College Tuition Fees: Unfair And Illegal?

The rising cost of college tuition has become a significant concern for students and parents alike. With student loan debt in the US reaching $1.77 trillion and the average graduate owing more than $37,000, it is no surprise that many are seeking answers and solutions. While there may be no single cause or simple solution, a range of factors contribute to and could help address this complex issue. From cuts in state and federal funding to increased investment in student services, and from the role of federal student aid to the impact of private student loans, the rising cost of college tuition is a pressing issue that requires attention and collective effort to resolve.

The College Cost Reduction Act

Secondly, the act holds institutions financially responsible for overpriced degrees that leave students with unaffordable debt. This means that colleges and universities must consider the potential financial burden on their students when setting tuition fees and cannot simply pass on excessive costs to their students.

Lastly, the act proposes funding colleges based on student outcomes rather than excessive regulations that further increase costs for families. This performance-based funding model incentivizes institutions to prioritize student success and improve the quality of education, as their funding will be tied to the achievements of their students.

Overall, the College Cost Reduction Act is a comprehensive approach to tackling the issue of rising college costs and aims to provide much-needed relief to students and families struggling with the burden of student loan debt. By increasing transparency, holding institutions accountable, and shifting the focus to student outcomes, the act seeks to make higher education more accessible and affordable for all.

Student loan debt crisis

The student loan debt crisis is a significant issue in the US, with Americans owing a total of $1.75 trillion in federal and private student loan debt combined. As of 2022, America's college graduates owed $1.7 trillion on their student loans, a figure that is larger than the gross domestic product of all but 11 countries.

The crisis has been decades in the making, with the term "student loan debt crisis" first appearing in an academic report in 1988. The report indicated that the Guaranteed Student Loan Program of 1965, which provided low-interest, subsidised loans to thousands of college students, created a student loan "bubble".

The rising costs of college attendance have made it increasingly difficult for students to afford tuition, leading to a significant burden of student loan debt. This has been exacerbated by cuts in state and federal funding for higher education, which have forced colleges and universities to raise tuition fees. In turn, this has forced students to take on crushing educational loans that have harmed their financial stability. The cost of college attendance has increased at an annual rate of 6.8% in the 21st century, far outpacing currency inflation and wage inflation.

The impact of the crisis is far-reaching, with student loan debt affecting individuals' daily lives and hopes for the future. It has also had economic and sociological consequences, including stunted new business growth, delayed homeownership, reduced consumer spending, and increased economic disparities between social groups.

Efforts have been made to address the crisis, with the Biden administration cancelling nearly $180 billion in student loan debt for 4.9 million borrowers as of January 2025. Additionally, politicians have proposed various ideas to tackle the issue, including increasing federal grants, adjusting lending rules, and capping tuition increases. However, the rising cost of college remains a complex and challenging problem to solve.

Federal student aid and tuition increases

The Bennett Hypothesis, named for former Secretary of Education Bill Bennett, posits that increases in financial aid have allowed colleges and universities to increase their tuition fees, confident that federal loan subsidies would cushion the increase. Bennett's hypothesis has become a core belief on the right, with federal spending on student aid and the cost of college attendance being higher than ever. However, the research on this hypothesis is mixed and contradictory. Some studies find Bennett effects at public colleges but not private colleges, and others find the opposite. Most studies find that some colleges raise tuition prices or shift institutional aid in response to grants and loans, but this is not true of all college types.

Insisting that expansions in aid must have a causal effect for the Bennett hypothesis to be true misreads Bennett himself, who argued that whether or not federal aid "causes" tuition increases, it enables them. In this scenario, the cause of tuition increases is not the aid itself but other forces, such as the competition for prestige and the downturn in state funding per pupil. The availability of federal aid enables colleges to respond to these pressures by raising tuition.

The exact relationship between aid and tuition increases is less important from a policymaking perspective because the end effect is the same: more aid, higher tuition prices. Simply pouring more aid into the system won't create affordable college. Reforms that change the incentives for colleges are needed.

Federal student aid is a significant factor in rising college tuition costs, especially at for-profit institutions. A study at Harvard University showed that for-profit institutions that participate in the federal aid program charged tuition that was 78% higher than those that didn't.

According to the National Bureau of Economic Research, federal student aid accounts for most of the college tuition increases between 1987 and 2010. The more money students can borrow, the more colleges can charge. Colleges increased tuition because they knew federal financial aid could cover the difference, putting students and their families at the mercy of the federal government and colleges.

While federal student loans are a significant factor, private student loans also contribute to the rising debt burden on students. This likely stems from the explosion of college tuition since the 1970s. A paper from the Federal Reserve Bank of New York suggested that colleges were raising their sticker prices because the federal government was giving students more loans.

Tuition increases at private universities

Tuition fees at private universities in the US have been on a sharp upward trajectory for years. According to one source, the average cost of tuition and fees at private colleges and universities has reached $35,000 per year. Another source gives a higher figure of $41,540 per year, representing a 361% increase since 30 years ago.

There are several reasons for the increase in tuition fees at private universities. Firstly, cuts in state and federal funding for higher education have forced colleges and universities to raise their tuition fees. This has resulted in students having to take out larger loans, which has significantly harmed their financial stability.

Secondly, the availability of federal student loans is a significant factor in rising tuition costs. The more money students can borrow, the more colleges are able to charge. This dynamic has been referred to as the Bennett Hypothesis.

Another factor is the "Golden Ticket Fallacy", where the belief that any college degree will result in improved future earnings leads students to do less research on the cost of college, allowing universities to continue increasing fees.

Additionally, increased investment in student services such as career counselling and mental health support has contributed to rising tuition costs.

The rising cost of college tuition has led to a student loan debt crisis in the US, with student loan debt reaching $1.77 trillion and the average graduate owing more than $37,000.

The future of college tuition costs

The cost of college has been increasing for decades, and it's a complicated issue with no single cause. However, there are some key factors that have contributed to the rise in tuition fees. Firstly, colleges have increased the range of support services they offer to students, including mental health support, academic advising, and help with housing and childcare. These additional services require hiring more non-faculty staff, which increases operational costs.

Another factor is the change in state and local funding. Public colleges rely on this funding, which can fluctuate depending on market conditions and tax revenues. Economic downturns often lead to funding cuts, and even when the economy recovers, it may take years for funding levels to return to pre-recession levels. As a result, colleges pass on the costs to students in the form of higher tuition fees.

The overall increase in costs for service industries, like education, is also a contributing factor. Higher education institutions find it challenging to increase productivity while maintaining the same quality of education. Unlike manufacturing or other sectors, it's difficult to introduce innovations that improve efficiency without sacrificing the educational experience. As a result, colleges face higher costs to produce the same level of education, and these costs are passed on to students.

Looking ahead, it's difficult to predict the future of college tuition costs with certainty. However, based on historical trends, it is likely that tuition fees will continue to increase, although the rate of increase may vary. Online courses and technology can help reduce some costs, and there are also proposals from politicians to cap tuition increases or make community college tuition-free.

To address the rising cost of college, students and parents need to advocate for change and hold politicians accountable. Additionally, students can make informed choices about their education by comparing costs at different schools and taking advantage of financial aid, scholarships, and grants. While the future of college tuition costs remains uncertain, proactive measures can help mitigate the financial burden on students and their families.

Frequently asked questions