[zenlinux]

I know for this particular example the problem is tightly related to California's state budget problems, but the astronomical increase in the cost of a college education over the past generation drives me nuts.

It seems like this is one area where market forces can't do their job, because almost no one seems willing to forgo paying the exorbitant price of a college education, so there seem to be no pressures for prices to decline or remain stable. Instead we've changed the culture so most of this generation starts their working lives with tens of thousands of dollars in debt. If you're not willing to put up with this, you could very well be shutting yourself out of the middle class. It's not right.

[spamizbad]

I'm not exactly Mr. Free Market, but as far as I can tell the market appears to be functioning as intended.

People place a very high value on what they perceive to be a good college education, and this value is typically how much student debt they can acquire. There are well-known ways to significantly cut the cost of your college education: going to in-state schools, and conducting the first two years of your education at a community college. Despite this many people shun in-state institutions (unless they're in a state like California which has numerous highly regarded public universities, but then again they're all hard to get into), and even more laugh the the notion of Jr. College, determining it only fit for misfits teens and continuing adult education Note: I don't agree with that assessment, but it serves to illustrate the fact that college has become so closely tied to social status, making pricey schools all the more desirable.

As for what's driving tuition upwards, it's probably the fact that the modern University has become a luxury resort. They've got an array of clinics, career councilors, psychologists, paid tutors, entire buildings designated for non-athletic student recreation, bike and jogging paths, numerous social groups, reasonably well-maintained facilities and immaculately manicured campuses.

Further driving costs upward, besides state budget shortfalls for public universities, is the fact that they are very aggressive at handing out scholarships to attract top-notch students, along with the significant amount of marketing that is conducted to get everyone else to shell out big-bucks for their undergraduate programs.

And when you look at study after study that shows you're going to earn significantly more over your lifetime if you get a college education, is it any surprise people are willing to eat the high upfront costs? Paying $50,000 to a student loan for an additional $10K+/year in earnings potential seems like a bargain to me. Granted, it's not always going to work out for the best, but hey you gotta take risks to get ahead.

[jplewicke]

Another possible reason for tuition increases is Baumol's Cost Disease ( http://en.wikipedia.org/wiki/Baumols_cost_disease ), in which the relative cost of providing a service grows rapidly because it hasn't had productivity improvements. When the amount of time needed to teach someone how to compose an essay hasn't changed since before 1960, it's not surprising that it's gotten more expensive compared to the price of microwave ovens.

Since most of our economic activities experience greater productivity growth than we've seen in education, it's not surprising that educational expenditures are growing faster than inflation. I'm hopeful that this will change as web-based education goes mainstream.

[yummyfajitas]

the cost of college is also highly subsidized. That's not exactly a functioning market, although the market part of the system is responding to those non-market incentives. That's probably why college has turned into a luxury resort. If you aren't paying the full price, why not go to the school with free rock concerts and a yoga room?

I think a possible solution might be to require that if a college gets government subsidies, it must make it's services separable. That means students get the option to not pay for (and not participate in) student activities. Of course, there should be no government subsidies for non-essential services.

[dantheman]

Once again, this is where government intervention into the market is causing adverse side effects. If there wasn't a student loan system, their would be no way for students to finance their education and thus colleges would have to cut costs to become affordable. When students can borrow and pay whatever exorbitant prices prices will continue to inflate as everyone bids up the price. Additionally, we are seeing the costs of goods that are produced in America increase (education, healthcare, housing) because they do not have the returns to scale as other industries.

[dasil003]

And on the flip side, having a college degree isn't any kind of guarantee of good pay or job stability, so college students are getting screwed on both sides. In another 10-15 years people are going to start seeing just how bad a bargain this has been for their overall prosperity and the education bubble is going to burst painfully.

[tumult]

The price of college will keep "correcting" itself upward as people continue to see it as necessary for non-labor employment. College isn't a prerequisite for competence. Once people come to their senses about this, it will drop back down. Until then, the price will continue to go up -- people see a decade of debt as being worth the price of perceived employment opportunities.

[gamble]

In a sense, you're not buying an education so much as the prestige of the institution that grants your degree, so it makes perfect sense that higher-priced universities are perceived as a superior 'product'. I'm sure most university presidents see it that way - hence the emphasis on research, rather than instruction.

[theprodigy]

Agreed