What families actually pay universities hasn’t changed much in nearly two decades.
It’s back-to-school season, and, if one listens to the media, families are paying more than ever to send students back to their college campuses. U.S. News & World Report announced last September that the nominal cost of a college education had risen by well over 100 percent over the last two decades. Even adjusted for inflation, tuition and fees have risen by anywhere from 32 percent to 45 percent, depending on whether one attends a public or private university. But such figures are misleading by design.
In 2023, Dan Currell observed in National Affairs that, “in the late 1980s and early 1990s, colleges discovered that the appearance of high tuition was good for marketing.” How so? “Positioning one’s school as ‘almost as expensive as Harvard’ created a sense of exclusivity, and, somewhat contrary to economic theory, resulted in increased applications.” Yet a typical university could not charge as much as Harvard without making itself financially inaccessible.
Colleges figured out how to have it both ways: They began advertising exorbitant sticker prices while offering nearly all students deep discounts through generous scholarships and student aid. Their doing so may not be as generous as parents think, since universities expect almost no one to pay full price. Private colleges discount their tuition, on average, by more than 50 percent.
Certainly some students bear the full cost of their college education (especially those from overseas), but most are heavily subsidized by state governments at public universities or sizable endowments at private ones. The inflation-adjusted annual cost of in-state attendance at a four-year public university — the most popular option in the country — has hardly budged since 2006, going from $20,460 in 2006 to $20,780 in the last school year. The yearly cost of attending a private four-year university, meanwhile, has slightly decreased over that same period, from $36,670 to $36,150.
More amazing is that most of those costs do not go toward the actual education, but toward students’ housing, food, and other living expenses. Once those are excluded, the College Board finds that, “after adjusting for inflation, the average net tuition and fees paid by first-time full-time students enrolled in private nonprofit four-year institutions declined from $19,330 in 2006–07 to an estimated $16,510 in 202–25.” The inflation-adjusted tuition and fees of public universities have fallen to a minuscule level, peaking in 2012–2013 at $4,340 before declining to $2,480 last year. At public two-year colleges, the price of education alone is now negative, as students receive “enough grant aid to cover their tuition and fees on average.” This steadily improving affordability may be why just 40 percent of college students work part-time nowadays, down from 79 percent in the mid-1990s.
The greatest cost of college education is not in fact the education part, therefore. Rather, it’s the not working and earning an income part, as students would still incur food and housing costs regardless of their enrollment. Most of Americans’ $1.814 trillion in student loan debt is actually rent and dining debt. If a student stays at home and mooches off his parents for four years, though, his family will likely pay much less for his higher education than they would have 20 years ago.