College costs have recently been going up - or so it may seem. Actually they have been rising for quite some time now. And now the media has taken notice, along with the rest of America. Perhaps the bad economy is causing people to suddenly fret about the cost of higher education. It has gone all the way to the top - President Obama caused a stir earlier this year by challenging colleges to cut tuition costs.

Measuring higher costs

The Economist provides a helpful graph to understand this trend. By comparing the cost of college relative to the wages earned by Americans, it is clear that college tuition has indeed become steadily less affordable over time. The increase in college costs at all levels of higher education has outpaced the growth of household income over the same period:

Median household income has grown by a factor of 6.5 in the past 40 years, but the cost of attending a state college has increased by a factor of 15 for in-state students and 24 for out-of-state students. The cost of attending a private college has increased by a factor of more than 13...

Another factor that has contributed to rising college costs is the sheer increase in applicants. Many jobs require a college degree, and young people have obliged by applying to college in greater numbers - driving up the cost through their increased demand.

Forces that drive tuition upward

Forbes magazine does a good job of drilling down to the broader macroeconomic forces that make college unaffordable. First, higher education is an "artisanal" industry. It produces goods (education) that do not become cheaper through technological advancements. This has put the cost of education higher in comparison to other goods whose costs have been driven down by technological progress. Second, colleges rely on a highly educated labor force. The wages of highly educated employees have been climbing for decades, driving up costs. Third, the development of technology itself increases the cost of education:

The contemporary chemistry student, for instance, needs to be familiar with current laboratory tools, and they are more expensive than the chalk-and-test-tube world of the past.

What needs to be done

The federal government, individual states, and each university provide loans and grants to help students afford their education. Although not everyone can afford it, many can find a way to pay through the financial aid system. However, many students graduate college with serious debt. The New York Times points out that the important question is: will college really open up job opportunities lucrative enough to justify the cost of education?

America's assumption in funding higher education for greater numbers of students is that a better trained workforce will increase wages and strengthen the economy. Colleges will have to show that the education and training students receive has been effective - that real learning has taken place. Learning that can translate into better jobs and economic growth.

The task of measuring overall learning and how that translates into jobs is the key to knowing how best to allocate our resources for higher education.