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Allie Caldwell

Dr. Cassel

English 1201

21 Mar. 2020

Literature Review

In the United States, college tuition has become increasingly expensive. The high price of

tuition is problematic for students and their families. College tuition consistently outpaces the

rate of inflation and has increased significantly over the past two decades. Why has tuition at US

universities risen so dramatically? 

In the 1960s and 70s, both federal support and public demand for higher education rose.

As more Americans graduated, the wage gap between college-educated and noncollege-educated

employees grew. To this day, many people consider college a pathway to the middle class.

However, since the 1980s, students have been paying more for their diplomas. To address this

issue, the federal government expanded student loan availability during the 1990s and 2008

recession. During the 2008 recession, state funding for higher education declined, resulting in an

increase in tuition costs. Increases in tuition have led, in part, to the current $1.5 trillion student

debt crisis. The history is supported by political journalist and textbook author Alan Greenblatt

in his article for CQ Researcher. CQ Researcher is a resource that publishes comprehensive

reports on various topics for researchers and students. Additionally, the history is supported by

data analysis from the Pew Research Charitable. Finally, the history supported by economic

professors and authors of Why Does College Cost So Much? Robert B. Archibald and David H.

Feldman. 
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A key point repeated throughout the sources is that decreases in state funding for higher

education directly increase the amount of tuition paid by students. State funding pays for a

significant portion of students’ actual cost of attending public universities. Robert B. Archibald

and David H. Feldman claim that as states have reduced their appropriations for higher

education, “families have borne an increasing fraction of a rising tuition bill” (10). Additionally,

states tend to cut funding for higher education during and after a recession (Bundick and Pollard

59). Writing for CQ Researcher, Alan Greenblatt claims that state aid “has not rebounded from

deep cuts during and after the 2007-2009 recession.” This idea is supported by data from the Pew

Research trust, which found that states spent $2.2 billion less on higher education in 2017 than

they had in 2007 (4). 

Another key point repeated in the sources is that increases in faculty labor costs lead to

increased tuition. Writing for the Federal Reserve Bank of Kansas City, economists Brent

Bundick, Ph.D. and Emily Pollard claim, “statistical evidence suggests that wages in the

education sector...play an important role in explaining changes in college tuition inflation” (58).

According to Bundick and Pollard, 80 percent of higher education’s production value comes

from the highly-skilled, labor-intensive work of professors and faculty (61). Archibald and

Feldman note that as the education wage gap increases, “the cost of producing a service that uses

highly educated labor must also grow” (6). The increased costs of employing highly educated

individuals and the constant labor needs in service industries such as higher education may

contribute to long-term tuition increases. 

Writing for the Federal Reserve Bank of New York, David O. Lucca, Taylor Nadauld,

and Karen Shen contend that expansions to federal student loan availability lead to increased

college tuition. However, Archibald and Feldman claim that increases in federal student loans do
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not directly impact tuition. While acknowledging that increased student loan availability can

increase demand for post-secondary education, Archibald and Feldman argue that colleges are

more likely to admit more students than raise tuition in response (13). Both sources cite credible

data that shows a direct relationship between increased tuition and student loan availability

(Lucca et al, 464; Archibald and Feldman, 19). As such, the sources’ different conclusions likely

arise from their differing purposes and audiences. In “Credit Supply and the Rise in College

Expansion,” Lucca, Nadauld, and Shen explain their findings of a strong correlation between

increased tuition and federal aid expansion by utilizing economic data and algorithms. Their

intended audience is likely economists and researchers. Conversely, in “The Anatomy of College

Tuition,” Archibald and Feldman dissect the various factors impacting college tuition and

propose their recommendations for improving US higher education. Their intended audience is

likely academics and other college faculty.

One common misconception that surrounds the topic of college tuition is that students

pay full or “sticker” price for tuition. This misconception is often perpetuated by unreliable

financial blogs. As an unknown contributor for FiscalTiger states, “[at] a public university, an

out-of-state student can expect to pay around $23,000 per year” (“5 Reasons Why”). This

information, sourced from the CollegeBoard, is accurate; however, the article fails to mention

that the majority of students do not pay full price for tuition. This misconception is harmful to

students and their families. College applicants may consider a college out of budget when it

could actually be the most affordable option once grants, scholarships and tax benefits are

factored in (NCES).

One possible answer to my research question is the decrease in state funding for colleges.

This idea is well-supported by my research. I would like to further research individual state
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funding policies to compare the effects of funding decreases on tuition. Other possible answers

to my question include increased labor costs and student loan availability. Student loan

availability would require further research as my sources conflict on this point. Additionally, I'd

like to research the effects of spending on amenities such as stadiums and classroom technology. 

In addition to the sources listed, I included information from the College Board’s “2019

Trends in College Pricing.” The College Board is known for their annual review of financial data

from the NCES and universities. Additionally, I included political journalist and author Amanda

Ripley’s article “Why is College in America so Expensive?.” The article was published in the

Atlantic in 2018. In the article, Ripley cites data from reliable resources and quotes experts on

higher education. I also included American Institute of Research report “Labor Intensive or

Labor Expensive?,” authored by researchers Rita Kirshtein Ph.D. and Donna M. Desrochers.

Finally, I included information from the Integrated Post-Secondary Education Data System, a

part of the Department of Education.

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Works Cited

Archibald, Robert B., and David H. Feldman. "The anatomy of college tuition." The American

Council on Education 1 (2012).

Bundick, Brent, and Emily Pollard. “The Rise and Fall of College Tuition Inflation.” Economic

Review (01612387), vol. 104, no. 1, 2019 First quarter 2019, pp. 1–19. EBSCOhost,

search.ebscohost.com/login.aspx?direct=true&db=bth&AN=137333886&site=eds-live.

“5 Reasons Why College In America Costs So Much.” FiscalTiger , 20 Nov. 2019,

www.fiscaltiger.com/why-college-so-expensive/.

Greenblatt, Alan. "Issues in Higher Education." CQ Researcher, 26 Oct. 2018, pp. 897-920,

library.cqpress.com/cqresearcher/cqresrre2018102610.

Lucca, David O., et al. “Credit Supply and the Rise in College Tuition: Evidence from the

Expansion in Federal Student Aid Programs.” Review of Financial Studies, vol. 32, no. 2,

Feb. 2019, pp. 423–466. EBSCOhost, doi:10.1093/rfs/hhy069.

“Price of Attending an Undergraduate Institution.” NCES, Apr. 2019,

nces.ed.gov/programs/coe/indicator_cua.asp.

“Two Decades of Change in Federal and State Higher Education Funding.” The Pew Charitable

Trusts, 15 Oct. 2019, www.pewtrusts.org/en/research-and-analysis/issue-

briefs/2019/10/two-decades-of-change-in-federal-and-state-higher-education-

funding#appendix-figure-6.
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