How is it that college costs have soared so completely out of control that we now face a terrifying tuition bubble, crushing levels of college debt on families and students and an imminent student loan collapse?
Many ideas have been posited to attempt to explain the growing disconnect of American college tuition pricing from the rationality that governs every other market-based consumer good. Here are a few:
Higher education is more costly to deliver today because of expensive faculty research and the need to keep up with rising technology demands.
College costs too much because each institution must compete with other similar institutions in an escalating arms race of luxury amenities to attract top students.
It costs too much because parents think that expensive things have more value and so colleges must raise their prices to maintain the desirable illusion of high quality.
It costs too much because society is so much more complex these days that colleges must now hire vast armies of high-paid mid-level bureaucrats to manage and administer it all.
While interesting theories on the irrationality of college tuition prices abound, the real reason for the insanity of college pricing is quite simple and easy to explain. The answer lies with Karl Marx, who asserted the idealistic guiding principle of communism and college pricing: From each according to his ability, to each according to his need.
Fifty years ago, with the passage of the original Higher Education Act, Congress adopted this premise and interpreted it to mean, "From each according to his ability [to pay], and to each according to his [demonstrated] need." College financial aid offices have been operating under this guiding economic philosophy ever since, with predictably and increasingly dire and illogical tuition pricing results.
At the HEA signing ceremony, Lyndon B. Johnson asserted that, "Education in this day and age is a necessity." He proudly proclaimed that, "We can now make available scholarships up to $1,000 a year, awarded on the basis of need alone to an individual." Presumably, the proponents of the bill patted themselves on the back for having "solved" the problem of college affordability, when, in fact, they had actually ensured the exact opposite result.
Colleges were quick and eager to raise tuition prices accordingly, taking into account the external governmental help now available to students who "demonstrate" that they "need" it. On the high end, tuition prices began to be set specifically to extract as much money as possible from applicants with presumed greater "ability" to pay.
You know you're dealing in Marxist economics when different consumers face different prices to purchase the exact same product.
You don't just walk into a college and say, "How much does it cost to go here?" Are you crazy? There are forms to be filled out first! "Really?" you say. " You can't tell me how much our college bill will be until we fill out an intrusive government form detailing everything we earn and everything we own?" Of course not! First we have to analyze and judge you.
Imagine if your grocery store operated this way.
You: "How much are these eggs?
Clerk: "That all depends. How much are you worth?"
If you're worth or earn a lot, expect to pay $127 for those eggs. After all, you can afford it.
Tuition pricing has nothing at all to do with what it actually costs the school to deliver the product with a reasonable profit margin built in. Those rational market forces ceased to operate in American Higher Education half a century ago. Now, individualized prices are set by centralized powers-that-be, who take a close intimate look at your personal finances and determine where you fit on the sliding scale of decreed marxist "fairness."
The inevitable results of employing the Marxist pricing model in academia have now reached full fruition. Since 1978, college tuition and fees have skyrocketed 1,225%, compared to a "mere" 634% for medical care (also semi-Marxist in scheme, and, hence, second in outrageousness of pricing), 370% for shelter, 257% for food and 279% for the overall consumer price index. In terms of inflation, nothing else even comes close to college tuition costs. Thus, in predictable unintended consequential Marxist fashion, the end result is the precise antithesis of what was proposed. Rather than ensuring affordable tuition, this system has created the most unaffordable and preposterous tuitions that could ever have been imagined, with no end in sight, other than bankruptcy--personal, national, or both.
The college tuition system is the most socialized sector within our capitalized economy; this is why it's completely disconnected from rational market forces and makes no logical sense. So, if you're wondering why college costs are out of control, ask Karl Marx why idealism has yet to trump reality.
Marxism has never worked anywhere it's been tried. In fact, it's been a totally destructive economic disaster everywhere it's ever been implemented. Why would higher education be any different? Answer: it's not.