The Economics of College Tuition

Mar 01, 2004

Featuring:

Dr. Antony Davies
Professor of Economics
Duquesne University

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America's higher-education system ranks among its greatest achievements.  Indeed, the United States is home to some of the world’s finest academic institutions. As foreign spending on higher education in the United States is estimated to exceed $11 billion annually, higher education also represents a significant U.S. export.

Over the past decade, however, the cost of college has skyrocketed.  Between 2001 and 2003, the average tuition and fees for public colleges rose from $3,487 to $4,694. For private colleges, the hike was from $16,233 to $19,710.  These tuition jumps are unusual only because of their size. During the past 22 years, tuitions at four-year public colleges rose by 202% while the consumer price index rose only by 80%. If recent trends continue, by 2010, tuition and fees alone will be $7,082 for a public four-year college and $28,182 for a private institution. For many families, increases like these are difficult to absorb, but faced with tight budgets, many institutions of higher learning continue to increase their rates. 

As a result, policymakers on Capitol Hill face increasing pressure from constituents, as well as other entrenched interests, to somehow address the matter.  Over the past months, Congressmen from both sides of the aisle have sponsored legislation attempting to control college costs through varying means, including tuition indexing, cost containment mandates, and tax incentives for students and families.  But why has the price of higher education increased so dramatically lately and when will it stop?  Who stands to benefit from the varying approaches to making college “affordable?”  What are the implications of these reform proposals on teachers, students, parents, and the public at large?

Please join us as we sort through these issues and see how the lense of economics can sharpen the way we think about these problems.