students as customers will disserve everyone. (hedged) — 00:04:07 · capitalism
  • ★★★ Hank suggests colleges should give students enrichment and education rather than sell an experience; students learning about the world and themselves matters, possibly more than money, and needn't cost $40,000 a year. (hedged) — 00:04:21 · education

In the description and comments

  • ★★ The description says rising US higher-education costs have priced some people out of an education and built over a trillion dollars in student loan debt. — video description · United States
  • ★ Hank lists the video's sources: the Delta Cost Project's Trends in College Spending reports (1998–2008 and 2001–2011), Vox's explainers on student debt and college costs, the Hamilton Project on students who start college without finishing, and reporting on public colleges' shift to tuition revenue, tuition and room-and-board trends, and the growth of college administrators. — video description

Threads in this video

  • restate · Is college worth it? — Hank says that even at inflated prices college is still a good deal, beating the stock market, but the real question is whether it could be a better deal and not about maximizing revenue. (00:03:34)
  • restate · What is school for? — Hank says colleges should provide enrichment and education rather than sell an experience, so students leave knowing more about the world and themselves. (00:04:21)

Mentioned

Central: higher education

Also: 2007–2008 financial crisis · adjunct professor · capitalism · education · health care prices in the United States · inflation · stock market · United States

Only in the description or credits: Vox

Also centred on higher education: College Advice From an Expert · Is College Worth It? · Life is not a Job Training Program · Your Brain Gets Smart, but Your Head Gets Dumb · US College Students Need Help · An Announcement 3 Years in the Making

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