Why College Is So Expensive In America


College in America: it’s four years
of all nighters, keg stands, ethnically diverse welcome brochures, Pinterest
perfect dorm rooms and crushing student debt. I have $69,812, $47,000,
$90,000, $35,000, $350,000, $60,000 worth of student loans. My
minimum student loan payment is $1,000 a month. It should take me about 10 years to
pay that back, I will be roughly 36, 45-years-old, I don’t know how old I’ll
be when I pay that off. I was actually on campus at Penn State and I
saw that I had so much to pay and it just was overwhelming. I didn’t know how
to do it, I never saw a number that big. I just went to school for
a few months found out that it was not what I wanted at all, and now
I have this forty thousand extra dollars that I have to pay and nothing really
to show for it. If I wasn’t paying this student debt, oh my God, I would
just invest all of my money. It feels like I will have a roommate for the
rest of my life because my debt is so much. You can’t point at someone
and say, this person made your student debt load so much more, it’s the
whole system. So why is college so expensive, and is it worth it? Higher
education today is made up of three main sectors. They all bring in money
from tuition but where they get the rest of their revenue varies. Public schools are your state schools
like SUNY or Iowa state. They get money from the government. Private
for-profit schools like the University of Phoenix or Capella University
get money from shareholders. And private non-profits are those like Yale an
American University, they get a lot of their money from donors. More on
that later. But choosing a college hasn’t always been so complicated. In
1636, America’s first college was founded. You might have heard
of it before, Harvard University For hundreds of years college in America
was a pretty exclusive club to get into. But we’ve come a long
way from Harvard’s first graduating class of just nine men in 1642. In
2018 more than three million Americans were expected to receive a college degree. The demographics of American
higher education have been utterly transformed. In 1944 the G.I. bill was signed
into law giving veterans money to attend school. The G.I. Bill of Rights looks
after the money end too. That’s right. Tuition is taken care of. Funds
are provided for laboratory fees, books, supplies and equipment are included. Just a few years later, nearly
half of Americans enrolled in college were veterans. You cannot underestimate the G.I.
Bill. This educated an entire generation of men and some women too. And
it opened the doors people who hadn’t even thought that they might go to
college. The G.I. Bill changed what American families could aspire to. But not everyone was able to take
full advantage of the bill’s benefits. It was significantly harder for women and
people of color to get the tuition money and enroll in college
because of the widespread discrimination by both schools and banks. Dateline Russia 1957. In a moment the story. In the
50s a little beach ball sized satellite launched into space by the Soviet Union
had a big impact on the American education system. The first Sputnik. People were worried
about this clash between the Soviet Union and the United States. And
suddenly it was popular to study science and math. It was patriotic. In the 60s the civil rights movement
helped push the doors open even wider to give women and people of
color access to higher education. In those years students at University of
California schools paid less than a thousand dollars in registration fees. No
tuition if you were a resident. But with the 70s
came the taxpayer revolt. If you want something you pay for it.
Don’t expect me to pay for it. It’s your problem not mine. And so
what happened was the student loan process exploded. And then came the
U.S. News and World Report. It was one of the luckiest
or most ingenious publishing decisions ever. In 1983 U.S. News and World
Report published a list of America’s Best Colleges. It became a highly data
driven ranking. Every one of the criteria that U.S. News used
depended on name recognition, traditional quality, prestige and most of all
wealth. Rankings played a big thing for me. I was an athlete and
so I was pretty competitive. There have been a ton of new lists
since the 1983 ranking but the U.S. News and World Report still reigns king.
And colleges keep a pretty close eye on it. If you ask them they will say they
pay no attention to it. But within the conference rooms of the admissions
office and provost offices across the land, I can assure you they
pay very close attention to it. One thing they’re paying attention to
are their test score averages. By the 90s, colleges started boosting base tuition
and using the extra money to give merit based scholarships to kids
who tested well. The chief data strategist at U.S. News and World
Report downplayed test scores as a major factor in their ranking, saying it’s
less than eight percent of the methodology today. And that “We’ve
seen schools perform best in the rankings if they emphasize and
perform strongly in student outcome areas like graduation and retention rates.
He also said they further decrease the weight of SAT and ACT scores.
Tuition costs at both public and private colleges have doubled since the late
80s, even when you account for inflation. Even so, more Americans
are getting college degrees. But state funding for public universities has taken
a hit. States spent less on higher education in 2017 than they
did in 2008 before the recession. And that means students are spending more.
The tuition they’re paying is a big moneymaker for colleges. 2017 was the
first year ever that most state schools got more money from tuition
than they did from government funding. If you’re sitting in the state
legislature and you’re looking for money, the university system is one of
your biggest costs. So when you realize well we cut them 2 percent last
year, they didn’t go out of business. Let’s cut them another 2 percent. What
happens is you pass the buck. It goes from the
taxpayer to the student. The average student graduates with
about $37,000 in student debt altogether. The U.S. has
$1.5 trillion dollars of it. I had this mindset that I was gonna
go to college undergrad and then I was gonna go to grad school and get my
PhD. I thought that I would get through it and then come out on the other side
with a job and then be able to pay it off. But that did
not go according to plan. Rachel Brandt got her undergraduate degrees
in math and economics from Iowa State. Then she moved to New
York to pursue her master’s in economics. She left grad school after her
first semester to better cope with mental health issues she was going through. I thought that I would just withdraw
and be fine. But then a couple of weeks after I withdrew, I got an
email from the school saying that I owed them $6,000 right away. And that was
rough. So I didn’t know how I was going to pay that.
And that was very stressful. Three, four, five, six, seven different student loans that all
have to be paid with different interest rates. The number just keeps going up. I
will be paying $867 in rent a month and that’s about how much I’m going to
have to be paying in loans. I look at my bank account every
day and it’s very scary. Rachel is far from the only one
not to finish a degree she started. Only about 57 percent of undergrads complete
their degree within six years. One option students turn to for a
more flexible and at times more affordable path to a degree are for-profit
colleges like University of Phoenix or DeVry University. The industry has been
in flux, but today a little more than 900,000 students attend for-profit colleges
in the U.S., many of whom use federal loans to
help cover the cost. I feel like I want to do
something practical that would that would clearly lead to a specific job. The Art
Institute of New York City was suggested to me. Now, I really regret that it
was because it turned out to be a terrible financial experience. Despite for-profits being just a small
fraction of all colleges in the U.S., for-profit students default on their
student debt at a much higher rate. Chyna is a first generation college
student from New York who studied web design and interactive media at the Art
Institute of New York City when it was run as a for-profit. I withdrew from the school, that
was something could have entirely taught myself using tutorials. For-profit schools date all the way
back to colonial times. Not everyone could attend institutions like Harvard,
so entrepreneurs saw a business opportunity and began teaching reading, writing
and trade skills *** for a fee. Benjamin Franklin was a big
fan of for-profit schools and the practical skills they offered. In
1994, University of Phoenix’s parent company Apollo Education Group went public
and laid the groundwork for the for-profit education
corporations of today. But this big business approach
to education hasn’t come without controversy. With so much money on the line many
turn to the schools that show the best numbers, the best chances at a new
job when you graduate. But can you believe what some of those
for profit colleges tell you? When I went there for the so-called
tour it was it was basically a sales pitch. That should have been a red flag but
it wasn’t because I was 18, not having parents who completed college, you
know, being a first generation student it’s like I
didn’t have the discernment to just leave those kind of
schools alone. The Art Institute did not respond to a request for comment.
However the director of Cato’s Center for Educational Freedom defended
the for-profit system, saying non-profits make a lot of money too.
They just distribute it differently. He said traditional colleges often use it
to “make the lives of people working in them more comfortable.”
He also said everyone in higher education is almost certainly seeking
profit and there is little evidence that people in for profit schools
are less focused on students best interest. Since Chyna left, the Art
Institute of New York City along with 43 other Art
Institute campuses shut down. There are a number of
lawsuits against various campuses. However Chyna’s not able to qualify for loan
forgiveness because she left the college just before the cutoff date. And she
feels trapped. Since she hasn’t paid off her student loans in full, she’s not
able to get her transcript, which she needs that to apply to state schools.
So for now she’s enrolled in another for-profit school in the hopes of using
the degree to apply to a master’s program at a state school. I feel like all these for-profit
schools they prey on people who are already who come from low
income backgrounds. Enter the non-profits. Amari Lilton is from St. Louis but
went to undergrad at a private college in Chicago. Now she works at an
advertising agency in New York City and is paying off her more
than $40,000 in student debt. You want to have the college
dream without the student debt, because you’re just coming into something and you
feel like I’m gonna have all this independence I’ll be able to pick
my own classes I’ll have this freedom I’ve never had before. So you want
to go to the coolest place you can. Every college wants to be the best.
They want to compete with the next college. They want to attract the
top students. That means they have to have the best facilities they
have to build new buildings. And remember tuition discounting? While
the sticker price of non-profit colleges are rising, so is the tuition
discount rate. The price you see on a college website is higher than
what many students end up actually paying. You would think that most of
the money is going to the cost of running the school, but nearly
half of undergrad tuition at non-profits goes to help other people pay
for their schooling. Amari didn’t pay the full price of tuition at her
private college but she’s still facing more debt than she was expecting. I just cried. Yeah I just cried because I
had no clue how I was going to do it. I dream about it. It’s always on my mind. If I’m like
going out to lunch and I’ll just say, oh my God I hope this goes through
because I know they just took my money out. I just hope, I hope. I want
to double my payments by the end of this year so $2,000 a month. My goal is to
not go into my 30s with debt. If I go to Wells Fargo and say like
I want a portfolio with all my best investments help me out, they won’t
take me seriously because I have $250 in the bank. So where do we go from here? I’ve
been studying this for a long time and advocating for reform and this is
the hardest type of problem to fix because it’s structural. It’s all of
us. It’s the whole market. Jarrett Freeman ran for New York State
Senate in 2016 when he was just 26 years old. I declare my candidacy for
New York State Senate. And a big part of his platform
was education and student debt. I was actually on campus and I saw that
I had so much to pay and it just was overwhelming. I didn’t
know how to do it. I never saw a number that big.
Americans are becoming less convinced that a college degree is worth it. In 2013,
53 percent of people thought a four year degree was worth it. In 2017
only 49 percent of people thought so. I think that it’s so ingrained in your
head that you have to go to college, that college is the next step after
graduation. I think in hindsight I see that college is not for everyone. Overall I feel a little jaded about
college being worth it for everyone, or at least for students
directly out of high school. Knowing what I know now, I would have
even taken a few years off before I went to college. There is this
idea that 18-year-olds are supposed to know what they want in life. And now
that I’m turning 25 tomorrow, I still don’t know exactly what’s going on. That mindset could be a problem
for the future job market. It’s expected that by 2020, 65 percent of jobs
in the U.S. will require people to have some college education to even be considered.
So there are a lot of jobs that require you to spend some money
on school before they’ll pay you to work. In many cases that
sum is a lot of money. Student debt is a national crisis.
Unfortunately we don’t have bills on the floor that are
actually addressing that. The reality is there probably isn’t
just one solution that’s going to solve everything. It will take a
lot of different approaches, and different approaches are being tested across
America. One of the proposed solutions is an income share agreement.
Essentially, instead of taking out loans, students could agree to repay an
investor a percentage of their income for a set amount of years after
they graduate. The idea has support from politicians on both sides of the
aisle and some schools are starting to test it out. In New York
City, Governor Cuomo implemented a program that gives middle-class residents free tuition
at select state schools. And some billionaires like Bill Gates are
giving their own money to try and fix the system. And of course
there’s the idea to offer free college. I do not agree with free college.
I think that when you give someone something for free they do not realize
the value of it, and that’s just my opinion, and I think that there
should be some cost associated with it. Free college is a great idea. I
am fully supportive of free college. The catch is: who’s going
to pay the bill? In other countries taxpayers foot most
of the bill. So instead of paying student loans later in life, you’re
paying higher taxes. Roughly two dozen countries across the world provide free
or almost free college to its citizens. The solution probably won’t be that
simple in the U.S. But with student debt rising and the need for
a college degree becoming more and more important, the future of American
education depends on figuring this out.

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64 Responses

  1. CNBC says:

    Tell us your student loan story:

  2. FRISHR says:

    Short answer: Because Capitalism

  3. Zach Van Harris JR says:

    Im drowning in debt

  4. Leroy Cancio says:

    The Elite Controls the Banking Systems

  5. 448Serg says:

    @0:58 You got that flashy new 3 thousand dollar Apple laptop on your bed though. 40k well spent, please, keep telling us how its our problem now.

  6. Gerardo Olivas says:

    They actually cited a 4% drop as something noteworthy? Someone definitely didn’t pay attention in their stats course.

  7. legaliciousM says:

    I get paid $1000 to go to school every month. That pays my rent, transportation, food, clothes, bills and everything I need. Furthermore, I have the ability to loan money from the state with 0% interest if I need to. I don't, because I have a job on the side, where I earn another $1200 a month.

    When I get sick and I go to the doctor or hospital, everything is free. My rent is reduced because the state provides help since I am a student, even though they already pay me to go to school. I have the cleanest tap water in the world, clean roads, cities, great public transportation.

    I have a brand new laptop, iphone, new clothes, fun on the weekends and money enough to even invest it every month.

    I love Denmark.

  8. Tonyburgessful says:

    Because we are greedy,,,,,  no other explanation needed.

  9. Jo Ka says:

    Shouldn't people just give it up? Seems like simple economics, if demands drops then prices drop also

  10. 112313 says:

    You didn't explain why students loans are do high…

  11. Mister Carnitas says:

    College is expensive because people don’t wanna work in construction 🔨

  12. tmmsplace says:

    A bachelors degree is the best way to a middle-class life style, even today. High cost of university to reach that lifestyle is why the middle class feels less than financially successful.

  13. Steven Chen says:

    college is expensive, because wage hasn't growth as expected. it's not that college is expensive, it's really our labor value has gone down per inflation, meaning if your wage is growing less than cost of living and essential such as your children college tuition and etc, you're actually making less money every year. this sums up what we call wealthy distribution and income distribution. as income continue to outpace on the top few % so does wealth, we achieve such distribution by overcharging for service/products while underpaying our people at the same time… thus you can't afford what's being serviced because you were paid on that scale to begin with, as result, people end up with debt, cuz debt creates money out of thin air through future leverage.

  14. john s says:

    College became expensive when money was lent to 17-18 children with no restraint.

  15. Henry Jiang says:

    Where is all my money going towards?

  16. Henry Jiang says:

    What is the alternative to college if you don't want a white-collar job?

  17. Fishmonger says:

    haha in sweden we get paid to go to university

  18. Samuel Fey says:

    a college or univ degree is worth if you get into STEM otherwise you are going to be in debt forever

  19. Christopher Mitchell says:

    Skilled trades.

  20. Christopher Kelly says:

    RANDOM : Amari Lilton Looks EXACTLY Like Octavia Spencer.

  21. AndyRips says:

    Just join the military, 3 years and get out. Use the TA while active, then GI Bill once you get out.

  22. SIMONE says:

    Man, I never regretted leaving college early and getting into a medical/pharmaceutical sales career.

  23. quarbarian2 says:

    “The reality is there probably isn’t just one solution”
    Yes there is, and they literally just said it. Revolutionary change is the only solution, and without it we are doomed in this area and so many others.

  24. Jean-Luc Du Preez says:

    These American kids are nuts. If you not from a rich family…don't take on the massive debt…go to community college and find work!!

  25. YTH says:

    Anybody else get infuriated when the tuition bill is $50k and then a tenured professor works part time and goes on a fully-funded sabbatical?

  26. Maciej S says:

    Probably students are just getting milked and that's the reason why it's so expensive. Government paid me to study. Poland. Afterall, it's just real estate costs, books, academic faculty and lean administration. All of it divided by thousands of students. Would be nice if CNBC stuck to the title and didn't clickbait. CNBC also milking but YT users instead of students.

  27. NJay Maldito says:

    Is there an option to delay payments?

  28. Shane Morris nane says:

    https://marginalrevolution.com/marginalrevolution/2019/05/the-baumol-effect.html

  29. Donquixote Rosinante says:

    So why the college is damn expensive? 18 minutes in and i see no summary nor anything explained in depth

  30. Matt Youngstrom says:

    Any educational institution, with college being at the forefront, is charged with teaching its students how to think critically. The central value isn’t the content of a field of study (though the knowledge gained is what constitutes the domain of a profession) it is the ability to logically and systematically solve a problem within a professional field that is at the heart of education. College in America is where this skill is honed through rigorous examination of a field such as science, mathematics, and the humanities. This is why I strongly advocate for getting a degree regardless of what is studied. It shows, among other things, perseverance to study the raw core of a subject, to train oneself to adjust to a new domain and its language, and come out the other side stronger because of it. While it’s true that some professions require a mastery of content-to be a lawyer. For instance, means you know the law-it’s much more important fora lawyer to judiciously apply the law to defend an argument. The same is true for a software developer or a nurse; they use their profession’s domain to solve problems. As a nation we should prize this transferability in critical thought and foster it for everyone. Unfortunately, in a country that prizes individual freedom, we are often confronted with competing interests: how can I be a citizen that advances the goals of a nation that cares for its own, but at the same time focus on what makes me competitive against the same citizenry I’m supposed to support? After all, what kind of nation pits it’s citizens against one another? Aren’t we all on the same team? We are on a national level, but clearly not on an individual level. Until we resolve this dichotomy, the student loan debt will continue to rise, as will health care costs and many others.

  31. BOONIQUE says:

    Everything in the United States is a money grab. I

  32. Mr. Akill3s says:

    And yes it expensive, but it’s the loan repayment system that needs regulations. The rig the interests so you are paying for the next 25-30 years by front loading all interest they want first,

    They charge you accumulated PER DAY of the TOTAL of the loan. So the 5% for years is insane.

  33. Dalton Williams says:

    Greed. That's why college is so expense. I didn't need to watch a video to know that.

  34. Steven Pena says:

    College is overrated and expensive.

  35. Sigurd104 says:

    It’s not hard to pay for college if you’re not stupid. Go to a community college and then transfer to a 4 year university that you live close to and commute. I actually received grant refunds when I went to community college and at the 4 year college (which I’m doing 2 years at), it’s at most $3000 a semester but I’ll likely get more aid. If anyone does 4 years at a 4 year university (god forbid out of state and moving away), then they deserve every bit of debt they have for being complete morons.

  36. Luca says:

    The GI bill works !!!

  37. Justin Jones says:

    If you are coming out of school making 40000 a year do not stay somewhere expensive to live go online look for the best places for jobs for the field of study you went for and choose the one with the lowest cost of living and move and then take 10,000 a year and pay to your student loans and within 4 years your college is paid for.

  38. Tanja Lehner says:

    Im European, I’ve to pay 386 Euro per semester for attending my university of applied science. I couldn’t afforded higher education in the United States.

  39. Jack Snyder says:

    Con games are always expensive for the suckers.

  40. D RD says:

    at 0:59, "I have these US40k extra debt", while having a US$3k MacBook Pro in front on the bed…mmmm

  41. kamal saloi says:

    I have a engineering degree in electronics and communication. And I am unemployed. I am 25 years old. Unemployment in India is sky rocketing. At least there's vacancy in USA. In India there's none.

  42. Gabrielle says:

    You people in the comments section not taking student debt seriously are horrible

  43. B Loopy says:

    If you’re a guy, unless your parents are paying your college, go to trade school!

  44. Lone Wolf says:

    Wiping my tears with my gi bill I earned serving my country

  45. Big Raf says:

    This is such a Pro Elite Banking Segment. CNBC is nothing more than a shill for the Finance Industries that fund it. The reason College is so high is because you can borrow money to go to school. If you want to make college chap, just ban School loans. Prices would drop by 70% overnight . Colleges are a profit making business no matter which way you slice it. Education is not the purpose, profits are. I left School when I refused to take out 30K in the 90's in school debt. I am so glad I did. Today I am debt free.

  46. kaede19xx says:

    A total disregard to personal finance responsibility. YOU asked for the loan, they gave it to you and now they ask you to pay it back…. Yeah…. totally unfair 🙄
    Also if you choose some useless degree, meaning those that pays very little in the job market, don't expect any miracles after graduation.

  47. Seablian says:

    Solution to student debt:

    Don’t go to university unless you are intelligent and actually have a good degree plan. (Aircraft management, medical school, etc.).

  48. David Hill says:

    Moral of the story is have rich parents that will bankroll your education so you don't end up in debt

  49. Robert Bell says:

    Went to school for a few months and $40K in debt??? So many of these kids need someone with an ounce of sense to counsel them.

  50. Robert Bell says:

    And poor China who went to the art institute of NYC is drowning in debt yet has airpods. And how much are those? And I'll bet they are linked to the latest most expensive iPhone.

  51. Robert Bell says:

    I like the idea of income sharing. Someone investing in you is going to carefully vet you and ensure you are obtaining a monetizeable degree. Better make sure that cannot be bankrupted off your record. Sure its indentured servitude but hey whatever, as long as the education industrial complex doesn't have to lower tuition. It's all good right?

  52. Metal Videos says:

    rachel brandt got a dutch family history for sure. sins brandt is a dutch name

  53. Metal Videos says:

    complaints about school being so expensive. yet buys everything from apple lol. they could have saved couple of thousands dollars if they didnt go with overprice apple crap.

  54. Metal Videos says:

    they should care more about school. americans are one of the most ignorant and stupid people on this planet. granted their school system sucks ass and dont teach them anything. but still

  55. DaredevilSquidDik says:

    University of the People = What you're looking for…

  56. El Chupacabra says:

    should have been titled "The rise of college education prices"

  57. Benn Ibbetson says:

    Imagine being able to think about paying $2000 a month back😂😂😂first world problems

  58. Twaine H. says:

    Look, if you make bad decisions in your life, you got to do what you got to to clean it up. Stop complaining and do better in the future. Stop child support or lower the payments for that. Well stop complaining and live with your decision

  59. Twaine H. says:

    You pay to go the the club or for entertainment,,, what you think college is. The stuff you learn is out of date and unnecessary. You r paying to be in a social group. Just to say you accomplished a degree which is worthless…

  60. Twaine H. says:

    Bad news is with that degree they expect you to work at the lowest level which pay is not enough to pay back loans and live

  61. Aaron Wantuck says:

    To guy who says "if something is free you do not understand its value."
    Do you think that way when you call the police? What about drive your car on the road? How about the military? What about the National Power Grid? How about National Parks? Look people know the value of something when it is free and even you understand its value. Without free roads we would not have the vibrant infrastructure that allows businesses to thrive. If students graduate without student loans they can buy cars, homes, and other things. Both those items REQUIRE people to spend money on repair, improvements and such which in turns creates a vibrant economy.

  62. Jay L says:

    Cut down administration to reduce tuition

  63. shahad says:

    I wanted to study in America until I saw this video 💀🤣

  64. Ammar Siddiqui says:

    If it isn't Engineering, science, CS, or pre-med, it isn't worth an expensive university.

  65. yidingcao says:

    Chinese just can’t relate.

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