America’s great private universities have either been involved in price-fixing for the past decade or the US government has been manipulating the real rate of inflation. Which do you believe is most likely?

American Compass has compiled tuition rates from arguably the 10 most prestigious universities in this country: Harvard, Stanford, Columbia, Brown, MIT, Dartmouth, Penn, Princeton, Cornell, and Yale. Somewhat surprisingly, total fees at these schools have been within a few percent points over a decade despite disparate reputations, enrollments, endowments, faculty sizes, and geographies. Less urban schools such as Dartmouth and Cornell charge the same rate as schools located in dense urban regions such as Cambridge and Manhattan. After analyzing the data, we found that fee increases were so similar between schools from one year to the next, that there was no benefit in analyzing fee schedules at each school individually.

The magnitude of change from 1999 to 2009 is staggering. Average tuition at these schools in 1999 was $23,093. Total fees including room and board was $30900. These costs ballooned to $35851 in tuition and $47550 in total fees by 2009. Consider the chart below for a closer look at annual changes.

These increases may be more tolerable if wages had increased by a comparable amount over the same period. Instead, while wages were mostly stagnant or may have ticked slightly upward with the consumer price index, university fees surged forward. No wonder more families looked to state schools for an affordable education.

So what happened? In 1999, Harvard boasted that tuition increases were at the lowest level since LBJ was in the White House. At that time Dean of Faculty, Jeremy Knowles, declared “We are absolutely committed to … constraining our costs, now and in the future.” That dream lasted less than 1 year. Meanwhile, Harvard’s endowment swelled from just over $17 billion in 1999 to $37 billion in 2008 (before suffering heavy losses with the global financial crisis). At 2008 endowment levels, Harvard University could conceivably have operated for well over a decade without charging another penny in tuition.

Why even run a university with such a large war chest? With income from investments ($1 billion per annum leading into 2008) greater than the costs of instruction, all of Harvard’s tuition charges appear superfluous.

To wit, providing higher education is only a small part of a major university’s function. America’s great universities established a global brand in the 20th century because of the wealth and stature of its past students. These former students helped finance these universities which often behaved more as corporations seeking to hoard resources and find best talent. Quality education was often secondary to greater investment return, larger real-estate holdings, and more prominent faculty.

So why have all these universities charged virtually identical fees over the past decade? Part of the reason was surging inflation in the United States. The US government’s massive deficits and the mostly ignorant US population (which has looked the other way) are largely to blame for that. But there is a second, more insidious reason for higher tuitions. Universities charge high rates because they can. The Harvard brand is now recognized everywhere in the world. There are plenty of families world-wide that can afford their rates. America’s universities are global organizations now anyway.  Providing affordable, high-quality education to Americans is no longer part of that formula. So can Americans afford their most famous universities? The question itself is no longer relevant. America’s great universities are no longer for average Americans.