What does this chart show?
From 2002-2022, tuition revenue per student at the median flagship state university rose by 64% (inflation adjusted), outpacing average household spending for many common expenses.
Why does it matter?
43 million Americans owe a total of $1.6 trillion in federal student loans1.
Over the last 20 years universities battled viciously to maintain and improve their position in influential rankings polls to attract students, spending lavishly on facilities, administrators, and coaches. This spending was often without pushback as public-university trustees approved 98% of cost-increasing proposals. As these institutions pursued their growth and development agendas, federal student loans have served as a limitless source of financing as costs have been passed to students.
The Bottom Line
Despite technology driving the cost of high quality education at scale to ~zero, the cost of an education credential, backed by federal student loans, remains immune to deflationary forces. With two-thirds of employers requiring a degree for entry level roles, the university spending arms race is likely to continue unabated.
Chart & Data Sources - Colleges Spend Like There’s No Tomorrow by Melissa Korn, Andrea Fuller, and Jennifer S. Forsyth
Jack
I agree but what did they spend it on “ spending lavishly on facilities, administrators, and coaches”
Where’s the teachers??
Jack
If you are suggesting that people who did not go to school should pay student’s loans, that’s morally wrong. I was next door last night with my 82 year old neighbor who is on hospice (he’s dying). His wife is 74. I was shocked to hear they still had a mortgage! Should we repay his mortgage for them?? There are all kinds of arguments to be made to do just that. Logically they can’t work to repay. Reality they will have to sell and move to somewhere cheaper.