"Higher education shouldn't be a luxury," Mr. Obama said in his January address. "It is an economic imperative that every family in America should be able to afford."
But so far, students remain willing to pay, concluding that to forgo a college degree would be worse for them in the long term. And many colleges, especially the best ones, are still flooded with applications.
"There's a lack of incentive in higher education to be cost-efficient," says Richer Vedder, director of the Center for College Affordability and Productivity, a think tank on higher education finance. Constituencies that usually matter most to college administrators are faculty, alumni, and, to a lesser extent, students, he notes. Parents, who are often footing the bill, don't factor in much, and even many students with loans are not yet thinking about the cost.
Alumni want new stadiums and good football teams; faculty want good salaries and a low teaching load; students want nice dorms and facilities – all things that cost money.
Even the college rankings in U.S. News & World Report can help drive up costs. Colleges can move up in the rankings by paying professors more, having more alumni who contribute to the school, and attracting better students.