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?