New Report Offers Explanations and Solutions for Rapid Tuition Inflation in Higher Education

To improve prices, analyses of tuition inflation must ask why market pressure has failed to mitigate costs

NEW YORK, NY – The wave of colleges forgoing in-person instruction for the coming academic year has sparked a national conversation about the overall value of higher education, which often comes with a hefty tuition price tag. In light of this national reckoning, a new Manhattan Institute report from senior fellow Beth Akers identifies an important question that’s not been asked in previous analyses of tuition inflation: Why has market pressure failed to mitigate rising costs, as would normally happen in competitive markets for other products and services?

In addition to suggesting the importance of analyzing tuition inflation from the demand side of the equation, Akers also offers four possible demand-side explanations for tuition increases:

1. Poor information on the value of different colleges and majors and the “Golden Ticket” fallacy, in which aspiring students seemingly overvalue the return of a college degree;
2. The opaque system of pricing that makes comparison-shopping for college difficult and expensive;
3. Geographic constraints of aspiring students and the resulting implications on competition; and
4. Regulation preventing lower-cost alternative business models to enter the marketplace to compete with existing traditional providers.

Click here to read the full report.