The Rising Costs Of College

The Rising Costs Of College

 

Since 2000, the average college tuition in the U.S. has more than doubled. Why does college keep getting more expensive?

First:  The Good News

NSHSS is here to help you on your college journey, so before we look at the reasons why tuition keeps rising, we’d like to share some resources that show how a college education is attainable on any budget:

• Read our series on Paying For College.
• Take a look at the NSHSS Scholarships page.
• Check out our article on How to Earn Free Money for College Tuition.
• See how one student paid for college on our NSHSS Twitter feed.

 

While tuition is definitely increasing, this definitely does not mean that college is out-of-reach for any student.

So Why is College Tuition Rising?

In 1980, the inflation-adjusted price for one year of college – including tuition plus living costs – was $10,231.  By 2020, the total price increased 180% to $28,775.  The price of higher education is the fastest growing segment of the economy besides hospital care.

Economists point to several factors which explain this rise, including:

• Financial Aid

• State Funding
• Accreditation
• Non-Academic Sevices

 

The Importance of Financial Aid

Financial aid isn’t really the cause of rising tuition…though it is definitely one side of the coin.

Federal aid under the 1965 Higher Education Act was designed to permit economically less-privileged students to attend college.  It has proved enormously successful:  There are over twice as many undergraduate students now as 50 years ago.

At the same time, colleges have come to depend on this aid.  Federal and state sources of aid end up paying for about 57% of tuition for public schools, and roughly 44% of tuition at private colleges.  

With over 80% of college students on financial aid, this external funding has become an inextricable part of the funding model for colleges.

State vs. Federal Funding

The affordable tuition for in-state residents at public colleges has made a high-quality college education possible for millions of Americans.  Just because these state schools are public does not mean that they aren’t the best.  In fact, the U.S. is widely regarded to have the best public universities in the world.

But even in-state tuition has been rising steadily.

The problem is that state funding is not only inconsistent – varying with state budgets and economic cycles – it has been  going down.   While federal aid has remained at the same level, state and local funding has dropped 25% in the last 20 years.  This cost difference has been passed on to students --- both in-state, and out-of-state -- as higher tuition.  

Accreditation and the Market

Some critics have argued that the accreditation system keeps tuition artificially high by preventing potential new colleges – who might offer competitive, lower tuition – from entering the higher education marketplace.

Accreditation is designed to provide students with the assurance that a school meets certain standards.  Critics charge that accreditation only provides a limited metric of a school’s educational program, pointing to schools with sub-50% graduation rates.  They also argue that review boards often include representatives of existing schools, which may make it harder for new colleges to achieve accreditation.  

The real problem comes back to financial aid:   The U.S. Department of Education only extends financial aid to accredited schools.  This effectively limits the ability of non-accredited schools from offering competitive tuition. 

Non-Academic Offerings

The cost of running a college has increased significantly, and this is has proved to be a large driver of increased tuition.  But many of these increased costs to not necessarily relate directly to classroom-based education.

In 1981, post-secondary institutions spent $13 billion on non-academic services.  By 2015, those administrative expenses had risen to $122.3 billion.

Some of these administrative functions have come about because of new federal and state regulations, such as Title IX requirements, and the Family Educational Rights and Privacy Act (FERPA).  Others, such as the widespread creation of departments of Diversity, Equity, and Inclusion (DEI), reflect changing norms in our society.

Schools have been also trying to outdo each other by offering students value-added services and amenities, such as mental health counseling, plush dorms, and gourmet cafeterias. 

Some question whether the high tuition and financial aid burden is justified by climbing gyms,  4-star cuisine, and dorm rooms with flat-screen TVs.  They argue that these outside-of-the-classroom perks do not necessarily enhance schools’ primary mission of educating students.   

At the same time, these are the types of amenities that are likely to appeal to prospective students choosing between colleges.  Some schools feel compelled to offer these “extras” – or lose the most promising students to their competition.  

The Net Result

While the rising costs of college is not great news, NSHSS is here to help.  We can help you find the right financial plan for the college of your choice – no matter what your budget is.