Why Does College Cost So Much?

Between 1997-2007, home prices increased by nearly 70 percent. In that same period, college costs grew even more rapidly, by over 80 percent. As a result, average student loan debt has grown to over $25,000. The total amount owed exceeds our country's collective credit card debt. What is going on?

There is neither a single nor a simple reason for the exploding cost of college. Quality higher education has always been relatively expensive. In fact, it is often more costly to deliver than what is paid by tuition. Research, philanthropy, and, for public institutions, tax dollars make up the difference. However, cash-strapped states are now reducing their support to either meet other needs or to just balance their budgets. As a result, students and their parents are having to pay more -- much more in many cases -- to cover the formerly subsidized costs of instruction. But this shift in support, from tax payers to students, doesn't tell the full story. Tuition and fees are growing at private institutions, as well.

Little noticed is the fact that an increasing number of new federal, state, college system and accreditor requirements are being imposed upon institutions of higher education. According to the American Council on Education, over 150 new rules, regulations and requirements became effective after the 2008 reauthorization of the federal Higher Education Act. Some of the most onerous and costly of these went live in July of 2011.

An example is the U.S. Department of Education's so called "program integrity" rules and the DOE's willingness to withhold Title IV financial aid from students if host institutions do not comply with a growing list of federal requirements. These extend to requiring every institution that offers an online program to seek "authorization" from 54 separate jurisdictions, even if they have but a single student in one of these jurisdictions. While such "authorization" may allow the institutions to cross a state line for purposes of Internet-delivered instruction, it does not permit them to recruit, advertise, meet, or be "physically present." Those actions require a separate process of "registration." In some states, this process requires the review of hundreds, if not thousands, of documents, fees that can run over $100,000, a site visit, and can take over a year to complete. These rules apply to all, public and private, for profit and non-profit institutions. Between fees (which are increasing as several states seek new income), labor and specialized expertise, the cost of compliance for all institutions has risen to an estimated $500,000,000, all of which can be expected to be passed on in future tuition increases. The alternative is for students to lose their eligibility for Pell Grants and Stafford loans.

Other requirements include the submission of all proposed certificate programs to the Secretary of Education for approval; requiring instruction to be measured by clock hours or "seat time" (imagine doing this online); filing reports on campus crime and student alcohol use when there is no physical campus; and so forth. When combined with other new state and local regulations, institutions have been required to hire additional administrators and compliance officers to ensure that they are not in violation of these various rules.

While federal courts have recently ruled against the Department of Education in regard to some elements of these rules, the "genie" is nonetheless "out-of-the-bottle." Nothing in either the initial or appellate rulings limit states from persisting in their various requirements, nor from issuing "cease and desist orders" to those who fail to comply.

College leaders do need to do a better job of reducing the expense associated with going to college. Passing the costs of lost subsidies or budget increases along to students in the form of higher tuition and fees is not sustainable. Yet, these leaders are going to need help from the politicians, law makers, and bureaucrats who have failed to see the connection between over-regulation and the rising cost of higher education. Informed analysis suggests that most of the new federal regulations have been imposed as a result of the actions of very few. However, rather than employing existent powers to deal with such miscreants, ideologues within the administration have elected to proceed down the regulatory path in search of evil for-profit institutions while, ala Dick Cheney, spraying all of higher education with their "bird shot."