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When Profit Shouldn't Be the Motive, Part 3: Higher Education

An Enlightening Trip

My younger son, Will, and I just got back from a college tour trip last week. He is finishing up his associates degree at our local community college and wants to transfer to a four-year university to finish his bachelors degree. Though we didn't have a tremendous amount of time to look at either of the schools we visited, it was long enough to get a good general impression.


Both schools are well-regarded, public universities in our state. The campus tours featured major departments, cafeterias, dorm rooms, and extras like the student center and gym. What was striking about both places was the quality of the facilities and the amenities offered to the students. The buildings at one campus all looked quite new, and the architecture at both was impressive.


The annual net price for each was pretty impressive as well, coming in at $14,500 and $20,800. The other two public universities that Will is considering clock in at $24,400 and $26,000. To attend any of these schools for four years then, a student can expect to pay between $58,000 - $104,000, which is calculated after expenses and financial aid are factored in.


While my son has only two years left to complete his degree, the cost is still estimated to be at least $30,000 for any of these public universities. My alma mater now has an annual estimated cost of $32,900 ($131,600 four-year total!). At these prices, it's not hard to see why college is once again becoming an easy option only for the wealthier among us, while students with more humble assets must either win large scholarships, take on significant student debt, or opt out of a four-year degree altogether.


A History of College Costs

Prior to WWII, college was primarily the domain of the elite. In 1910, only 3% of Americans attended college; in 1940, that number had risen to only 7%. While there were a number of reasons for such low numbers, cost was a significant factor. Beyond the lack of tuition assistance available, the price was prohibitive for most people. Tuition was about one-third of the median household's income in 1940, making it unattainable for all but the wealthiest 10-20% of students.


Image Credit: Beloit College
Image Credit: Beloit College

Those limitations changed at the end of WWII, when FDR signed the GI Bill in 1944. As a result, many people who would never have had the chance to go to college were able to attend. In addition to federal funding, large investments by states into their schools brought tuition and fees down to a much more affordable percentage. By 1968 and adjusted for inflation, the average cost was $11,400 (compared to$22,180 in 2022).


The result was an unprecedented upgrade in the type and number of professionals contributing to the US economy, as well as the expansion of the middle class. My dad was one of those GIs. Growing up on a small farm in eastern Montana, he went on to get two masters degrees and teach for most of his career. College was possible for him because of public funding, and the ROI on this investment was highly beneficial for everyone.


So when did college in the US start becoming unaffordable again? I remember my school bill going up about 8% a year during the late 1980s, which was when prices really started accelerating. The average cost of college has tripled over the past 60 years. In the last 20 years, public institutions have increased tuitions and fees by a whopping 141%.


Why College Costs Keep Rising

What is causing this trend toward unaffordability, both at private and public schools? While universities are largely not-for-profit by charter, many function more like a business these days, with revenue generation—not education—appearing to be the most important goal. Here are some factors that contribute to higher costs:


Facilities and Amenities Arms Race

Colleges compete to attract students by investing in state-of-the-art facilities, luxury dorms, recreational centers, and other amenities. This "amenities arms race" raises costs without directly improving academic quality. For example, some universities spend millions on fitness centers or gourmet dining options, which add to the overall budget but do not necessarily enhance learning outcomes.


We saw some of these enhancements on our recent college trip. I also remember when my alma mater received two enormous endowments shortly after I graduated. The hundreds of millions of dollars went mainly toward new facilities and extra campus housing. At the time, I remember thinking that a good portion of that money should have gone toward tuition assistance. The current environment, however, does not encourage that kind of allocation. Colleges attract "customers" through top facilities; and in many people's minds, a high price tag equals a high quality of education.


Administrative Growth and Spending

An additional factor is the rapid growth of administrative staff and non-teaching personnel. Over the last 30 years, the number of administrators at universities has increased significantly, often outpacing the growth of faculty members. These roles include compliance officers, student services, marketing teams, and other support staff. While some administrative functions are necessary, the expansion has often led to higher operational costs that get passed on to students through tuition hikes.


Decreased Funding, Increased Aid Demand

Another primary reason why costs have increased in the last few decades is that many states have cut their higher education budgets over the years. To compensate, colleges raise tuition and add fees (including a "major fee"). This shift places more financial burden on students and families, even though the institutions remain public in name.


As tuition rises, so does the demand for financial aid. Colleges may allocate more resources to scholarships and grants, which, ironically, are funded partly by tuition revenue. Greater aid demand also means more student borrowing when grants and scholarships can't be obtained, which gives schools the impression that they can continue to raise costs without consequence.


Getting Higher Education Back on Track

The main mission of higher education should be to prepare students for productive careers that benefit them, their communities, and the country. It is clear that over the past few decades, the focus on competition and profit has hampered these beneficial outcomes through high student debt ($1.83 trillion) and the trend toward lower college attendance (15% lower in the last decade). How can the system be reformed to fulfill its mission at an affordable cost? There are some concrete, systemic solutions that can be implemented:


Encouraging Public Investment

Schools can strengthen the case for public funding by emphasizing education as a public good and beneficial to all, rather than a commercial product. This perspective supports policies that increase state and federal support for colleges. In other countries, university education is often low cost or free because it is seen as an investment that makes significant, long-term returns.


Limit Administrative Bloat

Colleges should conduct thorough audits of administrative roles and expenses. Streamlining operations and cutting unnecessary positions can reduce overhead without harming student services.


Focus on Core Academic Mission

Institutions need to prioritize spending on faculty, academic programs, and student learning resources. Scaling back on luxury amenities and non-essential projects can free up funds.


Prioritization includes the (very touchy) area of athletics as well. Frankly, every school's trustees should sincerely evaluate whether their favorite sports program is just another expensive amenity that drains funds from academic spending. If sports is a profit center for the school, great! A litmus test question then becomes: "Are those profits used to support academics or grow sports?" If the latter, that's a problem. Another litmus test: "On average are we paying our coaches more than our professors?"


Additional litmus test questions can help to determine whether the school has lost sight of its academic mission, and can also show the way toward regaining it.


Promote Transparency in Tuition and Fees

Clear, detailed reporting on how tuition dollars are spent can build trust and pressure institutions to justify cost increases. Students and families deserve to understand what they are paying for.


Encourage Collaboration Over Competition

Public colleges can collaborate more often to share resources, reduce duplication of programs, and negotiate better deals on technology and services. This cooperation can lower costs across the board.


Reform Student Aid

Both the government and financial institutions should take multiple factors—including a degree's projected ROI—into account when lending to students. On the other side, the amount of interest lenders can charge should be limited to no more than what federal loans are allowed. In other words, let's stop student predatory lending.



There are some colleges and universities currently demonstrating how non-profit principles can work in practice. A few examples are:


  • University of North Carolina system: This public university system has kept tuition relatively stable by prioritizing state funding and controlling administrative costs.


  • California State University: Known for its focus on affordability and access, CSU has implemented cost-saving measures while maintaining academic standards. Surprisingly, the head football coach Justin Wilcox is still the highest paid state employee at a current contract of $4.8M for the 2025 season.


  • Community Colleges: Many community colleges operate on non-profit models with strong local support, offering affordable pathways to four-year degrees.


While more improvements can still be made (e.g. Justin Wilcox's salary), these examples show that with the right policies and priorities, non-profit higher education can thrive and serve students effectively.


One final and critical point is that almost all of our political leaders are university educated, often at "elite" schools. If we are to have truly representative government, then leadership must be comprised of those that it actually represents. In order to do that, people from average income households must be able to access higher education. To limit this opportunity to wealthy students, or to burden middle or lower income students with unmanageable school debt, is to put our nation's economic and democratic future at risk.


Fix Capitalism. Fix the American Dream.


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