These days, it seems like college being expensive is a given. However, it seems like the “elite” liberal arts institutions are especially sticking to this trend. It starts with basic principles of economics. According to data in Robert Archibald’s The Bottom Line: Why Does College Cost So Much?, the costs of higher education have been steadily increasing since a period of sticky costs in the 1970s. He notes that, “the villain, as much as there is one, is economic growth itself. Economic growth has a wide variety of effects on the economy, but in the case of higher education and a set of kindred industries these effects all seem to conspire to make cost rise faster than the general inflation rate” (Archibald 84). His three reasons for this are the fact that higher education is a “personal-service industry,” the increase in demand for “skilled labor,” and technology affecting industries in various ways. Along with these come a rise in cost for higher education as the general economy grows due to an increase in wages and productivity.
During this period of escalating higher education costs, liberal arts institutions have generally struggled to stay afloat. According to Ferrall, one of the largest factors in allowing a liberal arts school to provide its services is its endowment. Some liberal arts schools, especially the more wealthy, have been able to grow their endowments through smart investment. One excellent case of this is Grinnell College, which grew it’s endowment “from $10 million in 1968 to $1.47 billion in 2008″ (Ferrall 24). This underlies the budding issue of income inequality that seems to be plaguing the United States today. ” A fundamental reality of endowments is, the rich almost always get richer” (Ferrall 24). This has caused the lower-tier liberal arts schools to struggle with funding, often times having to succumb to high debt or even shut down. Another legitimate reason for sailing prices is the increase of giving financial aid to students, especially during the Recession of 2008. The student demand for gaining knowledge did not decrease during this time, forcing colleges to supply their “product” at a discounted price.