Universitas Blog

Why Does College in the US Cost So Much?

Saturday, May 31, 2014

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When the discussion turns to doing college work in the US, the issue of cost always comes up.  For many of my clients, cost is not an issue.  They are willing to pony up the funds necessary to pay full cost.  Be that as it may, the cost of a US college education is staggeringly high.  The cost to attend a Philippine college or university is quite low by comparison.  The cost of attending La Salle, for instance, is about Php210,000 or about $4,900 a year (based on an exchange rate of Php43 to $1).  UP is a measly Php45,000 or just over $1000 annually.   Harvard's total cost is $56,449 annually, NYU (the most expensive school in America) at $62,540, and state university heavweight UC Berkeley is going to make you over $52,000 poorer every year.  If you do the math, you will realize that you can send more than ten kids to La Salle for every year you are at Berkeley (more if you go to NYU).  You'll also see that the cost of a US college education is about Php 2.5 million a year or Php 10 million for the whole four year ride!  Certainly enough to make one's head spin.  Something that should be noted is that I compared cost of attendance figures, i.e. I only quoted tuition fees for Philippine schools since our students don't normally live on campus.  The case is not the same for US schools where our students typically live and eat in the residence halls so I've added the significant cost of room and board.

And the cost of education has spiraled too.  Back in 1983, when I started college, I remembered Santa Clara charged me an annual tuition fee of $5,607.  Room and board put my costs at just under $10,000.  Fast forward thirty years later to 2013, had my son attended Santa Clara, it would have cost our family over $43,000 annually to have Tyler roam the hallowed halls of the Mission Campus WITHOUT the cost of room and board.  Eeesh!  So why does it cost so much?

Before I even attempt to answer that question, let me just say that this is a question that more knowledgeable people than I have struggled with.  Countless articles have been written and books published (Why Does College Cost So Much by Archibald and Feldman) on this very topic.  People have speculated on the impact on American society when something as basic as a college education is prohibitively expensive and how spiraling student debt is going to affect the US in the coming years.   I won't even try to address those issues.  But let me try to give some thoughts.

1.  Building and maintaining physical assets.  Anyone who has ever visited an American university campus always marvels at the quality of the physical facilities.  Residence halls come complete with high speed Internet access, workout facilities, suites with kitchenettes, and large screen high definition television sets in the common areas.  They can sometimes rival high end hotels.  Roam around campus and you'll see vast expanses of beautifully manicured lawns meticulously (and expensively) maintained.  If you  Image

 

visit some large state universities, you'll see football stadiums and basketball arenas worthy of hosting professional teams.  All these cost money...a lot of it!  And much of the space is unused for significant portions of the year.  These palatial dorms are idle in the summer months and the football stadium is at full capacity only for some weekends in the fall.  And the food!  Cafeteria food has come a long way since I was in college and while yes, it is still cafeteria food, we didn't have sushi, vegetarian,  and vegan options as well as grilled selections made to order.  All this is done to attract students to come and enroll.  Students bring in much needed tuition money and fill the beds in the residence halls.

2.  Costs of Competing for Students.  Costs have spiraled because university administrators have allowed it to spiral.  They take the extra revenue and set it aside to attract superior students with grants and merit scholarships.  These grants and merit scholarships are just dressed up tuition discounts so a student the college is wooing may end up paying only $10,000 when the sticker price is $60,000.  The student is made to think that he/she is getting a prestigious $50,000 scholarship when in actuality, the college is just giving him/her a discount from the price they had jacked up to begin with!  What happens though to the poor schmoe who isn't quite attractive enough to get as large a discount?  Well, he or she is just given some kind of financial aid package which is packed with loans and such.  These loans are what causes a student to be, on the average, about $30,000 is debt by the time he/she graduates The good news for us international students is that we don't qualify for these loans so we are never in the hole for $30,000 at graduation.  We just don't get to go to college in the US period.

3.  Colleges have no incentive to compete on costs.  A college education is considered so basic now that people in the US will obtain it for their children regardless of the cost.  More and more, a simple college degree is not enough.  The thinking now is that the degree has to come from a name brand, ranked institution.  The colleges don't compete on cost, they compete on prestige.  When it comes to US higher education, prestige is becoming more and more the coin of the realm (and real education less and less).  I remember a case where a student wanted to attend the more prestigious and more expensive New York University (NYU) instead of the cheaper (and supposedly less prestigious) state university of New Jersey, Rutgers.  NYU would have put the poor child in serious debt at graduation while Rutgers would have allowed him to carry a more modest burden.  This race to be seen as more prestigious and to climb the rankings is what causes colleges to spend money on reason numbers 1 and 2 above which escalates this upward spiral.

Make no mistake.  College in the US is expensive.  Even back in 1983 when costs may be seen as more modest, it was still expensive.  Ultimately, the choice comes to one of value....do you value the difference of an American education so much as to pay a substantial premium?

Or you could send your kid to Canada where the cost of education is about 50% lower than in the United States.

 

Related article:

http://www.theatlantic.com/international/archive/2013/05/the-high-price-of-a-free-college-education-in-sweden/276428/.  A college education is free in Sweden but not as free as some would think.

 

 

June 5, 2014 Update: Trailer for upcoming documentary called Ivory Tower https://www.youtube.com/watch?v=eLdU7uts4ws

August 30, 2014 Update: Last year, only nine colleges in the US cost more than $60,000 annually.  This year, that number rose to FIFTY.  From just nine to FIFTY.  Wow!

http://www.businessinsider.com/50-colleges-charge-60000-dollars-2014-7

John Sy, President and Senior Counselor
Universitas College Counseling
203A CM Recto Street
San Juan, Metro Manila, Philippines

johnsy@universitasph.com
+63 (917) 833-3825


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John Sy, President and Senior Counselor
Universitas College Counseling
203A CM Recto Street
San Juan, Metro Manila, Philippines

johnsy@universitasph.com

+63 (917) 833-3825

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