Why is college so expensive? 3 Reasons why

Over the last 20 years, the cost of education at public 4-year institutions has increased by 141 percent for the average student, according to Education Data Initiative. The average cost of a 4-year undergraduate degree ranges from $39,000 to $226,512, depending on resident status and institution. It’s only natural to wonder why college is so expensive.

Increased demand for higher education, waning government funding and lack of investment in student services are the primary factors that contribute to the high and rising costs of attending a college or university in the U.S.

3 Reasons why college costs so much

There are three main reasons for college tuition inflation: a decrease in undergraduate enrollment, an increase in costs and record inflation.

1. Colleges are seeing a decrease in enrollment

Though projections show future growth, enrollment in postsecondary institutions has been decreasing consistently over the last decade. Undergraduate enrollment decreased by around 15 percent from 2010 to 2021. Fewer students mean a higher tuition per student to cover costs.

2. High student service and administrative costs

As enrollment declines and attracting new students is paramount, colleges are investing more in amenities, upgraded housing, attractive facilities and more. But those enhancements, paired with lower enrollment, are driving up tuition.

And while amenities and accommodations are big players in the increasing institutional costs, rising administrative costs are also to blame. A 2021 study from the American Council of Trustees and Alumni (ACTA) found that colleges spend more on administrative services than before.

According to the ACTA study, between 2010 and 2018, spending on student services and administration grew by 25 percent and 19 percent, respectively, while spending on instructional staff grew by only 16 percent.

3. Record inflation increases operating costs

Although inflation is down from its 2021 peak of 7 percent, it’s still up by 2.8 percent as of February 2025. Inflation affects cost of living and also has a substantial impact on an institution’s operational necessities. As operational expenses increase, tuition does as well to help absorb the cost.

How students can pay for college

Despite the growing costs, there are still ways for students to afford a degree — sometimes even going to college for free. To determine if you’ll qualify for any federal aid, start by filling out the Free Application for Federal Student Aid (FAFSA).

Some common ways students pay for college are:

• Scholarships: Many colleges, businesses and community organizations offer money toward college for qualifying applicants based on academic, artistic or athletic merit. Typically, you have to apply for scholarships, and you may need to meet certain criteria to apply.
• Grants: This is another way you can get free money towards your education, but this is usually based on need rather than merit. Grants often require an application and are available through federal or state governments and colleges.
• Student loans: Getting a loan for your education can help you put off paying for college, but you will have to pay back whatever you borrow plus interest. Both public and private student loans are available.
• Employer tuition assistance: Some employers offer employee programs where they pay for or reimburse tuition for certain courses or degrees of study. Employer student loan repayment assistance programs are also available through some employers or government agencies.
• Work-study: Students can sometimes qualify for this type of part-time work while in college. Work-study jobs are usually available through the college or university where you study.

Many students use a combination of some or all of these options to chip away at educational expenses. With the right blend of financial aid, it’s possible to bring down the high costs of college to a more reasonable level.

Is college worth it?

Despite the rising costs, there are multiple benefits of attending college, among them being potential earning increases, broader career opportunities and increased job security. But there are some drawbacks to consider, too.

Bottom line

Ultimately, decreased enrollment, increased student service spending and persistent inflation keep college costs high– and they continue rising. For students looking to pursue a college education, there are many options for college funding, including college savings plans, student loans, and work-study programs. Student loan forgiveness programs can help graduates to recoup some costs, depending on their field of study and career plans.