The Economics of Higher Education

            In the United States, the price of college tuition and fees vastly outpaces the inflation rate, the consumer-price index, and even medical care.  Among all of the debated solutions about what must be done to make college education more affordable, two solutions are more prevalent:  (1) college costs must be lowered, and (2) government involvement must be improved (Belkin, 2013).

            Lowering college costs is a clear way to lower college prices.  Cost and price are linked.  If the cost to produce a good goes up, then the price for that good goes up as well to cover the cost.  Costs from “administrative bloating,” marketing, and entertainment add very little to the bottom line or quality of education, yet these costs raise the price of tuition so colleges make back their money (Belkin, 2013).

            Government regulations, subsidies, and support must also be balanced.  In an article for the Wall Street Journal, Dr. Richard Vedder, director of the Center for College Affordability and Productivity, explained how federal financial aid has increased demand and accessibility of college to many (Belkin, 2013, para. 21).  With the increase in demand, colleges can now charge students higher tuition and fees.  Also, states are spending less money on college education than before; therefore, schools are relying more on federal loans than grants to help students pay for tuition (Hilsinger, 2013).

            With the price of a college education consistently growing faster than the inflation rate and the consumer-price index, something must be done to make college more affordable for students again.  In order to lower the price of college, college costs must be lowered and government involvement must be improved.

References

Belkin, D. (2013). How to get college tuition under control. Retrieved October 12, 2014, from The Wall Street Journal: http://online.wsj.com/news/articles/
SB10001424127887324549004579068992834736138

Hilsinger, C. (2013). Up, up and away: college tuition is on the rise. Retrieved October 12, 2014, from Forbes.com: http://www.forbes.com/sites/specialfeatures/2013
/07/24/up-up-and-away-college-tuition-is-on-the-rise/