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Tuition Increases

One theory for the continual increase in tuition is that universities prioritize endowment growth over educational interests. A possible explanation for this is that universities are concerned with intergenerational equity for the benefit of future generations of students, as well as the overall benefit to society. This means that the universities will always seek to grow their endowments to sustain their level of activity well into the future. There are, however, many arguments to this, mainly that the intergenerational equity theory does not accurately reflect the behavior of institutions with large endowments. Peter Conti-Brown, for example, describes how many of the elite universities cut their budgets during the recession despite sitting atop multi-billion dollar endowments which theoretically were supposed to act as cushions during such economic downturns.

Still, tuition increases may not be completely the responsibility of the higher education institutions. Instead, an article written by Archibald and Feldman suggests that tuition increases simply reflect the increasing costs of producing higher education. According to the cost-disease theory, it would be difficult to achieve cuts in per-student cost without the deterioration of quality in the education. While the decision-making of college administrators does come into play, the argument is that there are more fundamental and economy-wide factors that result in cost increases. A general economic trend is that costs in service-industries grow more rapidly than in manufacturing-industries, and increase in higher education costs is simply a reflection of this phenomenon. Some universities describe being caught in a dilemma where they are pressured to offer broader curricula and improve facilities to attract new students on one hand, but on the other hand these universities must raise tuition to compensate for state spending cuts and rising expenses.

See also: College Tuition in the U.S.