When will an American college or university cost $100,000 per year to attend?
I’d like to put this potential milestone out there as a provocative future, as well as a possible forecast.
Let me explain.
It’s well known that the published price of going to American colleges and universities has been rising dramatically and steadily for the past several decades. We can explore the various reasons in comments (consider: declining state per-student support; rising medical costs for campus staff; the amenities arms race; the discount rate strategy; rising numbers of students and Baumol’s cost disease, for starters), but for now I’d like to focus on extrapolating this curve ahead a few years, using the $100K number as a marker.
Two technical notes: by “cost” I’m referring to total cost. That means not just tuition (often the largest amount paid), but tuition plus room and board plus fees. I’m not including the opportunity cost of taking classes instead of working.
I’m also referring to the sticker price, which many students don’t actually pay. You see, in American higher education we often publish a price, then take parts of it away for some students through grants, scholarships, and other mechanisms, depending on need, merit, and other reasons. The difference between what a college publishes as their prices, versus what the typical student actually pays, is called the discount rate. Right now discount rates have soared, reaching 50% for many private institutions. (Here are some of my posts on the topic.)
So how long would it take for a campus to reach that $100,000 milestone? Let’s pick some of the most expensive institutions in the United States, like Harvey Mudd, Columbia, University of Chicago, or Sarah Lawrence. They are best positioned to crack that number. Depending on which webpage one reads, their total cost is, as of this writing, somewhere in the $60,000s.
So I’ll start my experiment with $65,000 as an approximation of Most Expensive University. I will assume an annual price increase of 4% (above general inflation, which stands around 2%, but in line with many history tuition and fees increases).
In eleven years Most Expensive U hits $100,064 and change. That’s the academic year 2029-2030. I’d consider that to be neither the short- nor long-term, but in the medium term.
Could this happen? Perhaps not. Extrapolations can be useful, but also flawed. It’s possible that general resentment of escalating higher ed costs will not only continue but grow, leading institutions to take even stronger measures to control costs. State governments could rediscover their 1960s mission and start supporting public universities once more, which might drive the privates to cut costs as well. A post-Trump cultural turn could acculturate still lower compensation for college faculty and staff.
And yet the drivers behind our current price growth spurt are strong. We have cut a lot of costs already – note the transformation of the professoriate into a majority of adjuncts, for example. Some costs are much harder to trim, such as total compensation for the rump of tenured faculty, and paying staff for the multiplying needs we see higher ed having to fulfill through regulation, competition, or human decency. And inflation is a powerful thing. At an annual increase of just 2% it would take MEU 20 years to crack $100K – longer than if it were 4%, but not in the distance future.
What would be the impact of MEU’s reaching the $100,000 milestone? We could just ignore it as a meaningless number, one of many, and one that doesn’t tell us anything new. It could also rock our world, shocking us with the turnover to six digits, driving desperate responses.
One more thought: I’m wondering when individuals and families paying full sticker price will become unhappy at paying for non-elite students to attend the same institutions. When will they demand institutional or policy changes?
$100,000 per year: a marker for the medium term future. Who do you think will hit it first, if anyone does, and when?
(photos by Adam Tinworth and Alan Levine)
Here are some thoughts and relatively safe predictions:
1) Yes, this will happen barring some unforeseen cultural catastrophe. Simple math really (which is to say, the effect of compounding).
2) There will be considerable hand-wringing about this milestone, just as there was for the last one:
https://www.nytimes.com/1981/02/19/nyregion/the-10000-a-year-college-education-has-arrived.html
3) Your predicted date may be delayed for a couple of years by schools not wanting to go over that threshold, but eventually the simple (compound) math will overtake their concern. A few schools might be canny about it for while (as Princeton did in 1981 with its $9,994 price tag).
4) Hard to say which of the 30 or so most likely schools will be the one(s) to breach this threshold first. Possibly one of these schools will embrace it and try to spin it as a positive, the way that high-end luxury auto makers do. Perhaps one that is more likely to embrace it as a way of being more consistent with their ideology (Claremont-McKenna? Univ. of Chicago?)
5) IMO individuals and families paying full sticker price are unlikely to become unhappy at paying for non-elite (I assume you mean economically speaking) students to attend the same institutions. A large number of them will have already been doing this for many years at the K-12 private schools which their children attend, so they’re used to that concept.
Great thoughts, John.
3: I can imagine a desperate hanging onto a few dollars below the milestone for a while.
5: I wonder how long they’ll keep doing that.
I think there are some of the super-rich who appreciate the benefits of exposing their children to their academically-elite peers from non-economically-elite backgrounds. This is potentially paternalistic and has serious consequences on campus culture, but I think it means that some rich folks will continue to subscribe to a noblesse oblige approach to paying full fare.
I think there’s also a family structure issue here. Given comparable income levels, the person with one kid will feel differently about tuition rates than the person with five. (Might be worth looking at the relationship between wealth and family size.)
We’ve talked about “barbell-shaped tuition distribution” for a while – schools with lots of full-pay students and lots of full-scholarship students, but not a lot of people who come to school on partial aid. I don’t think we know what to make of the fact that the barbell is moving, as more middle-class people receive need-based aid, and the people who are getting priced out are rich but not super-rich.
Regarding competition between expensive private institutions and state institutions, I don’t actually believe that cost-cutting and potential restored appropriations on the state level change the conversation that much. That ship has already sailed; the rebranding as a luxury good is largely successful for the schools at this level. What has the potential to change things is improvement in completion rate. If it ceases to be true that expensive institutions make degrees in 4 years, and state institutions make them in 5 or 6, that changes everything. (Well, not the way the degree functions as a signal, but everything else.)
Great points, Joe.
Agreed about some wealthy families wanting their kids exposed to “how the other half lives”. Some… and we can easily imagine the tensions that result.
That barbell: if Pew is right about the middle class shrinking, we should expect heavier weights on either send of an ever more slender middle.
Completion rate: I’ve been wondering about this for a while. As median age increases and more seniors work (for various reasons, including satisfaction and financial necessity) will we see a cultural norm shift, whereby we expect people to be older than they are now when they enter a profession? If so, will they lead to a gap year (either between secondary and post-sec, or after grad) becoming popular?
Very interesting point about the impact of the greying workforce! I wonder if we’re seeing some of this already with anti-Millennial sentiment. The narrative is framed as a cry for learnable job skills and essentially moral qualities of group identity (or obedience) vs. selfishness. But to what extent is it just a cry by the older generation for maturity, which is in essence a function of time? Maybe it’s not a meaningful judgment at all but just a form of ageism?
I do see the gap year becoming more popular inside institutions of higher ed, partly because 19-year-olds have learned not to make some mistakes that 18-year-olds are still making. And I hear increasing numbers of faculty encouraging students not to go directly to grad school from college. In many disciplines, this is just a reflection of economic reality as degrees get more expensive and tenure-track jobs decline, but I think it might also be about a preference for slightly more age and life experience as a valuable tool for making sense of graduate school.
A lot to unpack here, but I agree with John’s comments. I think we also saw hand-wringing at $25K and $50K thresholds. $100K might be easier for schools with high discount rates. Hard to tell if schools will do tuition resets like Drew and Sewanee did, but some might go in that direction (preliminary info from Drew seems to be that it worked–they hit their admissions target, and lowered the discount rate, keeping revenue per student about the same.)
Tuition, room/board, and fee for Harvey Mudd College is $72,228 this year. Average grant is nearly $30K though.
Of course, at some point the zottas will pay whatever they need to get their children into the elite schools. 😉
BTW, at 4 percent growth HMC hits 100K in nine years from 2017-2018, so in the 2026-2027 academic year.
Even faster.
Some zottas will like this.
Sorry but I still can’t read “Harvey Mudd College” without having an original Star Trek flashback
Thank you for admitting that, for now I can admit it too.
I hear this when I hear the name.
Every. Single. Time.