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College is becoming more expensive as the years go on. According to Business Insider, the average cost of one year of college in 1980 was just under $3,000, and that included: tuition, room and board, and additional fees. Today, that price has skyrocketed over an average of $23,000.

So why is it becoming more and more expensive as the years go on? It’s simply the effect of supply and demand. It’s no secret that having a college degree is more likely going to help you land a better, higher paying job. Despite the rising costs of tuition, universities are not seeing a decline in attendance; in fact, they’re facing the problem of not having enough seats for the number of students applying. Therefore, the demand for college is going up, and the supply is going down, which is one of the causes for the rising tuition.

Another cause for this supply and demand effect is outlined perfectly by Prager University. They claim that a lot of the responsibility lies with the government. The government helps students by providing loans for their college tuition. When students are being handed this money, the actual cost of a year at a university is being forgotten. The universities are receiving their money either way. When they see the funds coming in, it shows that the students have more money to spend (even if it’s being supplemented by the government instead of the student) and the cost of tuition is increased.

In this video, they further explain this behavior of supply and demand by comparing it to pizza. If everyone is receiving money to spend at the local pizza shop, it is likely that they will buy more pizza than they have in the past. As a result, that’s pouring more money into the business and fueling higher demand. With the increase in demand (i.e., needing more pizza), the owner will increase the price of each pizza to earn a higher profit.

Next time you hear someone grumbling about the increase in college tuition, understand that that for the government to provide these loans to students, they must obtain the money from taxpayers.