Are rich kids driving up the cost of college?

One of the reasons the cost of college has risen is that colleges have undertaken big capital projects to build luxurious dorms, fitness centers, and other similar amenities. The reason they do so, it is often claimed, is that they need to compete for student applicants. When students are trying to pick a college, cool amenities will stick in their heads and possibly push them in one direction or another.

I wonder what kinds of students are impressed by these things. On the left, there is this funny notion that college students are very enthusiastic about their education. Masses of 18-22 year old kids are yearning to fill their heads with knowledge, a yearning checked only by monstrous costs and other neoliberal evils. That is of course a ridiculous notion. Students interested in learning are a severe minority. The majority of students want to capture a degree to get an income boost and have as great a time as they can while doing so. Lazy rivers and rock walls in the fitness center make having a great time easier.

But students should also be cost-constrained, shouldn’t they? A poor student might be looking for a degree and fun just as much as the next person, but they also must be at least somewhat concerned about costs. So shouldn’t they provide some countervailing pressures on schools not to build out huge capital projects by going to less expensive schools that haven’t done so? It seems certain that these low-income students must be providing some marginal pull in the other direction.

So why doesn’t this pull keep the capital projects in check? Could it be because the overwhelming majority of students at the kinds of schools building out these expensive facilities are from the richest households in the country? When 74 percent of kids at the top 146 colleges are from the richest fourth of households (and only 3 percent from the poorest fourth of households), that is a lot of students who are not that cost-constrained. Because these kids face less financial pressure, they may be more likely to select the college with the coolest stuff even if it costs a few thousand more to attend. Since the consumption preferences of rich kids make up the bulk of the consumption preferences of the market segment called “conventional students,” they could be partly responsible for driving up the costs of college.