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collegeCollege costs are out of control! Middle-class students will be financially ruined by going to college! Only the wealthy can afford a good liberal education!

The hype about college costs has generated many myths about higher education, and has driven them deeply into the collective consciousness—where they are wreaking havoc with parents and students trying to make difficult decisions about going to college. The National Association of Independent Colleges and Universities has taken on nine of these myths, and we are going to look at them here [1].

Myth 1: Private colleges are not affordable, especially for the middle class

Untrue. Private colleges have dramatically increased their student aid budgets in order to remain affordable to students. The net cost to students and their families is often far less than the published prices of tuition and fees.

This year the published average cost of tuition and fees at private four-year institutions is $31,230, while the average net cost, after grants and financial aid, is $12,360. In other words, students receive, on average, $18,870 in grants and financial aid, which cover 60% of the cost. And the average net cost is about 15% lower today than it was in 2007-2008.[2] And these are only averages—many students qualify for substantially larger awards of financial assistance, making the education affordable even for those with very modest incomes or very heavy financial burdens.

Of course, there are some middle-class families whose circumstances and income make it difficult for their children to qualify for aid. And it has always been true that attending college is not inexpensive. But private colleges remain affordable for many students.

Myth 2: Federal student aid drives up college costs

Also untrue. Empirical studies conducted by academic and government economists over the past twenty years have shown that federal student aid has no causal relation to increasing college costs.[3]

Education is expensive. Putting students together with teachers in an intense learning environment cannot be done on the cheap, unless we are willing to accept substandard results. When students receive financial aid from external sources, whether from private sources or from the federal government, it reduces the amount of money colleges must raise by increasing tuition.

Myth 3: Private colleges are mainly for the wealthy, and have very little diversity

Also untrue. Four-year private colleges have the same percentage of minority undergraduates as four-year public institutions (26%).[4] They also have similar percentages of students from various economic backgrounds. Here is a small table:[5]


All in all, diversity is just about the same at private and public colleges.

Myth 4: Many college graduates have student debt in excess of $100,000

Untrue. In 2014, only 4.3% of all student borrowers owe more than $100,000. 70% owe less than $25,000, while 25.7% owe between $25,000 and $100,000.[6] These figures include debt for graduate students, which is much higher than undergraduate debt.[7]

The average amount of debt per undergraduate borrower at private colleges in 2013-14 was $31,200, compared to $25,600 for public colleges.[8] Here at St. John’s, the average debt was $28,700.

It would be better for everyone if students did not have to go into debt to get a college education. But unlike many monetary debts that people contract over a lifetime, this one produces significant economic returns. That brings us to the next myth.

Myth 5: The financial cost of a college degree is not worth the financial benefit

Also untrue. An analysis of data from the Economic Policy Institute shows that holders of a bachelor’s degree earn about 80% more on an hourly basis than students with only lesser amounts of college education.[9]

The median annual earnings in 2014 for workers with a bachelor’s degree was $57,616; with an associate’s degree, $40,404; and with a high school diploma, $33,852.[10]

During the recovery from the Great Recession, between December 2007 and February 2012, college graduates gained 2.2 million jobs, whereas those with a high school diploma or less lost 5.8 million jobs.[11]

While financial returns are far from the most valuable benefits of a college education—the College Board reports that college graduates also enjoy greater security, better health, closer family connections, and an enhanced sense of community[12] —they are real, and they persist during good economic times and bad.

Myth 6: Students are abandoning private colleges for other options

Also untrue. Since 2011 at least, while total college enrollment declined, enrollment at private colleges and universities increased.[13] Here at St. John’s, enrollment has stabilized and has been increasing.

Because of the steady increase in enrollments, the number of private colleges in the United States has continued to grow at a rate of five or six four-year institutions per year for more than a generation.[14]

Despite the prevalence of the myths we have been examining, students continue to flock to private colleges and universities, even as enrollments in public and for-profit institutions decline.

Myth 7: Private colleges have billion-dollar endowments that insulate them from economic reality

This is largely untrue. While a few of the best-known independent colleges and universities do have massive endowments, the vast majority do not. In 2013, the last year for which comprehensive figures exist, only forty-seven of the nation’s 1,600 private institutions had endowments worth a billion dollars or more. That is a mere three per cent.[15] For many of the rest, their endowment investments have not been returning enough to keep up with increasing expenses.[16]

And in recent years most private colleges have had to spend more out of endowment income than used to be considered prudent.[17] Why? Because of our unique commitment to making college available to all who really desire it: we have greatly increased grants subsidizing tuition and other costs in order to lower the out-of-pocket expenses to the vast majority of families that have been hit hard by the great recession.

For most colleges, their endowments hardly insulate them from economic realities. They merely provide the basis for prudent financial planning, and they must be managed conservatively to protect their principal, so that the endowments can support the next generation of college-bound students.

Myth 8: Private institutions are unresponsive to the needs of a changing society

Untrue. A simple glance at the websites of just about any private college will demonstrate that a vital concern is, and has been, the development of technologically sophisticated and flexible learning models. Independent institutions offer a wide variety of programs for adult students, and well as programs tailored for groups of young people who do not traditionally attend four-year colleges: for instance, many private colleges have standing transfer agreements with community colleges.

As I already mentioned, private colleges have a long-standing commitment to try to provide access for everyone who wants a college education. They responded to the recent economic downturn by rapidly expanding academic support and financial aid programs to help students from all backgrounds continue to complete a college degree. You can see information about these initiatives from hundreds of colleges at the Building Blocks to 2020 website.

Here at St. John’s College, on both of our two campuses in Santa Fe, New Mexico and Annapolis, Maryland, we know that the great recession has made it much more difficult for many families to afford the cost of a liberal education. For that reason, we nearly doubled our budget for financial assistance from $11.4 million to 21.9 million since 2008. And we have held tuition increases to a modest average rate of 3.7% over the same period. The result is that the average net cost of attending St. John’s has decreased even in unadjusted dollars, and still more so in dollars adjusted for inflation.

In order to do this, we had to rely on generous donors, who greatly increased their annual gifts as well as their gifts to our endowment, because they share our continuing commitment to providing our education to all who can benefit from it—whatever the financial constraints.

Myth 9: Private institutions are neither transparent in their finances nor accountable for their performance

Also untrue. As far as financial transparency is concerned, private institutions are highly regulated. They are nonprofit entities, and so they must abide by specific and detailed IRS rules relating to transparency in governance and finances. The public has access to much of this information online at the University and College Accountability Network.

As far as accountability for performance is concerned, the U. S. Department of Education requires every college that participates in federal student aid programs to be accredited by an approved agency. Accreditation, which occurs at ten-year intervals with secondary checks at the five-year mark, involves intensive examinations of both financial soundness and academic quality. The public can also see critical aspects of this information from more than 800 institutions at the UCAN website mentioned above.

This brings us to the end of the nine myths about college identified by NAICU.

Much could be said about how the persistence of these myths in the public mind is resulting in harmful consequences, both to individuals, and to higher education. Let me point out just two of these consequences.

First, these myths harm individuals by making both prospective students and their parents believe that college is beyond the reach of average people. This harms individuals who abandon the dream of a college education—which, as we have seen, holds both financial and personal rewards for those who receive it.

Second, these myths harm higher education by removing bright, talented, and vibrant young people from the ranks of college students. Higher education suffers immeasurably from the loss of even one such student; for in a community of learning, the learning of one can immeasurably enhance the learning of all.

Here at St. John’s, we are doing our best not to lose a single student to financial concerns. We continue to do everything we can to make our education affordable to all who have the desire and the ability to take part in our community of learning.

Books on the topic of this essay may be found in The Imaginative Conservative Bookstore. Republished with gracious permission of St. John’s College, SignPosts for Liberal Education (January 2015). 


[1] NAICU- “9 Myths About Private Nonprofit Higher Education
[2] College Board- “Trends in College Pricing
[3] The Washington Post– “Why student aid is NOT driving up college costs
[4] U.S. Department of Education, National Center for Education Statistics, NPSAS: 2012.
[5] U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12), August 20, 2013 release.
[6] (See p. 6.)
[8] (See p. 22.)
[9] (See chart.)
[10] U.S. Bureau of Labor Statistics.
[11] (See pp. 3-4)
[12] See the report called Five Ways Ed Pays
[13] Examine their “Term Enrollment Estimates.”
[14] U.S. Department of Education, National Center for Education Statistics, “Digest of Education Statistics 2011,” Table 5, August 2011; U.S. Department of Education, National Center for Education Statistics, “Postsecondary Institutions and Cost of Attendance in 2012-13; Degrees and Other Awards Conferred, 2011-12; and 12-Month Enrollment, 2011-12,” First Look, July 2013, Page 4, Table 1. Analysis by the National Association of Independent Colleges and Universities.
[15] National Association of College and University Business Officers and Commonfund Institute, “2013 NACUBO- Commonfund Study of Endowments,” January 2014.
[16] National Association of College and University Business Officers and Commonfund Institute, “2013 NACUBO- Commonfund Study of Endowments,” January 2014.
[17] National Association of College and University Business Officers and Commonfund Institute, “2013 NACUBO- Commonfund Study of Endowments,” January 2014.

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4 replies to this post
  1. I’ll never doubt the stats so well presented, and a popular libertarian website runs almost weekly columns on how it makes no (financial) sense to go to college anymore – all written and published by university graduates, of course, as are their donors! But Russell Kirk often told me that colleges were needlessly costly, due to enormous sports facilities, student unions, etc – and I noted that the Buddha, Plato, Christ and Mohammad all taught under trees.

  2. First off, net tuition and fees at private institutions amount to only 60% of the overall net bill (TFRB) according to College Board data. Second, average net tuition and fees at private institutions is more than 400% of the average net tuition and fees at public four-year institutions. Third, room and board is 14% higher on average at private institutions compared to public ones. Despite all the discounting, net TFRB at private institutions is still nearly 200% that of net TFRB at public institutions. And how much of that figure is skewed by the generosity (born of amazing wealth) of the top 40 or so private schools?

  3. I’m sorry, but “Myth” #2 is not a myth at all. Government subsidy absolutely does enable higher tuition prices, and there is plenty of evidence to support it.

    Although you have a footnote, you haven’t actually cited any specific studies here. All you’ve cited is a left-leaning columnist at a left-leaning newspaper who has cherry picked studies to assert there’s “no empirical evidence”.

    (It is also worth mentioning that most of the studies that seek to refute the link are government-funded.)

    There is in clear evidence that prices at for-profit colleges that accept federal aid are 75 percent higher than at for-profit colleges that can’t or don’t. There is also clear evidence that public state universities have raised in-state tuition prices as more federal funding becomes available, outsourcing their subsidies to the Federal government. And there is very clear correlation between increases in federal funding and increases in tuition.

    There is also a clear link between increases in federal funding, and increases in admissions costs, and relative decreases in faculty costs. This is another classic effect of subsidization, and is what economists expect in a “captive market.” Even where prices do remain the same, quality drops, and larger portions of the funding is eaten up by administration and other non-academic expenditures.

  4. Myth 2…. Student aid is a subsidy, increase the amount and you allow the school to raise costs, raise the costs and you at some point allow for an increased cash flow to the school, or net profit. Or is it another myth that former students are loaded with debt?

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