Writing in The New York Times, economist N. Gregory Mankiw proposes three reasons the cost of higher education has skyrocketed. Briefly, these are the causes he identifies.
First, the technology of teaching has advanced very little so it has not become more efficient, more productive. However the highly educated people who perform it insist on being paid for their education at rates commensurate with the earnings of other highly educated people. Second, rising inequality has increased not only the benefit of education but also the cost thereof. And third, the apparent cost of higher education is comparable to a hotel's "rack rate" which few end up paying.
I believe Mankiw is best thought of as an apologist for higher education. He entirely omits several major cost drivers, which I will identify briefly. Colleges and universities are under several kinds of pressure to admit and educate students they formerly would not have considered. The federal government pressures schools to have a diverse student population. Liberal faculty accept the rightness of that pressure.
Plus, public universities worry that if they cannot attract minority students enrollments will fall and perhaps campuses will close. Eventually in states like CA with many minority legislators, budgets will not pass if their constituents are not being served.
The universities' experience with underserved populations is that they are easy enough to recruit, if sufficient aid is provided and standards are lowered. What has proven very difficult is retaining and, more importantly, graduating those students.
Their reaction has been a proliferation of administrative positions with the task of helping minority students succeed once on campus. In the fifty plus years I have been involved higher education administrative overhead has effectively metastasized, become a cancer that absorbs untold resources and produces nothing in the way of either classroom education nor research.
Another factor is the desire of university officials to leave behind glorious buildings as "monuments" to their stewardship. For example, the campus on which I spent most of my faculty career enrolls today roughly the same number of students it enrolled 15 years ago, yet in that period it has completed several large buildings and parking garages.
Who do you suppose paid for those? CA's taxpayers did, of course. Are they nice? Certainly. Were they needed? Almost certainly not. The campus was entirely functional 15 years ago with basically the same enrollment. Of course all those new administrators need office space....
