Why does college cost so much? And is a college degree still worth the price?

As a higher education professional, I am asked this question all the time.  Certainly, I agree that college is an expensive proposition, but I argue that in fact, a college degree is not a cost, but an investment.

In production, research, retail, and accounting, a cost is the value of money that has been used to produce something, and hence is not available for use anymore.

I prefer to categorize college expenses as an investment: money spent in the hope of future benefits actualized over a span of time.

The purchase price of a car is a cost; that car begins to depreciate as soon as it is driven off the lot, and even more as miles driven add wear-and-tear.  Unlike a car, a college education becomes more and more valuable the more you use it, as additional experience adds to the theoretical concepts learned in a classroom.  And I'm not the only one to see things this way...

Those with bachelor’s or associate degrees earn more money over their lifetime than those who skip college, even after factoring in the cost of higher education, according to a report released last summer by the Federal Reserve Bank of New York.

A recent New York Times report lauded the “Rising Value of a College Degree” with data demonstrating that a bachelor’s degree recipient can expect to earn about $1.2 million more, from ages 22 to 64, than someone with just a high school diploma.  When considering whether the value of a college degree has changed over time, the researchers found that Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree; that’s up from: 89 percent five years earlier, 85 percent a decade earlier, and 64 percent in the early 1980s.  Here's a graphical representation of the increasing earnings improvement between those with a college degree and without:

So when considering the question of why college costs so much, I started to wonder if we're just using the wrong time scale.  I decided to look up the average nightly rate at a Marriott hotel in the U.S., which I found to be $137.34/night.  What does Marriott throw in with that room? A bed, some towels, shampoo, and soap? Maybe a gym, and if you’re really lucky, free coffee in your room?

Compare that to the nightly cost at Millsaps College.  Millsaps’ sticker price is $45,860/year for tuition, fees, and room and board, but if that includes 32 weeks of classes, or 224 days… that’s $204.73/night.  Most students receive significant scholarships, so using the discounted cost for the average Millsaps student, $23,000, the average price out of pocket is $96.70/night. And what do our students get with that?  Besides their classes and a degree at the end of four years, that price includes an unlimited meal plan, a recreation center, career counseling & internships, concerts, lectures, travel opportunities, lifelong networking with professors and alumni, and (perhaps most importantly) faculty members who care about our students and want to serve as mentors to propel to success in their careers and their lives!

So, perhaps we shouldn't ask why college costs so much, but why does the Marriott overcharge us!