Part 1: Why Is College So Expensive?

PHILADELPHIA (CBS) - A college education has become the second-costliest purchase most families will make. What makes it so expensive?

Carnaroli-Craig-u-of-p — (Craig Carnaroli, Univ. of Pa.)

"Over 50 percent of our budget goes to the people that we employ," notes University of Pennsylvania vice president Craig Carnaroli (right).

Carnaroli says that tuition increases merely reflect rising costs, but any tuition-paying parent can tell you they bear no relationship to inflation. College professors used to be famous for the patches on their elbows. Now they make an average of over $100,000 a year. Penn's president makes over $1 million. And the number of salaries at colleges has multiplied.

Carnaroli says, for example, the dean of students used to also teach.

"Now we've had to professionalize the administration, because there also a whole set of compliance requirements that the state and local government expect of us," he explains.

Salaries are not the only factor in tuition increases. Buildings have multiplied as well.

Welsh-Suzanne_Swarthmore-si — (Suzanne Welsh, Swarthmore College)

Swarthmore vice president Suzanne Welsh (right) blames ratings systems, which don't take cost into consideration but do look at facilities.

"That does start a little bit of an arms race," Welsh notes, although she thinks the economic downturn has ended what might be called the "edifice complex."

But don't expect tuition to come down soon -- at least not for everyone. One point that both Welsh and Carnaroli make is that few students pay full tuition.

Financial aid can make elite schools as cheap as state college. But -- like airline passengers -- those who pay the full freight are helping to cover the discount for others.