Why is American college so expensive compared to other countries? Part I

U.C. Berkeley Tower. Photo by me

Universities and colleges in the United States are one of the most expensive on the planet. The average tuition in 2011 for a four-year institution was 22 thousand dollars. Students living in the United States know that they have to start saving early and apply for financial aid and government loans in order to deal with the hefty debt later. According to President Obama in his August 24^th weekly address, students graduate with an average of 26 thousand dollars in debt, which they slowly pay off in the years to come.

But why is American college expensive? In Europe, France offers higher education in public universities for 180€ a year. In Brazil, free excellent-quality higher education is offered to those that can pass the vestibular, a competitive exam (though arguably one would have to pay for good K-12 education in order to pass). But in the United States, studying at a public university can still reach 15 thousand dollars a year.

The answer to this question is no doubt, more complex than I’d thought- I figured I could type in Google and blindly ask: Why is college so expensive in the U.S. when it’s almost for free in France? Turns out, not even Google had an answer for that. I had to break my initial question down into pieces to get a full view of what was really going on. I broke it into three parts:

-Why is American college so expensive?

-Why is French college not expensive, and how can it afford to pay for foreign students’ education?

-Where does the U.S. tax money go, anyway?

Today I’ll be discussing the first one. Why is college in the United States so expensive?

Now, if you look for the answer for this question, you’ll find that many articles and magazines explain why college tuition is going up and why it’s expensive today. Washington post has an excellent explanation with charts that you can check out here.

If you’re wondering why the cost of going to college is so high in the first place, well, it’s because it is costly. Students have to pay for room and board, for instruction, academic support, and all those nifty things that makes each college unique. It’s also a price that’s fixed high, just like airplane tickets are high, and one that people are prepared to pay for. The usual way to go is to start a saving’s account for your kid to go to college once he/she starts kindergarten. You’re not paying the full expenses of tuition either- part of it is funded through tax revenue. Check out where tax money goes in Part III.

But still, colleges weren’t always this expensive. Tuition at U.C. Berkeley used to cost $700 in the 1970’s, and today it costs 15 thousand grand, which corresponds tlo an increase of over 2 000 percent. College tuition has been going up, making debts even harder to pay off in the future. Here’s why:

è         Schools are spending more on research now than they used to.

è  Schools are investing in more technology to stay on top of the list. The more technology colleges invest in, the more attractive it becomes and more students will want to attend. But getting top-notch technology costs money and who’s paying for it are the students through tuition increases.

è  Schools are offering more scholarships to become more attractive to some, and often they take the money to pay for them by increasing tuition.

è  In general, more people are attending college than before. It’s getting more competitive, and in some cases, those that can pay are priority. Many schools offer merit-based scholarships however, so my message to fellow Americans would be: study as hard as you can. It might pay off sooner than you think.

The truth is that college is so expensive because it’s not subsidized, which means that the government doesn’t pay for the complete cost of college. The current system allows individual students make their decisions, i.e. choose what they will study, at whatever college they choose that accepts them, and deal with the costs. That might seem like a given, but there are other systems which won’t let you do that. In Brazil, for example, if you want to become a doctor and receive good education at your chosen college, you better study real hard because there’s fierce competition. For example, 100 places are offered to study medicine at the University of Santa Catarina (public university) but as many as 5000 people apply to take the vestibular test. Only those with the 100 top grades on this test will get in.

There are also entrepreneurs out there who realize the gain in opening a college, simply because they can make profit out of it. Kids are getting their education, but meanwhile, someone’s making money out of it. Happily, those colleges are listed as ‘FOR-PROFIT’ colleges and there’s a big list of them on Wikipedia.

Check out how France allows for its citizens and even non-citizens to go to college for the lowly cost of 180 euros a year in my next post, Part II.