Universities do not make up a homogeneous group. It is a mistake to write about them as such. The business model and the issues relevant to costs differ strongly across these groups: Top tier privates, top tier publics, Research I schools, Top Tier liberal arts schools, most liberal arts schools, Lower Tier state schools, regional state schools (e.g., "teachers colleges"), community colleges, for-profit schools, and likely other categories.

That said, Mike Alexander in his comment covers a lot of reality that many authors and commenters are completely unaware of.

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I don't think the rise of government-backed loans plays a major role in of higher college costs. If this were so college education would be the same product just more highly priced. But college is NOT the same product. When I went to college my classes were taught by professors and teaching assistants, both employees of the university who got benefits, Today, a lot of instruction is performed by adjunct faculty (contract workers). A similar thing has happened in corporate America. It used to be custodial, security and cafeteria workers were employees at my company. Around 25 years ago they became contractors. Today entry-level engineers and scientists are contractors as well.

In general, low-value work has been outsourced. Note that instruction is considered low value at modern universities, just as research is treated as low value labor at pharmaceutical companies (this was always the case in academia). All this happened as a cost-saving measure. If universities were flush with cash from government loans there would be no need for these measures.

But costs have risen despite these cost-saving (and I suspect quality-reducing) actions. Three sources of cost increased have been pointed out to me over the last 20 years.

The first is IT. IT systems contain expensive hardware and must be operated by expensive personnel. None of this existed when I was in school in the 70's. It is a large extra cost added on to what schools were doing then, with no improvement to the educational product. This is because the world is digital today, you need to have IT, just to keep the value you used to have without it. Adding IT doesn't increase the value of your degree product because all skilled workers (including the noncollege-educated ones) work with computers too. IT is like a tax levied on everyone, that is paid to the companies that produce IT equipment and services and the technicians who manage it.

The second is competition for lucrative markets. Foreign and wealthy students pay the full tuition, whereas nonrich domestic students often pay the sale price (i.e. scholarship). Research provides a lucrative stream of income for the university. To maximize these revenue sources universities will add services and amenities to try to attract rich or foreign students and make investments to become research centers. This can pay off sometimes, but if everyone is doing it. then schools are spending a lot more to chase the same fixed population of well-heeled students. Costs must necessarily rise.

The third is new functions that were not done in the past and which do not increase the value of the educational product. According to what I have read, there is a lot of paperwork that needs to be done in modern education that if the academic staff did it, they would have no time to do anything else. So, administrators were added to do this work. These people perform administrative functions that also exist in business and so are paid like their counterparts in business (i.e. they are not contractors).

I worked for 33 years in generic drug manufacture for Pfizer. When I left, about 15-20% of the staff in our bulk drug manufacturing plant performed tasks that did not exist when I started. These people handled all the paperwork need to fulfil new regulatory requirements added in the 90's and 2000's. This work did not affect the productivity of the manufacturing operations themselves. They did have qualitative effects: product quality is better documented, and the operations today are safer and less polluting than when I started. Doing this adds to cost.

Another 20% of the staff are technical process support people like I was. Our fraction was the same size when I left as when I started in the 80's. Because of our efforts the physical amount of product made in the same facilities increased by about half, and the number of workers making it dropped by about 20 percentage points. So basically, plant operators were replaced by administrators, but total output from the plant increased by 50%. So, the real cost per kg went down, despite the addition of all that administrative staff.

I suspect something like this happened in the university. But the productivity of student learning is limited by the raw material (student brains). So, productivity had not gone up, while cost has certainly has with the additional of all the administrative staff to do the educational equivalence to the quality, safety, environmental and DEI services our administrations do.

When you had all three of these it is a large increase in cost.

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