Why is college so expensive? 6 reasons (and how to make it cheaper)

By Carolyn Morris | Published on October 21, 2025

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While college tuition prices were steady with only slight increases from 2020 – 2021, costly degrees still remain out of reach for millions of Americans, and millions more are grappling with crushing student debt. This hasn’t always been the case. In fact, 40 years ago, college cost nearly a third of what it does now. So, what happened?

According to the Education Data Initiative, tuition and fees for public four-year universities (adjusted for inflation) have been increasing by an average rate of 9% per year since 2010. While this number would be significant on its own, it comes on top of steep tuition increases in the last twenty years, with the price of a four-year in-state tuition and fees rising a whopping 56% when adjusted for inflation.

Additionally, it now takes the average college student 6 years to graduate as opposed to 4 years making college costs even more of a burden. U.S. wages, meanwhile, have not kept up. In fact, the average median family income declined 2.3% between 2021 and 2022. And over the past 30 years, income inequality has been increasing, leaving lower-income households — especially those in Black or Latino communities — further and further behind.

That means families are feeling the squeeze of education costs more than ever.

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Source: https://educationdata.org/college-tuition-inflation-rate

1. It’s expensive for colleges to market to students

In the fall of 2024, more than 19 million Americans are projected to be enrolled in a college or university. That’s one reason why a number of for-profit colleges have entered the scene, hoping to benefit from the growing demand for higher education. With more institutions offering degrees, many colleges and universities throughout the country have had to compete harder for enrollments — and spend more money on marketing for new students.

For example, for-profit colleges have the advantage of fewer overhead expenses compared to more established non-profit schools. Consequently, they can spend millions on advertising to prospective students. This has forced non-profit colleges and universities to expand their own recruitment efforts as well.

Just how much do colleges spend on recruitment?

Acquiring students has become a cost of doing business — and an increasingly critical one. Right now colleges spend anywhere from $494 to $2,950 per student in recruitment costs. Each school ultimately recoups those costs by building them into students’ tuition. That means you could end up paying thousands of extra dollars just to cover the cost of all those mailers and brochures that were sent to your house.

A major exception to this recruitment pressure is elite schools — such as Stanford or Harvard — which have seen a record number of applicants in recent years.

2. Colleges are investing more in the student experience

Along with increased recruitment efforts to compete for students, comes a battle for the best college experience. To stand out from their competitors, universities are going the way of the Google office — think rock-climbing walls, comprehensive healthcare programs, and decadent cafeterias. In fact, college spending has steadily increased specifically for administrative costs unrelated to education.

Colleges and universities also spend big on improvements to gyms and stadiums in an effort to increase rankings and attract better students — even though glitzy amenities and winning sports teams rarely contribute to students’ academic success.

Colleges and universities collectively increased facility upgrade spending by 26% in 2023. Sports team funding — another huge, nonessential marketing expense — also continues to drive up costs.

It should be noted that, while the battle for the best amenities can contribute to rising tuition, it isn’t the biggest culprit. After all, when schools vie to become the nation’s most all-inclusive university, they’re beefing up more than just their dining halls. More colleges these days are adding additional student services, like mental health support, wellness programs, specialty counselors, and academic guidance programs. While many of these services have the potential to produce a happier, healthier student body they aren’t cheap. According to some estimates, comprehensive academic advising programs can cost thousands of dollars per student each year.

3. Colleges adjust their prices to look more competitive

There’s another reason advertised college tuition prices have gone up over the last few decades. Some colleges have artificially raised their listed prices to appear more elite, while simultaneously increasing their endowment and merit-based aid. This creates the illusion of steep discounts. Both tactics attract students — and often cost them more in the long run.

Other experts link soaring tuition rates to the rising number of student borrowers. In contrast to today, very few college students took out loans from the federal government in the 1970s. Then the Department of Education expanded eligibility requirements for Pell Grants and other sources of funding. As a result, federal student aid has become ubiquitous. Today, colleges know that many students can get some or all of their tuition paid for via loans. The Bennett Hypothesis posits that these schools are less likely to lower their costs when they know Uncle Sam is going to foot the bill.

4. States slashed education funding in the past

In the wake of the Great Recession of 2008, governments scrambled to slash state spending on a number of line items, including college education. In the years that followed, state spending on higher education improved but never quite reached pre-recession levels. However, it seems that higher education funding at the state level got a much-needed boost in 2023.

5. Administrative positions are growing

Another likely culprit in the rising college price tag is the expansion of administrative staff. American colleges are spending more on their non-teaching staff — which includes everything from alumni-network fundraisers to dining hall employees — than nearly any other higher education system in the world.

That’s not to say colleges don’t necessarily need these staff members to implement new programs and take care of changes in the landscape of higher education. Technology, for example, is a vital part of everyone’s lives that didn’t exist so universally 30 years ago. In recent years, colleges have spent millions of dollars on average central IT costs.

However, some economists theorize that, though schools are spending more on tech, they’re not getting the same cost-saving and productivity benefits from it that other industries are. After all, you can replace a grocery store cashier with a self-checkout machine, but you can hardly replace a coach or professor with a robot if you want to maintain educational quality. As a result, inflation and wages may be rising in America, but colleges aren’t able to find any new efficiencies to offset those high costs. Thus, payroll keeps growing — and so do tuition prices.

6. College executives are earning higher salaries

In addition to the expanding numbers of administrative staff, high-ranking administrators are earning unprecedented salaries.

Public university presidents, for instance, have benefitted from generous compensation packages in recent years, some in the millions. The current top public earner is Jay A. Perman Woodson of the University System of Maryland, whose salary is over $1 million. Private college presidents can earn more than twice that amount.

Is the cost of college worth it?

Amid discussions of looming student debt and increasing costs of attendance, many young adults considering both undergraduate and graduate degrees may wonder if it’s worth it. The data on this question is quite clear based on statistics from the BLS: on average, grads with bachelor’s degrees earn $594 more each week compared to those with just high school diplomas. Unemployment rates also vary depending on what type of education you have. People with just a high school diploma face a 4.3% unemployment rate, while college graduates with a four-year degree have just a 2.1% unemployment rate in May 2024.

Of course, it’s still necessary to consider a number of factors when determining the potential return on investment of your degree. You should always research career prospects in your particular field and your geographic area. Otherwise, you run the risk of not finding a relevant job in the future. It’s also important to compare a school’s cost of attendance to your projected future earnings to make sure you can handle your student loan payments upon graduation.

Familiarize yourself with income-driven repayment plans for federal student loans and refinancing for private student loans to make sure you have a game plan to pay off your debt once you graduate.

Despite all the external factors contributing to the cost of your education, you can still empower yourself to make smart decisions that set you up for rewarding work and financial success.

Tips on making college more affordable

Picking a school to attend can be an emotional decision, but it’s important to take a step back and ensure you’re making a prudent financial decision, too. And if your heart is sold on a school that would stretch your budget, there are a few ways to close that funding gap.

Complete gen-ed courses at a community college

Generally, community college courses are much less expensive than those at bigger universities. Relying on a community college for your non-major classes can free up your budget and let you focus your education spending on degree-specific courses. Some community college courses are even open to high school students looking to get a jump start on their college credits. Others let you attend for just a school year or two before transferring to a larger university.

Go to an in-state school

It can be tempting to go to college as far from home as possible, especially if you’re an adventurous student. But travel costs, housing costs, and out-of-state student fees all add up. Take advantage of in-state tuition discounts whenever you can. If your family lives close to campus, consider commuting from home for a semester or two to save on room and board. If your heart is set on an out-of-state school, look into low-cost out-of-state universities.

Give preference to public schools

The average cost of attendance for a public, nonprofit college or university is much lower than that of many private schools. And remember: a school’s cost doesn’t reflect its quality. Many different factors determine the price of tuition, including a school’s amenities, administrative staff, and marketing costs. You’re just as likely to get a great education at an inexpensive state school as you are at an expensive college.

Compare college tuition costs

Both public and private colleges are required to list not only the tuition cost, but also the expected cost of attendance. Be sure to compare these numbers rather than tuition alone; the expected cost of attendance usually includes fees, supplies, and room and board, which may vary wildly from school to school.

File your FAFSA early for financial aid

File your FAFSA every year, even if you aren’t sure if you fit the criteria for financial need. You could qualify for aid you weren’t expecting, either from your school or from the federal government. A completed FAFSA is also required for some scholarship applications.

Search for scholarships

Like financial aid, scholarships and grants are education funding that you don’t have to pay back later. Some awards are based on merit rather than financial need, and can be a strong option for someone who did not receive the level of financial aid they hoped for.

Learn more about Earnest Student Loans

Over the last 30 years, tuition costs have soared for a variety of reasons. State funding cuts, expanding administrative staffs, and increased construction and facility costs all play a role.

While you don’t have much control over tuition increases, you do have control over the method you use to pay for college. If you’ve maxed out your federal financial aid and scholarship opportunities, it’s best to look for a student loan servicer that offers low interest rates and flexible terms. That way you can make payments on a schedule that works best for you. Earnest offers all those perks and more. You can get a free rate estimate with Earnest. It takes minutes, and it won’t impact your credit score.