Tuition costs are rising much quicker than costs in any other category. The reasons for ever rising tuition prices are argued relentlessly. It’s probably a combination of greedy schools, too much financial aid, far too many liberal arts cash cow majors, and way too many administrators.
But who really cares, right?
In all reality, ever-rising tuition prices are your best friend. The more expensive college becomes, the more others have to pay to get the same degree you have.
Human capital is a fairly competitive business. I can relate this to an investment I own, Conrad Industries, which is involved in one of the most competitive businesses in the world, ship building and repair. I mean, it’s one of those businesses where customers shop around and have many different choices in who they work with. Business doesn’t just fall in your lap because you happen to have the prettiest ad in the Yellow Pages.
But Conrad Industries manages to make ridiculous amounts of money doing it, especially when you consider how little money it invests in what it does. The reason is simple: it bought all the most expensive parts of the business (land, mostly) at prices not seen in many decades.
So to compete with Conrad Industries today you would have to buy land and buildings at 2013 prices to compete with a company that paid 1960s prices for its waterfront land and buildings. Oh, and you can’t beat it on quality, you have to beat it on price. Good luck. It would be impossible. You’d lose money trying to match their prices if the market were bitterly competitive. They can sell their services cheaper given their cost basis.
Your college degree is the same way. Someone who goes to school today and graduates with $23,000 in debt (the current average) can charge way less for his or her services in 2050 than someone who goes to school in 2050 and graduates with $150,000 in debt.
So, once you’re out of school, you should root for ever rising college tuition. I know I will be next year. I say let’s make it $50,000 a year at every state school for every major!