College prices are rising and it’s our fault 

Recently, “several private colleges and universities in New England will cost more than $90,000” to attend. This is an insane amount of money to pay for simply going to school. A lot of people have different opinions regarding why college has gotten so expensive, but at the end of the day, one of the key reasons for this is people’s lack of sensitivity to price increases. Prices continue to rise, and we continue to apply for and pay for these schools. And the continued stream of demand only incentivizes institutions to continue to increase prices. 

Considering one example, “at Boston University this fall, tuition, housing and other expenses will be $90,207 for this upcoming academic year. Based on the BU Arts and Sciences website, adding up the same costs equates to roughly $85,000. It’s important to mention that in the “other expenses” category, personal and transportation expenses were cut in half from this academic year to the next academic year. Both sites indicate that it is for an academic year, making it possible that these expenses were potentially decreased in estimate to accommodate for other expenses increasing, such as tuition, which saw a roughly $3,000 increase. Despite the roughly 5% cost increase of attending Boston University, “applications to the University dipped slightly compared to last year (about a 2 percent decrease.” There ended up being “78,750 submissions to the Class of 2028.” This shows that there is a level of inelastic demand — in other words, a price increase of 5% only equates to a 2% decrease in applicants. It should be noted that this analysis doesn’t consider national trends. Additionally, a 2% decrease in applicants is extremely meaningless to a school that enrolled a little over 3,000 students for the class of 2027 despite getting tens of thousands of applicants. 

Nationally, we also see an increase in college applicants and college costs. According to Forbes, “the number of college applicants through March 1, 2024, has increased by 6% over the same time last year.” At the same time, US News reports that “the average tuition and fees at private ranked colleges have climbed by about 4% over the last year [and] at ranked public schools, tuition, and fees rose 2% for in-state students and about 1.4% for out-of-staters.” For colleges this makes sense, more people are applying to their schools, so they can respond by increasing the cost of attending their universities. However, for all of the students, it makes very little sense. Even though the price is already high, more students are continuing to apply. 

That said, while students are paying for high college prices, there is a greater application rate among public schools compared to private schools, showing that there is some price sensitivity. Forbes indicates that “applications to public school members using the Common App (10%) grew at twice the rate of applications to private members (5%) over last year.” This shows that students may be somewhat responsive to the high price of attending private higher education institutions. 

While college costs are extremely high, as students we are enabling these costs to increase. Costs are high and keep rising, but we continue to apply more and more to expensive schools. This begs the question: will college prices ever go down, or will they rise indefinitely? If there are people willing to pay, colleges will continue to charge insanely high prices.