Those burdened with massive student loans might reasonably wonder why colleges cost so much. University educations do not always deliver value for the money, because tuition is so high. Between administrative costs, faculty salaries, and irresponsible spending, colleges create a significant financial burden for their students.
Reason one: ease of access to student loans. One of the reasons that colleges cost so much is that student loans are so easy to obtain. Administrators know that students can get the money to pay tuition, even if tuition is very high. This fact enables universities to charge high tuition rates, and reduces their incentive to curb irresponsible spending and inflated faculty salaries. To be fair, I believe most universities try to deliver value for the money, but administrators must know that tuition is a huge burden for most students.
Reason two: rising professor and administrator salaries. Although educators will always complain that their salaries are lower than the salaries of their private sector counterparts, the reality is that faculty salaries have risen dramatically in recent years. Administrative costs have also risen. In the private sector, business managers aggressively contain salaries. In my experience, university administrators are less aggressive about this. Because they see themselves as being outside of the private sector, they are less careful to ensure that they receive value for the money they spend on employees. Irresponsible spending, however, results in higher levels of tuition and student loans for the students.
Reason three: a college education is a valuable product that is expensive to provide. In many cases, colleges deliver real value for the money that students pay. Faculty salaries are high, in part, because they have to be high to attract qualified professors. Similarly, administrative costs at a university will be high no matter what management does. Students are willing to take out high student loans, in part, because they realize that education is a good investment. For low-value degrees, tuition might constitute irresponsible spending, but there are many high-value degrees for students to obtain.
Because of easy access to student loans, rising professor and administrator salaries, and the unavoidable expense of providing a valuable education, it is not surprising that colleges cost so much. Students are willing to take out massive student loans because they believe they will receive value for the money. Unfortunately, irresponsible spending by colleges sometimes makes tuition higher than it needs to be.