WHY does college cost so much? Two basic reasons: People will pay what the colleges charge, and colleges have little incentive to reduce tuition.
Those who want the government to provide subsidies to help meet the high cost of college seem not to consider whether such subsidies might have contributed to the high cost in the first place.
In any kind of economic transaction, it seldom makes sense to charge prices so high that very few people can afford to pay them. But, with the government ready to step in and help whenever tuition is “unaffordable,” why not charge more than the traffic will bear and bring in Uncle Sam to make up the difference?
A small-college president once told me that, if he charged affordable tuition, his school would lose millions in government money each year.
In a normal market situation, each enterprise has an incentive to lower prices to attract business away from competitors and increase profits. But the academic world is no normal market.
Back in the early 1960s, when my academic career began, many – if not most – colleges had their faculty teaching 12 semester hours; a few had teaching loads of 15 hours. Today, a teaching load of more than 6 hours is considered sweatshop labor.
Why was it considered necessary to cut the teaching load in half? Mainly because professors were expected to do more research. Why more research? Because research brings in more money from the government, foundations and other sources. On many campuses, a faculty member can’t expect to get tenure unless he or she brings research money into the campus coffers.
Competition among academic institutions thus seldom takes the form of lowering costs in order to lower tuition. The incentives are all the other way.