Students at the University of California, Los Angeles campus, which has faced steep state cuts. (David McNew/Getty Images)
When high school senior Jenny Bonilla got her college acceptance letter in March, she felt shock and heartbreak rather than joy. That’s because the letter from Goucher College, a private liberal arts school in Baltimore, also brought news that she would owe an unaffordable $20,000 a year in tuition and board, even with a scholarship the college was offering.
Bonilla had been in the running for a full ride to Goucher but eventually lost out because her parents’ combined income of $57,000 a year was deemed too high.
“That was heartbreaking,” she said.
Bonilla’s experience is all too familiar to many students and their parents contemplating college, as higher education price increases have far outpaced the growth in middle-class wages over the past three decades.
The average tuition and fees at a public, four-year university rose to $8,655 in 2012-13, not counting the costs of room and board, according to the College Board. That’s 250 percent more than it would have cost in 1982, when a year of college would have set the average student back just $2,423 in today’s dollars.
The tuition at private colleges has increased at a slightly lower rate over the same period: The average four-year private institution costs $29,056, not counting room and board. It would have cost $10,901 in 2012 dollars in 1982.
The pricey degree comes with big returns, on average: College-educated workers earned 79 percent more than high-school-educated workers in 2012 and were much less likely to be unemployed.
The pain of the price hikes has been partly offset by an increase in federal grants and tax breaks for college, as well as by private schools offering deeply discounted tuition rates to lower-income students. But even with that help, some students like Bonilla are finding themselves locked out of the system.
Why is college so much more expensive now than it was 30 years ago? Economists fall into two main schools of thought in explaining the trend.
One theory, referred to as the “Bowen Rule,” says the decisions made by many colleges and universities—such as how many administrators to hire and how to spend its cash—primarily drive the cost.
A competing theory, called “Baumol’s cost disease,” posits that higher education is expensive because of outside macroeconomic factors that affect other businesses, specifically that it costs more to hire highly educated workers even in fields that have not grown more productive.
In other words, it’s either the colleges’ fault, or it isn’t.Read More »from Sticker shock: New college graduates, here is why your education cost so much money