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The 1 big thing people get wrong about college costs

A year at Harvard is still cheaper than a year in jail.
A year at Harvard is still cheaper than a year in jail.
Paul Marotta/Getty Images

It costs far more to keep someone in jail for a year in New York City than it would to educate him or her for a year at Harvard. That comparison comes from Conrad Hackett, a demographer at the Pew Research Center:

This comparison is striking, but it's slightly off — and it illustrates a widespread misconception about higher education. Price (what the consumer pays) is not the same as cost (what gets spent on providing a service).

The distinction between price and cost doesn't matter at a jail. Inmates aren't paying their own way.

But at Harvard, $59,000 isn't what the university is spending on every student. It's not the cost of the education; it's the price, a totally made-up number that represents what Harvard thinks its education is worth in the marketplace. The cost of a Harvard education is far higher: the university spends $84,218 to educate each student each year. (Which is still cheaper than a year in jail!)

Even if you're a Harvard student paying the full price — and most students pay less, due to financial aid — you're not covering the entire cost of your education.

The distinction between price and cost matters. "Tuition is skyrocketing" and "college costs are out of control" are often used interchangeably. But they're different problems, and solving one doesn't necessarily solve the other.

The federal government could reduce the price of higher education for families by handing out $20,000 grants to everyone. States could do it by raising taxes and making tuition free. But that wouldn't do a thing to control the cost of higher education; it would just change who pays the bill.

On the other hand, Harvard could replace all its professors with giant screens broadcasting free online classes. That would drastically reduce its costs — but unless Harvard passed those savings on to students in the form of lower tuition, the price wouldn't change at all.

"College costs" is alliterative and fun to say. But most of the time, what people mean is "college prices" — a different problem with a different set of possible solutions.