Editor’s note: The cost of college—its historic rise and how to navigate current expenses—is intertwined with the issue of student loan debt. This page focuses on understanding the costs of (and how to pay for) higher education; see our resources on student debt here. Background Since the middle of the 20th century, higher education has been viewed as a steppingstone to well-paying professional careers for millions of Americans. Earning a degree has become a viable path to upper-class prosperity for many, in particular first-generation college students. But, it can be costly. As of 2025, annual tuition alone ranges from around $10K for an in-state, four-year public university to almost $40K for private institutions. The total price tag—when including living expenses, fees, and other costs—for a bachelor’s degree in the US can now exceed $100K for public institutions, requiring the majority of students to secure financing to cover the cost of education. History In 1950, around 2.3 million Americans were enrolled in college, or about 1.5% of the population (historic census data). By 2023, this percentage had risen to 7%—or 24 million students—and more than one-third of adult Americans had completed a four-year program. In 1958, the National Defense Student Loan program was created to focus on developing students in areas deemed critical to national security. The 1965 Higher Education Act broadly expanded federal student aid to the general population. Find a thorough history of federal student aid policy here. Even accounting for inflation, average tuition and fees have more than tripled since 1970 (see tables). Covering Costs On average, contributions from parents (39%) and college savings funds (11%) cover roughly half of the cost of a college academic year. To pay for the remainder, students rely on scholarships, grants, work-study programs, and loans. One primary mechanism to save for college is a 529 plan. These tax-favored accounts grow tax-deferred, and withdrawals aren’t subject to state or federal taxes if used for qualifying educational purposes. The federal work-study program allows students to earn financial aid while getting practical part-time work experience. Average awards are small relative to tuition costs, around $2K annually. Fewer than one in 10 students receive a scholarship. An estimated $46B in public scholarships are given each year (along with about $7B in private scholarships). Search through more than 9,600 scholarship opportunities here. Around 40% of students take out loans each year, with the vast majority relying on federal loan programs. There are three general types—subsidized (interest does not accrue while in school), unsubsidized, and options for parents and graduate students. Applying for federal student aid is free. Students must fill out a FAFSA (Free Application for Federal Student Aid) by Oct. 1 for the following school year. See how to follow the process and find the link to download a FAFSA form here. Are Costs Sustainable? The rising cost of higher education has sparked public debate over the return on investment of the decision to attend college. Many high-profile universities have begun to offer generous aid packages and claim full sticker price costs are only paid by a small percentage of enrollees. A consequence of rising college costs is accumulating student loan debt. More than 43 million Americans hold a total of $1.6T in outstanding federal loans, with the average household with student debt owing around $55K.
Hours of research by our editors, distilled into minutes of clarity.
Enrollment has dropped over the past few years—especially for men. In this Freakonomics podcast episode, educators and economists explain why they think college enrollment has been on the decline. They also offer solutions and make predictions for the future of college.
Investors put after-tax dollars into these education-earmarked accounts, and like a 401(k) or IRA, they invest them into stocks, bonds, or funds. When it comes time to withdraw, investors do not pay any taxes on distributions. However, the money must be used for approved expenses like college tuition, textbooks, and trade schools.
Ivy League universities manage massive endowments to support their operations—but instead of simply spending donations, they invest them for long-term growth. Yale’s David Swensen helped reshape this approach in the 1980s by diversifying beyond stocks and bonds into private equity, hedge funds, and real estate.
Established in 1896 with seven members, the Big Ten has expanded far beyond its Midwestern roots. As of 2024, it includes 18 schools—stretching coast to coast from Rutgers in New Jersey to UCLA in California.
While paying off student loans can feel like a big achievement, some experts argue that it’s not a good idea to pay off student debt early if you have to sacrifice retirement or emergency savings to do so.
Determining the all-in cost for each student’s specific circumstances can be tricky. But what is behind the rise in price? Analysts point to a number of factors—lack of transparency around cost, expansive government support, increased administrative burdens at schools, and more.
While Washington, DC, has the highest average federal student loan debt in the country at $54,795 per borrower, North Dakota has the country's lowest average at $29,647 per borrower.
Student debt is no different than the big rent or car payment that comes out of someone’s paycheck every month: Its presence affects that household’s purchasing power. Multiply that household by the 43 million Americans who had outstanding federal loan debt in September 2023, and student debt’s impact becomes considerable.
As of 2024, the total outstanding federal student loan debt sat at $1.6T, held by almost 43 million borrowers. Explore the history of student loans and how they became prevalent in the US, as told by several influential actors in the creation of the program over the years.
As of summer 2024, interest rates on federal student loans ranged from 6.5% for undergraduates to above 9% for loans taken out by parents (private loans can exceed 17%). The interest rate determines how quickly the amount owed grows. Use this calculator to estimate your monthly payments.
The United States is home to more than 33 million businesses, the vast majority of which are small businesses, with millions being created (and others closing shop) every year. These businesses often rely on loans, provide the goods and services that keep the economy flowing, and sometimes even grow large enough to enter public markets or provide private investment opportunities. Explore key topics central to business and finance, from the role of the Federal Reserve to how initial public offerings work, how millions of American students finance higher education, and more.