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Why Is Higher Education So Expensive? – Learn Liberty


STUDENT 1: My student debt will, most likely,
by the time I graduate, be around $80,000 at minimum. STUDENT 2: Itís really complicated. I just
donít understand how we have to pay so much money to get an education, especially in America. STUDENT 3: Itís overwhelming. I’m not sure
what Iím going to do with my major yet, so it’s kind of crazy thinking about paying off
all that debt but somehow itíll disappear. PROFESSOR LIN: College is getting increasingly
expensive. Tuition at U.S. universities has risen faster than inflation in every year
since 1981. So why is the price of college rising so quickly? It’s basic supply and demand.
Weíre seeing enormous increases in the demand for higher education, and universities can
respond in two ways: increasing the supply by accepting more students or increasing the
tuition. Since most colleges can’t keep up by increasing enrollment, tuitions must rise. To understand what’s happening, we need to
examine what’s been driving that demand. There are two main factors. First of all, the payoff
from a college degree has been growing over time. In 1980 college graduates earned 50
percent more than high school graduates. In 2008 they earned over 90 percent more. In
addition, a college degree increases your chances of finding a job, even in a sluggish
economy. In the May 2012 employment report, the unemployment rate for high school graduates
rose to 8.1 percent while the unemployment rate for college graduates fell to 3.9 percent.
So it should be no surprise then that young people today are pursuing higher education
in larger numbers than ever before. But there’s more to the story. STUDENT 4: Itís kind of something that I
don’t understand. You know, costs are constantly rising. I mean I guess it has to do withó
Every price rises, every cost rises, but college costs rise so exponentially that I think that
it just doesn’t equate. PROFESSOR LIN: There’s a second major reason
for the increase in demand, and this one is the result of public policy. To make colleges
more affordable, federal and state governments have been giving subsidies to studentsómost
notably through government-backed student loans, but also through grants and tax credits.
In fact, as prices rise there’s political pressure to increase these subsidies. What many students don’t realize is these
subsidies actually lead to higher tuitions. When you subsidize something, it’s cheaper
for people to consume. So people consume more of it and demand rises. So while students
may want more subsidies to make college more affordable, ironically more subsidies actually
make college less affordable, because they fuel the demand thatís driving tuitions upward.
Instead of being helped by the subsidies, students are just taking on more debt than
ever before. And this rising demand also drives up prices
in another way. Because colleges have no trouble filling seats, even with record-high tuitions,
theyíve felt no pressure to cut costs. Instead, colleges have spent more. Fancy student centers,
dining halls, athletic facilities, and many more administrative staff than ever before:
these additions make college more expensive without increasing the value of the diploma.
The rising price of college education is a heavy burden for young people and their families.
Fortunately, because we know the main reasons behind rising tuitionsópromises of higher
wages, and increased subsidiesówe can start to look for solutions.

100 Replies to “Why Is Higher Education So Expensive? – Learn Liberty”

  • Not one partisan liberal quack attacking this video offer any direct argument to what is presented. It's all buzzwords and junk cop outs like 'overly simplified' and 'trickle down doesn't work'. Education doesn't mean anything when you don't know how to think.

  • his answer about 1980 vs now where graduates went from earning 50% more to 90% is very very deceptive!!! because they earn a much higher percentage of steadily decreasing wages! Also factor in that inflation is far higher than wage increases-anyone interested in telling us the truth could have easily progressed 3 charts including inflation and the median cost of rentals and home ownership with the buying power of the dollar!

  • make colleges and universities public and free, as well as it exists private universities and colleges. For those who cannot afford to pay the bill for a private college og university, they should be able to choose another option, like a free public option = free universities and colleges. We have that in Norway and it is amazing. 

  • 1. ) Supply can be effortlessly increased by adding more schools.
    2. ) Schools that didn't blow money on useless shit and offered lower tuition would, if capitalism wasn't a load of horse shit, result in a competitive edge to make the other universities have to respond.
    3. ) Neither of these things happens.
    QED Capitalism is bullshit and doesn't work like the fairy tale version libertardians present.
    Economists will never be able to reckon with the intangible social capital which is more important to Human behavior, and must corrupt, manipulate, irrationalize, and generally fuck with pure economic capital.

  • There are actually a lot of research showing how current American generations (and plenty to come) suffer from lack of education and healthcare, because the system is privatized and the average joe cannot afford it. As a result the population becomes stupid and unhealthy. If you don't look after your population in order to save a dime, you will instead pay in crime, stupid voters, deterioration of society etc. Unfortunately, Americans have been taught to be allergic to anything called 'help', scream 'Communism!!' while tearing their hair off. To you people I'll say this: Whenever communism has been put in practice by man, it has looked more like a totalitarian capitalist system ruled by dictators, because the wealth was never shared. Much like America today, where 1-3% sits on all the wealth, while the middle class disappears and the lower class is left to fend for themselves. All in the name of "Freedom and democracy".

  • YAYYY!! Check out our 2-min youtube learning video to know our 10 Ways to LOWER cost of living!

  • The first point is a typical example of wrongly inferring causation from correlation. There is only a correlation of education attainment and job prospects.

  • Woah. im so glad that i live somewhere where almost all education is covered by my goverment. getting stuck with these loans sounds horrible

  • Well that's very informative, but it doesn't give any clear answer as to solve the problem. Maybe in a another video

  • I really like this video but the part about athletic facilities is not true. Athletics and the NCAA actually make money for most universities that play their cards right.

  • World Mentoring Academy(a MOOC est. 4/2010) has 800+ courses with 180+courses aligning with AP/CLEP/DSST/CSS/NYU-SCPS/TECEP etc test out programs. A student can also study courses to challenge their University courses. One student earned has Bachelors in less than a year and $5,000(textbooks & test fees) from a US State University(regionally accredited).

  • It's so expensive because government is involved. Every time government gets involved in shit, the price goes up, and the quality goes down usually. It's expensive to not only buy and own a home, but also rent in many places, especially NY- thanks to government.

    College is not for everyone, not everyone needs to go and today most of it is a joke. You go in get brainwashed being told what to think, instead of how to think. You come out dumb, in debt, and working at Starbucks serving coffee lol.

  • I feel sorry for a lot of these people who are in debt really bad. You end up working in a place that you most likely will hate working in. Almost in a lot of cases of people that I meet in these situations, their major has nothing to do with their job. And they can't even enjoy doing risky things from jumping off an airplane skydiving to even doing naughtier things like eating out some ass, because they can't afford to see a doctor for a prescription of antibiotics because of sexually transmitted infections.

  • I feel anyone should be able to go to college, we can show you how to pay for a great college without you having to pay for it! (REALLY) http://www.payfie.com,

  • Get the government out of schools and let them really compete for their earnings. You'll see more schools, affordable cost and better classes.

  • If you believe affordable college education is a fundamental right for all Americans, use your vote!
    Register as a Democrat:
    http://www.usa.gov/Citizen/Topics/Voting/Register.shtml
    *AND VOTE FOR BERNIE SANDERS IN THE 2016 DEMOCRATIC PRIMARY!*: https://berniesanders.com/

  • The only way to combat this madness is to start making social policies. The education should not const a penny. It should be free. Everyone should have equal opportunity from the start of life to make a good life and improve the life of others. The only way to do that is to fund the education by progressive taxes

  • This is why i am voting for Bernie Sanders in 2016. He has a simple solution to allow for college to be free for all Americans. For every 100 dollars collected on wall street 50 cents of that will go toward paying college tuition fees for college students. It really is time for these greedy billionaire wall street bankers to do their fair share and stop raking in all the financial benefit off the working class. Forget Hillary. Sanders all the way!

  • I think we need Bernie Sanders to be president of the United States to move tax money already being paid into the Federal government and wasted on the military and tax breaks for corporations and the rich, and moved instead to funding free public college educations for every citizen.

  • Great job Prof. Lin! The solution to the prohibitive cost of education clearly is reducing  the demand for higher education. We need to eliminate all those wasteful subsidies, and curb the ability of young people to get an education. What an unbelieveable pile of BS, you should be ashamed of yourself! Someone strip this man of his doctorate!

  • SANDERS FIGHTING TO SOLVE STUDENT DEBT CRISIS. HILARY IS IN BED WITH THE BANKS LIKE REPUBLICANS.
    https://www.youtube.com/watch?v=FiA2XjEz0K8&index=5&list=UUD_DaKNac0Ta-2PeHuoQ1uA
    https://www.youtube.com/watch?v=K0qGde8xwVk&list=UUD_DaKNac0Ta-2PeHuoQ1uA&index=6

  • What this video says isn't wrong it just misses the real problem.Yes we can make college cheaper by reducing the amount of people who apply to college. the same way we could make gas cheaper by making most people walk to work or having all goods drawn by horse.  The Demand for an education is a good thing. it increases our productivity and provides a more informed electorate. The question is how do you decrease the cost while meeting the near universal demand. Any ideas?

  • Generally pretty good, but there is an apologist bent to it.  
    1) He speaks as if colleges have no choice but to raise tuition since demand is high.   But that's largely a false argument, colleges could instead keep their prices the same and just raise entry criteria.  
    2) He also cites that the two big reasons for the high cost are the better job prospects of graduates and the insidious effects of subsidies, but he forgets one — blatant greed
    3) He does note that colleges keep spending more on student centers, new buildings, etc, but he doesn't note how that drives up all non-tuition college expenses, making it more expensive overall.
    4) Finally, he doesn't note the gross greed that drives colleges and professors to insist that a version of a textbook, unique to that one school, be used because it costs twice as much and can't be gotten used AND because they (the professor and college) get a cut of the profits.   THAT does NOTHING to improve a class, just transfers money from poor students to rich faculty.

  • The greatest lie is that the optimal time to attend university is immediately after high school. Millions of relatively ignorant, naive teenagers, who never paid a mortgage or car payment, have to negotiate student loans and attending documents. The unis and loan originators want it that way, they don't want informed, experienced customers making demands on what the hell these documents mean.

    You want to stop tuition increases cold? Have every student loan become private, and any bank stupid enough to give a 17 year old a $30,000-$50,0000 loan is completely liable for any default. No government assistance, nor subsidy. If you want a loan, then you will approach it as would a business owner, who needs a loan. Prove that you have the capability to pay back the loan, that you have the capacity to control costs, that you have a plan for using the money effectively enough that you can pay it back. It would be an outstanding educational opportunity to have idiots understand how the world actually works, tuition costs would collapse, and worthless universities would be called on their nonsense, and a whole lot of people who do almost nothing for huge salaries would actually need to work for a living…..

  • It seems to me we need to increase the supply of education. Maybe we just need to build more colleges and universities.

    But with the financial incentives to do that already in place, why aren't people doing it?

  • So it's all down, really, to the institution's greed. They raise prices so one expects better quality of service, but that's not what happens. Instead to make it seem like a fair trade-off, colleges build fancy centers account for the mark up. Pathetic. These places are nothing than for profit machines. No integrity about the betterment of society as a whole, there.

  • Besides scholarships, how about taking some college courses in high school, going to a community college to start, getting a degree online, join the military, Khan Academy and so forth…He does mention some of the Non educational non value added increased costs provided by big schools, but no mention of professors, staff and presidents making big bucks off of the kids and their parents. http://www.nbcnews.com/id/33575819/ns/us_news-education/t/ranks-millionaire-college-presidents-again/ back in 09 23 universities paying over $1M/year for presidents….Your true education is to get a degree w/out going in debt. It can be done. Stay thirsty my friends.

  • This is a very informative video with an important message. However, the volume of the music in the background makes it hard to understand and concentrate on what the speaker is saying.

  • Easy fix, stop student loans, tuition will go down. Colleges can charge more because, to the student, they are not paying for it. So they don't care. You will always have this problem when a 3rd party is paying the bill.

  • This is a bit misleading. The video states that in 1981 college graduates could do "50% better" than high school graduates, but that now college graduates can do "90% better." The reason for the percentages is that – because more and more people are going to college – more and more jobs are now requiring a college degree. Jobs in banking (administrative assistants, tellers, etc.) used to be filled with people with a high school education. Now, they require a college degree (or at least some college). THIS is the "supply/demand" principle that's working here.

    Maybe PRIVATE colleges (who normally work on a business model) raised their tuition because they had more people applying. But public (state- and county-assisted) colleges have seen an enormous influx of people from all different backgrounds and in with many different issues (PTSD, abuse, etc.). To meet the demand (we can't turn them away… we're public), we have created an enormous arm called "Student Services" which includes counselors, advisors, advocates, etc. Student Services now is greater than 30% of the cost of running a college… and in the 1970s, it really didn't exist.

  • In other words, competition will always exist. If everyone can afford it, just raise the price and select only those who can afford the higher education.

  • Good analysis, sad that you did not try to find solutions. Just to note, higher education has always been expensive, going back tens of centuries – Martin Luther, for example, got his Bachelors, Masters, and Doctorate in the early 1500's – so the existing system has been around for centuries (note the Medieval gowns that professors still wear at ceremonies). Degrees used to be the realm of the elite, who would then pursue endeavors (such as science) out of honor and responsibility, with no thought toward further income. Now it is within reach of the children of tradesmen, though now practical material security is emphasized (and which is why the quality of the pursuits suffer). Philosophers would say it was emphasizing lowly subjective values over critical objective values (with the subsequent ill individual and societal results).

    Would free college for everyone work? Since other countries have already tried it – you can go ask them – I haven't given the matter sufficient time and effort.

  • How about colleges don't give a fuck and want to charge as much as they can? It's greed, like usual. Has nothing to do with learning or knowledge.

    Good luck if you are just getting into college! I feel for you.

  • I'm unsure about your line of reasoning when you say that in response to the higher amount of students interested in college programs colleges raise fees. I feel colleges would just decrease their acceptance rates rather than raise tuition fees.

  • I love they systematic way these videos present complex economic principles in ways that the everyman can understand. the videos are supported by evidence and not by name calling. I love this!

  • schools shouldn't be ran like it's a business, if demands goes up, they should increase the admission requirements. ''better job prospects'' is suspiciously worded. yes, better job prospects compared to if you didn't have a college degree. a phd in particle physics will give you a better chance at landing a job in dish washing than a high school diploma. but a phd in particle physics could've easily given you a position at a college faculty a couple decades back, a job as an engineer or a researcher. the necessity of a college degree has increased, rather, but its value has dropped considering the changes in costs and opportunities it brings.

  • now i've been looking at multiple videos on this topic from right leaning sources (Learn Liberty, PragerU, etc.) and left leaning sources (buzzfeed, TheAtlantic, etc.)
    now, the right leaning sources say that the government offered MORE subsidies which caused the costs to rise, but the right leaning sources said the government funded schools LESS causing universities to make up the difference by raising tuition costs. Can someone explain to me how these two differing claims can occur?

  • The price of college will never go down till you get the Government out and the demand for college goes down.

  • Why don't people just go to a community college for the first two years with a scholarship and then transfer to a 4-year institution to complete the degree? You're essentially paying for 4 years of college for the price of 2, and most people are going to learn the same general shit early on.

  • the percentage of people attending college has risen from 4.2% in 1970 to 7.5% in 2010. so they are increasing the availability dramatically while increasing the price dramatically. the main reason is that through various means people have been told that they can afford to go and that if they dont they wont be able to make enough money. both are lies. the colleges, banks, government, text book sellers, and others all benefited from convincing people spend their money getting a degree even if they had to borrow most of it.

  • Yeah, the thing with subsidies is just that it enables less privileged people, that means children of less wealthy parents, to go to college. If it wasnt for them, prices would drop, colleges would have less income and the lecture halls would once again be filled with wealthy children only. Great plan.

    Im from Germany but spend one year in the States during my studies and i was seriously appalled by the state of your education. Here most Universitys cost between 300€ and 500€ per semester, because government does most of the financing. Also, if you need it, the government co-finances you with a loan called "Bafög", of which you only have to pay back half the amount you borrowed. Anyone, who really wants to, can study here. Of course we have a gap between the poor and the rich as well, but its a joke compared to yours.

    The reason, that government involvement makes a lot of things worse is because your two-party "democracy" switches back and forth between radical liberalism and liberal socialism, so its impossible for your government to do anything right.

    If you think a radical free market will solve your problems youre as big a fool as a communist. From a European perspective i can most often just laugh at you, the United States of America regularly work as a prime example of the dangers and damages done by unregulated markets. They only serve those, who already are wealthy.

  • Another important point is that the loans will make prices go up even without the demand because the collage knows that they can get more money.

  • How ridiculous is it that she is paying into an education and doesnt know what she wants to major in? I thought college students were supposed to be smart…

  • While I was a student I never realised that I was a parasite: working people (tax payers) were basically paying for my education. Meanwhile, my university was undertaking huge building projects and greatly expanded the sports facilities. I certainly enjoyed the latter, but I was not the one paying for it… And it's great having a nice gym and soccer fields on campus, but it has nothing to do with the core business of universities: education. In fact, hanging out in the gym rather than the library delayed my graduation for several years, so even more subsidies flowed towards the university.

  • The same dynamics occur every time socialist agenda is implemented and central planning takes the place of a free market. The government has so grossly overstepped it's role in the economy, that nothing operates as it should anymore. But like the man said, since we know what the true causes and effects are, we can begin to affect a real change . But only if we leave politics out of it.

  • Instead of the government wasting money on handing out subsidies, they should build more public universities with that money to increase supply.

  • I study online at the University of the People. It is great, and it charges no tuition fees. www.uopeople.edu

  • Thankfully higher education in New Zealand is heavily subsidized by the government, and the average amount per year that you would expect to pay at a university or other institute is about $5000-$8000 per year.

  • There are several ineffecties in Higher Ed: top heavy Adm/construction/Athletic programs, Grade inflation & archaic lecture-style teaching modality. Leading Prof Clayton Christensen HBS to state "In 15 yrs, 50% of Universities will be gone". As a MOOC developer [pre -Coursera], I see a future of Project/Designed & Experiential based learning with the mobile MOOC platforms in Creative spaces like Maker, Artist, Biolabs spaces with Professor/teaching staff. In fact, MIT is using their MOOC https://www.edx.org/course?search_query=ap with and thier Media, Ag, Biolabs & Learning Laboratories as the current path to education To get a how this is happening, check out a talk I gave https://youtu.be/B5mvQfjeBYE?t=50s
    Please like & share with those you care about.

  • People with college degrees generally have higher IQ's than those with high school degrees AND they get access to govt protected fields through licensure. I'd like to see the pay scale for high school grads vs college "studies" grads. Weeding out govt make work jobs for these left wing propagandists programs, I'd bet the wages would be very similar. It'd be hard for the colleges to admit this as it is hard to understand something when your job depends on you not understanding it.

  • Why has the employability of college grads gone up so much? Is it just because of ever-relaxing standards at public high schools?

  • If there are more and more educated people in USA, why they can't ( don't want to ) make a better system where education and medication is free ?

  • "tuition must rise huh" why not rise the enrollment standard, make it harder to get into uni if student don't study well in high school. This is just pure greed !!!

  • Boycotting the education system would drop the price down just by supply and demand if for one year a massive amount of students don't enroll the price would drop exponentially and a lot of people with degrees are less likely to be unemployed but instead just have jobs in the service industry its not getting them what they paid for .Its like saying the federal unemployment rate only affects about 2% of the population so what do businesses do they just pay them 5 cents more then they are no longer part of the statistics .Those who fund there education with loans are the worst they end up with interest that has been compiling for many years barely making any dents on there debt .Filling stadiums should never be a way to make education more affordable in fact they are the main reason its become more expensive if it were any different then you would be able to see a decline in the cost of tuition year to year but you don't .
    Look at the university of Alabama they've won an insane amount of bowl games but the cost of tuition has not declined you would think it would at least show up .The thing with boycotting for 1 yr would only work if everyone after high school would postpone college by 1 yr until they get it together so as to not just gridlock it the following year .All your really paying for is the degree and for 1 year you could get a full-time job and get a head start into paying off those loans you can still do the learning in the degree your getting in fact your grades will reflect it in the experience you just got paid to apply it in .

  • The solution of the problem is hiding in the diagram of price increases and tuition and fees. You can see that all prices increased at 193% from 1980-2012 and tuition and fees to 945%. Where these money went which the owners of the private universities earned at that period? Probably they didn't invest them or they invest some of them in non-productive investments, or maybe left them stagnate on the banks betting them on the markets. The solution? Bring these money back to the economy. The states must convince the owners of the private Universities to invest these huge profits back to the Universities in order to give everyone the opportunity to have higher education and free access to the knowledge ! This will increase supply and the Higher education will not be expensive anymore !

  • Universities are bloated with overpaid deans and assistant deans of nonsense positions, they are damn near towns in and of themselves with all the programs and services they run and that sort of thing costs money.  The prevalence of loans and grants means someone with deeper pockets is paying and when you couple that with the fact that it is illegal to declare bankruptcy on a student loan (unless your are a Congressman's child if I recall correctly), means prices go up because you pretty much have to pay the inflated cost no matter what. 

    To make matters worse, many students have no idea what they want to do with their lives (and understandably so) so they pay the inflated cost for many years and some end up getting fluff degrees or degrees in fields that do not pay well at all compared to what they would need to pay off the loans.  The normal price signals are ignored or almost non-existent when it comes to education and we are not only incentivizing, but encouraging kids to go into debt as soon as they enter the real world.

  • I have researched the education bubble for 4 years. It's near impossible to pay your way through college while you are there. Too many people want to sugar coat a college degree but it's just too expensive to justify.

  • It's beyond supply and demand. Look at how many deans or administrators there are making 6 figure salaries.  Look at how many fluff programs and amenities that are present in Academia, look at all the loans and grants where deeper pockets are paying and tied into that, look at the fact that you cannot declare bankruptcy on a student loan.  There is absolutely no incentive to lower prices and normal price signals that tell you what you can and cannot afford are simply ignored or are not present.  It's hard enough for people with good paying jobs to pay off those loans, let alone the people that chose garbage majors that don't have high paying job prospects at the end.

  • If you’re debating on going to a community college or a university, please check out my most recent video. Don’t let anyone tell you community college isn’t good enough. Congrats to you on whichever path you take! 🎓

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