Today's cost of living is far higher than it was 20, 30, or 40 years ago. We now have to pay significantly more than our parents or grandparents did when they were our age for our homes, automobiles, food, and clothing. This is due to inflation. The cost of college is one thing that hasn't increased at the same rate as inflation. Actually, it has been rising far more quickly.
Main points
- Compared to most other purchases we make, the price of education has been rising considerably more quickly.
- Loss of financing, increased enrollment, and more readily available student loans are some of the factors contributing to the rapidly rising expense of college.
- Students who want to reduce these expenditures should begin making preparations with their families as early as possible.
What Is the Price of College?
Nowadays, going to college is much more expensive than it was in the past. However, depending on the kind of institution you attend, the amount you must pay for education varies greatly. For instance, compared to four-year universities, two-year community colleges have significantly reduced annual tuition and fees. Private institutions typically have the highest tuition costs, with out-of-state students paying considerably more. The average cost of a college in the United States, broken down by school type, is as follows for the 2020–21 academic year:- Two-year in-district public education: $3,770
- Public four-year state-funded: $10,560
- Out-of-state public four-year: $27,020.
- $37,650 for a private four-year nonprofit
Why Are College Costs So High?
As you can see, the cost of getting a degree might be comparable to that of buying a home. But things weren't always like this. Here's a closer look at the reasons behind college's high cost. "Lower State Support" According to Mark Kantrowitz, publisher and vice president of research at Saving For College and author of "How to Appeal for More College Financial Aid," one of the main reasons college costs have risen so much is because government funding has not kept up with the underlying cost of higher education. As a result, families are now responsible for covering the cost of college. This is especially true in light of the fact that public funding never recovered from the financial crisis of 2008 after the recession. 41 states spent less on each student between 2008 and 2018. The states paid $1,220 less per student (or 13% less) on average. In the meantime, the average tuition rose by an average of 37% across all 50 states. However, since the late 1970s, household income has been largely constant. This encourages families to increase their borrowing or switch their enrollment from more expensive colleges to less expensive colleges, such as private to public colleges and four-year to two-year institutions, according to Kantrowitz. High Retail Prices According to John Pearson, a licensed college financial counselor with Barnum Financial Group's Center for College Planning, the retail cost of college is mostly a function of supply and demand. The baby boomers, a generation for whom attending college was frequently a life-changing experience, are reflected in the demographics of college-age children during the past three decades, he claimed. "A significant portion of that population wants their kids to enjoy the same, if not superior, experience." According to Pearson, colleges are aware of how to market to this parent demographic and that baby boomers frequently mistake cheap for quality. It's typical practice for institutions to generate a pipeline of candidates much beyond what they can accept in order to provide the impression of selectivity. Because of this and their use of tuition discounts, they are able to set an artificially high retail price and then give scholarships—which are essentially discounts—to lower the net price. Even if the "sticker price" of a degree may seem incredibly exorbitant, the majority of students don't actually spend that amount. It's a ploy to give the impression that the school is elite and of the highest caliber. Increased Enrollment Even though the cost of tuition is significantly greater on paper than what the majority of college students actually pay, families nonetheless overextend themselves financially, despite receiving scholarships and other financial aid. Furthermore, the net cost of college at public four-year universities has increased by 63 percent in the last 20 years. According to Andrew Pentis, a certified student loan counselor and subject matter expert for Student Loan Hero, the number of people attending college has steadily increased since the federal government made it more affordable for military veterans and regular people to enroll in the 1940s and 1950s, which is another factor behind the skyrocketing cost of tuition. Less money per student was available as enrollment rose. Therefore, not only is there less funding available for schools, but it also doesn't go as far as it formerly did. Colleges have therefore been forced to raise their prices to meet the enrollment levels. Additional Financial Aid Many people picture scholarships, grants, and other forms of unrequited free aid when they think about financial aid. However, low-cost student loans provided by the federal government are also a part of financial help. Additionally, the greater accessibility of these loans has increased the price of tuition. Schools haven't been encouraged to keep tuition costs low because, for instance, unsubsidized federal loans have been readily available to students and their families since the 1990s. According to Pentis, their pupils have just increased their borrowing to cover the cost. He said, "And the circle simply keeps turning because these children and their parents continue to believe—rightly, by the way—that a college degree will significantly improve their lifetime earnings over that of their contemporaries who didn't advance past the twelfth grade." Over the course of their career, a worker with a bachelor's degree makes nearly twice as much as someone with only a high school diploma or GED.More services for students
Because they are given less money, colleges must run more like businesses to survive. To do that, schools must compete for the wealthiest and most qualified students. One way colleges accomplish this is by offering top-notch services and amenities, including cutting-edge athletic equipment, luxurious dorms, restaurant-quality food selections, and more. According to some analysts, institutions had to raise rates to generate more income in order to pay for these changes.Managing the High Cost of College
The emotional component of paying for education is significant. According to Pearson's experience counseling hundreds of parents, they fear disappointing their children. "No parent wants to play the role of undermining their child's hopes and ambitions," the statement reads. Nevertheless, it's critical to be honest about your family's ability to pay for college. Too much debt can cause students to fall behind financially for years, whether they end up paying off their own student loans or helping out their parents later in life after they gave up their retirement to pay for their education.So, how can families prevent paying too much for college?
Early planning is key As Pearson noted, "often, parents don't start paying attention to these financial difficulties until after the youngster has already formed a list of potential institutions." Parents and students should participate actively in early planning to make sure college is not a financial burden. Establish reasonable goals for your college options based on what you can actually afford, and start saving as soon as you can. Utilize tax-favored accounts Money in a conventional savings account won't grow quickly enough by the time a child reaches college age because of the quick rate at which college tuition grows over time. Instead, think about investing your education money in a 529 plan run by your state. You can invest money in these accounts to use later on for tax-free, eligible higher education costs. According to Kantrowitz, every dollar you save means you won't need to borrow as much. "529 plans also give families the freedom to send their kids to a more expensive college than they might otherwise afford," says the author. First, attend a community college Attending a less expensive institution is perhaps the greatest and best option to reduce your education expenses. "You might potentially reduce your overall college costs if you attend a community college in your backyard and even live at home for those two years," Pentis added. You can transfer to the four-year institution you've been considering for your junior-year campaign once you've completed your general education requirements and have a better idea of what you want to study. Reduce Debt Make sure to explore all available funding options after selecting a school that matches your budget before taking out student loans or agreeing to income-sharing contracts. Pentis stated, "These alternatives include drawing down on existing savings accounts, taking on part-time work to boost income, applying for private scholarships and government awards, and more." Treat finding scholarships as a full-time job. Kantrowitz advised kids to use free scholarship matching websites like Fastweb.com and BigFuture from the College Board to look for scholarships. Don't forget to submit a Free Application for Federal Student Aid to request financial aid as well (FAFSA). The FAFSA must be submitted by June 30, 2022, for the 2021–2022 academic year.Questions and Answers (FAQs)
Do pricey colleges merit the cost?
It's crucial to consider factors other than the advertised price when comparing the costs of different universities. You may be eligible for many sorts of financial aid, so the price may be considerably lower than stated. Compare the net cost of each school, which is the institution's fee less any scholarships and grants you may receive.Why are private universities so pricey?
Public universities typically have lower sticker prices than private colleges, but on average, private colleges offer greater financial help. U.S. News and World Report data shows that the average tuition break for first-year students during the 2017–18 academic year was greater than 50%.Why is American college tuition so high compared to that of other nations?
One of the main causes is the fact that American students typically foot a larger portion of the bill for college. Government subsidies for school costs are typical in other nations. For instance, the majority of students in Norway attend college for free.