Before the automobile, before the Statue of Liberty, before the vast majority of contemporary colleges existed, the rising cost of higher education was shocking the American conscience: “Gentlemen have to pay for their sons in one year more than they spent themselves in the whole four years of their course,” The New York Times lamented in 1875.

Decadence was to blame, the writer argued: fancy student apartments, expensive meals, and “the mania for athletic sports.”

Today, the U.S. spends more on college than almost any other country, according to the 2018 Education at a Glance report, released this week by the Organization for Economic Cooperation and Development (OECD).

All told, including the contributions of individual families and the government (in the form of student loans, grants, and other assistance), Americans spend about $30,000 per student a year—nearly twice as much as the average developed country. “The U.S. is in a class of its own,” says Andreas Schleicher, the director for education and skills at the OECD, and he does not mean this as a compliment. “Spending per student is exorbitant, and it has virtually no relationship to the value that students could possibly get in exchange.”

Only one country spends more per student, and that country is Luxembourg—where tuition is nevertheless free for students, thanks to government outlays. In fact, a third of developed countries offer college free of charge to their citizens. (And another third keep tuition very cheap—less than $2,400 a year.) The farther away you get from the United States, the more baffling it looks.

This back-to-school season, The Atlantic is investigating a classic American mystery: Why does college cost so much? And is it worth it?

At first, like the 19th-century writer of yore, I wanted to blame the curdled indulgences of campus life: fancy dormitories, climbing walls, lazy rivers, dining halls with open-fire-pit grills. And most of all—college sports. Certainly sports deserved blame.

On first glance, the new international data provide some support for this narrative. The U.S. ranks No. 1 in the world for spending on student-welfare services such as housing, meals, health care, and transportation, a category of spending that the OECD lumps together under “ancillary services.” All in all, American taxpayers and families spend about $3,370 on these services per student—more than three times the average for the developed world.

The Great College Rip-Off
Why higher education in the U.S. is so expensive, and what students really pay for.
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One reason for this difference is that American college students are far more likely to live away from home. And living away from home is expensive, with or without a lazy river. Experts say that campuses in Canada and Europe tend to have fewer dormitories and dining halls than campuses in the U.S. “The bundle of services that an American university provides and what a French university provides are very different,” says David Feldman, an economist focused on education at William & Mary in Williamsburg, Virginia. “Reasonable people can argue about whether American universities should have these kind of services, but the fact that we do does not mark American universities as inherently inefficient. It marks them as different.”

But on closer inspection, the data suggest a bigger problem than fancy room and board. Even if we were to zero out all these ancillary services tomorrow, the U.S. would still spend more per college student than any other country (except, again, Luxembourg). It turns out that the vast majority of American college spending goes to routine educational operations—like paying staff and faculty—not to dining halls. These costs add up to about $23,000 per student a year—more than twice what Finland, Sweden, or Germany spends on core services. “Lazy rivers are decadent and unnecessary, but they are not in and of themselves the main culprit,” says Kevin Carey, the author of The End of College and the director of the education-policy program at New America, a nonpartisan think tank.

The business of providing an education is so expensive because college is different from other things that people buy, argue Feldman and his colleague Robert Archibald in their 2011 book, Why Does College Cost So Much? College is a service, for one thing, not a product, which means it doesn’t get cheaper along with changes in manufacturing technology (economists call this affliction “cost disease”). And college is a service delivered mostly by workers with college degrees—whose salaries have risen more dramatically than those of low-skilled service workers over the past several decades.

College is not the only service to have gotten wildly more expensive in recent decades, Feldman and Archibald point out. Since 1950, the real prices of the services of doctors, dentists, and lawyers have risen at similar rates as the price of higher education, according to Feldman and Archibald’s book. “The villain, as much as there is one, is economic growth itself,” they write.

This all makes sense, if we just focus on the U.S. But what about the rest of the world? These broader economic trends exist there, too. So why does college still cost half as much, on average, in other countries?

One oddity of America’s higher-education system is that it is actually three different systems masquerading as one: There is one system of public colleges; another of private, nonprofit institutions; and one made up of for-profit colleges.

The biggest system by far is the public one, which includes two-year community colleges and four-year institutions. Three out of every four American college students attend a school in this public system, which is funded through state and local subsidies, along with students’ tuition dollars and some federal aid.

In this public system, the high cost of college has as much to do with politics as economics. Many state legislatures have been spending less and less per student on higher education for the past three decades. Bewitched by the ideology of small government (and forced by law to balance their budgets during a period of mounting health-care costs), states have been leaving once-world-class public universities begging for money. The cuts were particularly stark after the 2008 recession, and they set off a cascading series of consequences, some of which were never intended.

The easiest way for universities to make up for the cuts was to shift some of the cost to students—and to find richer students. “Once that sustainable public funding was taken out from under these schools, they started acting more like businesses,” says Maggie Thompson, the executive director of Generation Progress, a nonprofit education-advocacy group. State cutbacks did not necessarily make colleges more efficient, which was the hope; they made colleges more entrepreneurial.

Some universities began to enroll more full-paying foreign and out-of-state students to make up the difference. Over the past decade, for example, Purdue University has reduced its in-state student population by 4,300 while adding 5,300 out-of-state and foreign students, who pay triple the tuition. “They moved away from working to educate people in their region to competing for the most elite and wealthy students—in a way that was unprecedented,” Thompson says.