The standard narrative in higher education is a pity party for the administration. We are fed the same tired line year after year: college sticker prices keep climbing because inflation is relentless, administrative compliance is suffocating, and campuses are just trying to keep the lights on while facing severe financial strain.
It is a neat story. It is also completely backwards.
Higher education is not suffering from financial strain. It is suffering from a structural addiction to unrestricted credit. Every time a university cries poor while flashing a sixty-thousand-dollar tuition bill, they are masking a basic economic truth: they keep raising prices because they can, and they can because the federal government and private lenders hand out unsecured cash to eighteen-year-olds with zero credit history.
When you remove the friction of price sensitivity from a market, demand does not drop when prices rise. It does the exact opposite. Institutions take that guaranteed capital and deploy it into administrative bloat, luxury student unions, and climbing walls, all while pretending they are teetering on the edge of bankruptcy.
I have watched institutions burn millions of dollars on vanity projects disguised as student enrichment, only to turn around and demand sympathy from taxpayers and alumni. The financial strain narrative is a deliberate smokescreen. It is designed to justify tuition inflation that vastly outpaces the Consumer Price Index, shifting the burden of institutional mismanagement directly onto the balance sheets of graduates who spend the next two decades paying off a depreciating asset.
Let us dismantle the core falsehoods keeping this machine running.
The Myth of the Starving University
Look at the balance sheets of mid-tier private colleges and state flagships alike. When administrators claim they are under financial strain, they are usually pointing to declining state appropriations or flat enrollment curves. But watch what happens to their institutional endowments and executive compensation packages during these supposed lean years.
The cash flows are not drying up; they are being redirected.
Imagine a retail business that doubles the price of its product every decade while the actual quality of the product—measured by the market value of the skills acquired—remains static or declines. That business would go bankrupt in a free market. But higher education is not a free market. It is a cartel protected by accreditation boards that gatekeep entry and federal loan policies that underwrite any tuition figure an admissions office cares to dream up.
When an institution builds a fifty-million-dollar recreation center or hires three new vice presidents of student experience, it creates a fixed overhead cost. To pay for that overhead, tuition must go up. Then, because tuition went up, the institution needs to offer more financial aid packages—which they market as generous discounts—which in turn reduces net tuition revenue, forcing them to raise the sticker price even further to compensate.
It is a self-perpetuating cycle of financial theater. The strain is self-inflicted. Yet the public is expected to pity institutions that treat their balance sheets like sovereign wealth funds while leaving their customers holding a bag of high-interest debt.
The ROI Illusion
The most dangerous lie told to high school seniors is that a college degree is a guaranteed investment.
Ten years ago, the math worked out more often than not. Today, the return on investment depends almost entirely on the major and the institution's network, yet the price tag is uniform. We charge an engineering major and a sociology major the exact same per-credit-rate, even though their median starting salaries post-graduation can differ by fifty thousand dollars.
That is not an educational model; that is cross-subsidization disguised as a public good.
Let us look at what the data actually says about degree value. The Bureau of Labor Statistics and Federal Reserve studies show that the wage premium for a college degree has plateaued in real terms for broad categories of humanities and general studies. Meanwhile, the cost of acquisition has doubled.
When you finance a sixty-thousand-dollar degree at six percent interest to land a job paying forty thousand dollars a year, you have not invested in your future. You have purchased an indentured servitude contract. The market has already adjusted to the flood of credentialed applicants, yet universities continue to pump out graduates into saturated fields while pretending the degree itself remains a golden ticket.
Why Tuition Increases Drive Quality Down
Common sense suggests that if you pay more for something, you get higher quality. In higher education, the opposite happens.
As tuition spikes and institutions gorge on easy loan capital, they invest less in actual teaching. The classroom experience for a freshman or sophomore at a major research university is rarely led by tenured, world-class faculty. Instead, it is outsourced to adjunct professors and graduate teaching assistants who are paid poverty wages with no benefits.
Where does the money go? It goes into the administrative apparatus. Title IX coordinators, diversity officers, enrollment management consultants, and institutional advancement teams multiply like bacteria.
This administrative bloat does not improve student learning outcomes. It protects the institution from liability and drives recruitment pipelines. The product—education—takes a back seat to the enterprise—administration. When a university claims it needs more money to maintain academic excellence, look at its faculty-to-administrator ratio over the last thirty years. You will find that the people actually doing the teaching are shrinking as a percentage of the payroll, while the bureaucracy swells.
The Uncomfortable Truth About Student Loans
Nobody wants to say the quiet part out loud because it disrupts political talking points on both sides of the aisle.
The student loan system is not broken by accident. It is broken by design to keep the university machine fed. If the federal government capped student loan borrowing at ten thousand dollars per year, what do you think would happen to tuition rates by next Tuesday?
Every private liberal arts college charging eighty thousand dollars a year would suddenly find a way to operate on twenty thousand dollars. They would slash bloated departments, cancel construction projects, and cut administrative fat overnight because their customer base would instantly dry up.
By removing the loan cap, we removed the market discipline that forces organizations to become efficient. We gave universities a blank checkbook and acted surprised when they bought a fleet of luxury cars.
What You Should Do Instead
If you are a student or a parent looking at this landscape, stop playing by rules designed to fleece you.
First, treat college like a procurement decision, not a rite of passage. If an institution cannot show you verifiable, audited employment and salary data for graduates of your specific major within six months of graduation, walk away. Do not pay brand-name prices for a generic education.
Second, consider the unbundled route. Certifications, technical bootcamps, trade apprenticeships, and portfolio-driven skill acquisition often yield a higher return on investment in twenty-four months than a four-year degree takes a decade to recoup. The monopoly of the four-year residential college is breaking down, even if the institutions are trying to legislate its survival.
Finally, if you do go to college, ruthlessly optimize for ROI. Go to an in-state public option, commute if you have to, major in something that solves an expensive problem for employers, and graduate in three years by maximizing AP credits and summer terms.
Higher education wants you to believe you are buying enlightenment. You are not. You are buying a credential in a rigged market. Once you see the tuition hike for what it actually is—a tax levied by an insulated bureaucracy—you can stop participating in the scam.
