Why are colleges and universities so expensive, forcing students into debt?

When I graduated from Oberlin College in 1970, I remember holding my diploma and telling my parents that this is what $16,000 paid for, approximately $4,000 each year for four years of tuition, room and board, books, fees and personal expenses. When I attended Harvard Law School from 1972 to 1975, tuition was about $2,500 per year. When I started teaching at Temple University in 1977 costs there were about the same or less.

Comparable costs today would run about $57,000 per year at Oberlin, or $228,000 for four years. Tuition alone at Harvard Law School now runs $47,600 per year. At Temple University the annual cost for undergraduate tuition, room and board, books, fees, and personal expenses runs about $29,000 per year in-state, and $39,000 per year out-of-state. Tuition at Temple’s law school for full-time students runs about $16,600 in-state, and $28,900 out-of-state.

In my time a good summer job could pay for the better part of the cost of an academic year. Today most students must borrow to pay their academic bills, some of them graduating with six-figure debt that they will be paying off for most of their working lives, a burden compounded by the current realities of the Great Recession.

This year for the first time, the total amount of student loan debt has grown to exceed the total amount of credit card debt. And some of that credit card debt is owed by the same students obligated to repay student loans!

I was recently asked what caused college and university costs to skyrocket to their current astronomical levels. The short answer is the U.S. News and World Report rankings of colleges, universities, and professional schools.

Before that magazine began compiling and publishing their rankings in 1983, students chose what colleges to apply to and attend based on location, cost, word-of-mouth, and sometimes family tradition. What the published rankings provided was a list of all the possibilities, and a method, however imperfect, of comparing all the different schools. This made students and their families much more conscious of their options as consumers. And it made the colleges and universities concerned and insecure about their ability to continue to attract students from the pool of newly empowered and informed consumers.

Colleges and universities responded by doing whatever they could to improve their ranking in the U.S. News and World Report. They improved and expanded classroom and research facilities, improved the ratio of faculty to students, and competed for faculty whose professional accomplishments would add luster to their institutions. To improve their evaluations from current and prospective students, they upgraded dormitories, dining, and especially athletic and recreational facilities. And to make a favorable impression on prospective students and their families, they upgraded landscaping and the overall appearance of facilities and hired student guides to escort prospective students and their families around the campus to present it in its best light.

They hired publicists to publicize the accomplishments of their faculty and students. College athletics attained even greater importance for its publicity and image-building. All of these things cost money. Big money.

Passing on those costs to students through increased tuition and other charges had the effect of making students and their families even more value conscious, seeking reassurance that college choices could justify their rising costs. This only escalated the competition and the need to improve the U.S. News and World Report ranking. Some universities have been caught cheating by reporting false data on the accomplishments of their students, alumni, and faculty. Suspicion is widespread now that, given the importance of the published ranking, the schools caught cheating are probably not the only ones doing so.

As college costs continue to accelerate far in excess of inflation, some shrinkage in the applicant pool is anticipated, particularly in light of the current economic crisis. This only intensifies the competition for the remaining students in the pool, further driving up costs.

I don’t see any easy solution. The published college and university ratings, since expanded to also cover professional schools, have been a huge marketing success for U.S. News and World Report, and that magazine is not about to abandon the practice. A boycott has been discussed by which colleges and universities might collectively refuse to submit data on which the rankings are based. But some schools may be tempted to break any boycott in an effort to improve their own rankings. And U.S. News and World Report could publish rankings anyway based on different criteria even less favorable to the boycotting schools.

Prospective students and their families need to educate themselves on the consequences of incurring student loan debt, including recognizing that graduates are competing for reduced numbers of jobs, often at reduced salaries because of the recession. They should consider less expensive unranked alternatives like community colleges, which can be a great value, save a lot of money, and still lead to a degree from a four-year college or university.

Education is still a good investment, but not at any cost!