Running head: WHY IS THE COST OF COLLEGE INCREASING?

Why is the Cost of College Increasing?

Jassmin Aranda

Blinn College

Author Note

This paper was prepared for English 1301, taught by Professor Henry.
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Abstract

It has been a concern for many of the causes of why college education is increasing throughout

the years. As college institutions are seeing multiple ways and a variety of help given to pay for

college, they believe it is fair to raise college tuition even though many college students oppose

this idea. There are a few factors that have contributed to the increased cost of college education:

demand for college degrees, reduced state support for institutions, and how federal student aid

programs subsidize schools.

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Why is the Cost of College Increasing?

Despite the help that college students get from the government and other funding

organizations, it has come to the attention of many people as to why the cost of college is high.

People go to college for job stability and for career satisfaction, but why is the cost of college

increasing? According to further research, the reasons the cost of higher education has gone up is

due to the demand for college degrees, reduction in state support of public institutions, federal

student aid programs that indirectly subsidize schools, market power model, and spending

constraint model.

College education institutions have noted that there has been an increased value in

college degrees and is a reason they decided to go ahead and raise college tuition. “In fact,

according to the General Accounting Office the average college graduate earned about 43

percent more than the average high school graduate” (Barry, 1997, p. 84). The difference

between the two is clear that people earning a college degree are getting higher pay than those

with just a high school diploma and therefore the government made the decision to escalate the

value of college.

“As reported by the Department of Education statistics, state government funds

accounted for 46.3 percent of public institution in 1980. By 1993 that figure had dropped to 36.8

percent” (Barry, 1997, p. 85). With this being said, there is slower growth in financial support

from public universities.

Federal student aid programs are meant to help college students with college costs but

may not fully cover all related expenses that deal with college. Some college students end up
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using student loans which the federal government has extended by private banks. “These loan

programs not only facilitate indebtedness, but also boost the scale of that indebtedness by

encouraging steeper tuition increases” (Barry, 1997, p. 85). Most students and their families

usually do not pay the full price for college since there are a few options available which include

subsidized loans, scholarships, and federal grants. Thus, schools usually get away with charging

each college student a different amount for the same type of career someone is going to college

for. With the federal debt assistance there is, the more college students choose to use student

loans, and that is why higher education institutions think the answer lies in controlling the costs

of education.

Market power model asserts that grants and other subsidies increase demand, which gives

colleges the ability to raise the price of tuition and other fees. “According to the market-power

view, grants, aid, and subsidized loans will boost student demand and lead to higher “sticker

prices” (Fethke, 2012, p. 28). This piece of information suggests that colleges do not pass on to

college students the income that comes from Pell grants and may end up charging extra fees to

students depending on how much they have been awarded. In other words, federal grants

increase profit for college tuition but do little to increase the enrollment for college students.

Spending constraint model argues that the rising tuition is the result of declining state

funding. The spending constraint model predicts that college tuition will increase as taxpayer

support falls which indicates if there are not enough individuals who pay taxes to a federal state

then that will cause higher education institutions to want to make changes to the cost of college

by raising it more. “Since public universities are constrained by their governing boards to break

even, tuition revenue must rise in response to a reduction in taxpayer support to sustain base-
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level expenditures” (Fethke, 2012, p. 28). This explains the fact that state help for college has

declined, and the cost of tuition has gone up for more than a decade.

Conclusion

In conclusion, the cost of college is increasing in many distinct factors. Regardless of the

different options available to help pay some amount of college tuition, the many reasons the cost

of higher education increases is due to the demand for college degrees, the decline of state

support for public institutions, federal student aid programs that indirectly subsidize college and

universities, and the market power and spending constraint model. All these factors contribute to

higher education institutions increasing their tuition. The more funds college students receive

from federal states, college education institutions will take advantage to be able to raise college

tuition and make any changes.

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References

Barry, J. S. (1997). Rigging the price for higher education. Academic Questions, 11(1), 84.

https://doi.org/10.1007/s12129-997-1028-x

Fethke, G. (2012, April 6). Why Does Tuition Go Up? Because Taxpayer Support Goes

Down. Chronicle of Higher Education, 58(31), A28.