10 Reasons Why College Tuition Increases Every Year

College is an invaluable part of life as a young adult, with almost every subject under the sun available to eager young academics. College tuition rises every year for many reasons, and it’s even faster than the rate of inflation.

Here are 10 reasons why college tuition increases every year:

Economic trends and rates of inflation.
Less higher education funding.
Graduation setbacks lead to longer periods of study.
The traditional campus experience.
Scholarships and the student aid cycle.
Insufficient competition with other schools.
Frequent technological upgrades.
More demand: A higher rate of student admission.
High-pay labor and industry standards.
More subjects mean more money.

Let’s delve deeper into these reasons to discover what exactly you’re paying for and why college life has become so absurdly expensive.

1. Economic Trends and Rates of Inflation

The truth is, economic trends and rates of inflation fluctuate over time.

Economic trends rule how the market economy functions and inflation is the product of these fluctuations. When it comes to college tuition, economic trends and rates of inflation are the two biggest reasons for such high costs and the main factors in why college tuition increases annually.

Since the great recession in 2008, economic trends have forced rates of inflation higher at a time when public funding has been cut to institutions of higher education. With a 2% rise in inflation each year, and less cash handed out by local government authorities, colleges are forced to ask for more money in the form of tuition fees (source).

Many colleges and universities never adequately recovered from the events of the 2008 recession and yet were compelled to continue as they’ve always done.

In light of these events, money needs to stretch further than ever before.

With a lot less money for essentials, most of the money that universities make comes in the form of tuition fees, which seemingly have to cover all the university’s expenses from top to bottom (source).

2. Less Higher Education Funding

Along with average inflation rates and subjugation to the overall market economy, local government entities have stopped handing out as much money as they used to. Less public funding for colleges means less money to provide their students with the services they’ve always given.

It’s no secret that higher education costs are beyond what most graduates make in terms of salary for the years after they finish college. Unfortunately, for the majority of college students, their college years are formed by the inextricable weight of student loan debt.

However, although government entities are handing out these cash loans to desperate students, they’re actually handing out less funding to the colleges themselves. This lack of public financing creates gaps in university resources, which, unfortunately, have to be filled by tuition fees (source).

3. Graduation Setbacks Lead to Longer Periods of Study

With an increasing workload and several other obligations pushed onto students today, there are more and more instances of full-time students taking much longer to graduate.

With the extra years factored in, plus a semester or two potentially changing majors or dropping subjects, these graduation setbacks leave students overwhelmingly out of pocket. Some reports suggest that 40% of those admitted to a 4-year degree don’t finish their degrees on time. This can be due to taking a sabbatical for a few semesters or the result of switching majors. As a result, many 4-year college students end up taking closer to 6 years to finish.

In an institution wherein each semester is calculated separately, adding more time to your course inevitably means more money. More extended study periods also mean that the college has to maintain its care over your education for longer and add even more to the list of potential expenses (source).

4. The Traditional Campus Experience

When people think of going to college, they think of big, red brick buildings, stately dormitories, grand pillars, a vast campus swarming with students, and littered with amenities and state-of-the-art facilities.

The traditional campus experience is a lot more expensive than it used to be since the cost of today’s education is more than 17 times what it was in the 1960s. Extracurricular activities that require more space on campus have left many universities with no choice but to raise the price of study (source).

Offering modern housing, a variety of food choices, and extra support for students such as welfare teams and academic wellbeing all contribute to the rising cost of university. Year after year, the number of additions needed to keep the traditional campus experience magical costs colleges a tremendous amount of money.

Operating costs are much higher than you might expect, with some studies suggesting that public colleges spend on average around $14,000 each year for every student in attendance.

Furthermore, your tuition fees are going to your educational needs, and your campus experience is a big part of that (source).

5. Scholarships and the Student Aid Cycle

Federal Student Aid has a lot of control regarding who goes to college since higher education costs are so high.

Increasing numbers of loans offered to students going to college mean the student aid cycle gives colleges more opportunities to hike their prices. With much of the tuition fees borrowed from public authorities, colleges and universities are free to set whatever price they like.

According to the National Bureau of Economic Research, student aid accounts for the majority of tuition fee increases from 1987 to 2010. This startling evidence suggests that colleges are taking advantage of loans offered to their students, and students are unwittingly sunk lower into debt (source).

Additionally, when a college sets a high tuition rate for a large number of students, they can then offer certain students scholarships that decrease the net price.

This trick also means that colleges can be more selective with who they enroll in their programs, allowing for top students with bigger loans to come in and unwittingly pay for those who attend based on college scholarships (source).

6. Insufficient Competition With Other Schools

The cost of tuition has risen quicker than the cost of hospital care and housing combined in the United States, and one of the reasons for this is the lack of sufficient competition with other schools.

Competition with other schools is a great way to level the playing field for everyone, including students and colleges. Still, unfortunately, there aren’t enough higher education institutions in each state to form sufficient competition.

Traditionally, industries with a lot of inter-business competition tend to perform the best, keep their prices low, and steadily increase productivity over time. However, the higher education model hasn’t allowed for productivity to increase, meaning prices are skyrocketing.

Since many schools must behave like businesses to survive, their prices will inevitably reflect this.

Given that accreditation for new schools is difficult since the system naturally disadvantages them, the big players like 4-year colleges get to make their own rules, and tuition fees are no exception to that rule (source).

Fewer higher education institutions mean less competition, and less competition means higher prices that’ll continue to increase every year.

7. Frequent Technological Upgrades

Technology is developing at a faster rate than ever before.

Every year, we face new and innovative technological discoveries and advancements that many universities and colleges must purchase.

To remain at the top of their field, colleges and universities have to take advantage of these technological upgrades. Without these upgrades, students would be less likely to receive the best education money can offer.

This includes:

Providing state-of-the-art technology for research students.
Surveillance systems for security staff.
Round-the-clock IT services.
Administrative software.
Study operating systems.
Lasers for the physics department.
Extensive online library software for research.
Computers for coding majors.
Speech software for the drama department.

The money has to come from somewhere, and that extra 8% on your tuition fees will help with that. Additionally, since technology is changing and evolving all the time, it’s necessary to provide much of it on campus to assist researchers employed by the college (source).

8. More Demand: A Higher Rate of Student Admission

The rate of student admission to higher education institutions is at an all-time high, and it’s only increasing as the years go by.

Since there’s a higher student admission rate, this means more demand, and more demand means more money. Campuses have to be equipped to house, feed, and teach a vast number of students every year, bearing in mind safety concerns and a high standard of teaching.

More people on campus inevitably means more safety concerns.

This means colleges need to employ more security personnel, more administrators, more teaching staff, full-time and part-time, and more welfare services. Bearing in mind that the student admission rate increases year on year, tuition fees will inevitably increase at the same rate to account for the cost (source).

9. High-Pay Labor and Industry Standards

Colleges are subject to high standards, so their labor costs are dependent on this. Colleges and universities need to pay their staff sufficiently to compete for the best reputation for teaching outcomes.

Having high-pay labor means paying faculty members high wages to encourage them to give better outcomes. These wages come from tuition fees, and considering the university spends $14,000 per year on each student, you can bet they’re investing a significant part of that in their professors.

Without these high salaries, it’s likely the faculty wouldn’t be held in such high regard since their wages enable them to teach and do research on the side, which is often done these days (source).

Every year, since more students are applying for these colleges, the number of faculty needs to increase, and the workload associated with having so many students needs to be shared.

Having an excellent faculty with great outcomes costs increasingly more each year.

Interestingly, this concept is called Baumol’s Cost Disease. Famed economist William Baumol said that only productive industries could cut the cost of labor, and unproductive industries like higher education will increase salaries, increasing the price of the service for consumers.

In this instance, the students themselves become the consumers (source).

10. More Subjects Means More Money

Every year, colleges and universities take on more subjects to deal with the diversification of higher education in the United States. These days, you can study almost anything at college, including Geography, Mathematics, Zoology, and Social Care.

With the rising number of subjects being offered at higher education institutions, colleges need to have the resources, faculty members, and money to provide this to their students. Many years ago, there were only a set number of subjects being taught in higher education, but today, the choice is so varied that many students don’t settle on a topic for at least 2 years.

Having the resources to accommodate this is of the utmost importance to these institutions, allowing their students the scope to study and research almost any subject under the sun. Your annual tuition fee helps to uphold this, so with even more subjects being offered every year, your payments are bound to increase.

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