Guide to the Rising Cost of College

Guide to the Rising Cost of College

In the last few decades, pursuing higher education has turned from a proven track for personal and professional advancement into a formidable challenge for prospective college students and their families. In this guide to the rising cost of college, we will take a look at the multifaceted factors that affect the rising college costs and the effective strategies to minimize them.

How Much Does College Tuition Cost?

U.S. News & World Report’s annual survey says the average tuition for both public and private colleges and universities in the 2022-2023 academic year has increased from the previous period.

As can be expected, the average tuition and fees in public colleges and universities are lower for in-state students than for out-of-state students. In dollar terms, it’s $10,423 for in-state students against $22,953 for out-of-state students in the same period.

Between public colleges and private schools, in-state students in public institutions pay approximately 74% less in average tuition and fees than their counterparts in private institutions. In dollar terms, it’s $10,423 and $39,723 for the 2022-2023 academic year - or a difference of $29,300 for the same period.

college student studying in the library

Take a Closer Look at the Tuition and Fees

As a prospective college student, you must look closely at the tuition and fees of your preferred colleges and universities and even ask questions of admissions counselors, current students, and alumni. You will likely find wide variations in their tuition and fees, as well as between the abovementioned average college costs.

Take, for example, the cost of tuition and fees (i.e., sticker price) at Claremont College and San Diego State University, both in California, for the 2022-2023 academic year. Claremont’s full-time undergraduate tuition and fees are $64,150, while SDSU’s $4,145 is significantly more affordable.

The bottom line: If you’re concerned about the rising costs of college, then be sure to consider public institutions in or near your local area.

But if you’re keen on earning a degree from a private college or university, you may want to consider private institutions that meet most, if not all, of their students’ demonstrated financial needs. Examples include many of the best-ranked colleges and universities, such as Brown University, Columbia University, and Stanford University. Financial aid can be key to helping these colleges be as affordable as possible.

Consider Your Graduation Timeline

But we want to emphasize that according to the National Center for Education Statistics (NCES), few students will earn their undergraduate degree in four years.

Case in point: In 2020, the six-year graduation rate for first-year students and full-time undergraduate students was 64%. This means 64% of undergraduate students who enrolled in four-year colleges and universities in 2014 will have earned their bachelor’s degrees in the same institutions by 2020.

The bottom line: If you want to calculate the likely cost of your college education, it may not be enough to multiply your base cost by four years. Your degree program may take longer to complete.

With this in mind, you must consider the possible reasons that you won’t be able to earn your bachelor’s degree in four years. Among the common reasons are possible strategies to avoid, including:

  • Changing majors (Plan your college career well in advance so you can follow a single path.)
  • Part-time enrollment (Attend college on a full-time basis or take more courses during the summer term to make up)
  • Course availability (Discuss your options with your academic advisor and plan your term-by-term course load.)
  • Academic challenges (Take advantage of student support services, such as tutoring and writing centers)
  • Work obligations (Time management and discipline are key when attending college while working)
  • Financial constraints (Plan for college, apply for federal student aid and other types of financial aid, and practice money-saving strategies on expenses)
  • Transfer credits (Work with an academic advisor to ensure that most, if not all, of your college-level credits can be transferred.)
students walking on a college campus

Look Into Colleges with Tuition Freezes, Resets, and Fixed Rates

There are colleges and universities that either have tuition freezes, tuition resets, or fixed-rate tuition for their students. In a tuition freeze, the tuition per credit is locked for a specific academic year, often for several years in a row. In a tuition reset, the tuition per credit actually becomes less for a specific academic year.

Notable examples in the 2023-2024 academic year include the University of New Hampshire, University of Vermont, New England College, and Grand Canyon University, all of which have had a tuition freeze; as well as Colby-Sawyer College, Indiana University of Pennsylvania, and Lasell University, all of which have had a tuition reset.

In a fixed-rate tuition scheme, students in college will pay the same tuition rate during the duration of their academic program, usually limited to four years. This is, in effect, a tuition freeze for eligible students who qualified for the program.

Most, if not all, colleges and universities with a guaranteed tuition plan require completion of an application and being approved for admission. Notable examples include the University of Houston, the University of North Carolina System, and Ohio University.

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How much has the cost of tuition risen?

The average cost of tuition has roughly quadrupled since 1989. According to Forbes, in 1989, the average four-year degree was $26,902 ($52,892 adjusted for inflation). In 2018, the same four-year degree costs an average of $104,480 across four years, evidence of rising costs in recent years.

In just the last decade, the cost of college has gone up by 25%. And the rising cost is not just based on skyrocketing tuition. Students are also paying more for college fees and expenses like housing and books.

All told, this has produced a trend of increasing college costs in every single U.S. state. CNBC reports that From 2008 to 2018, the average tuition at four-year public colleges increased in all 50 states. On average, tuition at these schools has increased by 37%, and net costs (including factors like scholarships and grants) have increased by 24%, according to a 2019 report from the Center on Budget and Policy Priorities.

Over a longer span, the trend-line is even more dramatic. Between 1980 and 2020, the overall rate of inflation rate in the United States was 236%. By contrast, average college tuition and fees grew by a staggering 1200% during that same time period.

Everyone knows that college is expensive, but most people do not know just how expensive, or just how much the cost has risen in a short time, but there is no doubt that college costs have ballooned over the decades.

college student looking at a book in the library
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Why is the cost of college rising?

In this guide to the rising cost of college, we ask the most important question: WHY.

When looking at rising college costs and their impact on your life as a prospective college student, it’s crucial to understand the wide range of factors and their relationships that influence the cost of college over time.

Effects of Inflation on College Tuition

Like most products and services, the cost of college education rises naturally over time because of general inflation. When inflation hits, it affects salaries, administrative expenses, and infrastructure maintenance costs that colleges and universities must deal with.

Demand for College Education

In the last several decades, there has been a massive growth in the demand for a four-year degree. Between 2008 and 2018, Visual Capitalist reports that the undergraduate enrollment in the US grew by 26%.

By contrast, in the 2019-2022 period, there was an 8% drop in undergraduate college enrollment. The decline continued even with the return of in-person classes after online classes had become the norm because of the COVID-19 pandemic. According to the Bureau of Labor Statistics, this was the steepest decline on record since 2018.

The steep decline in undergraduate enrollment has many implications, but labor shortages across a wide range of fields are definitely among the most concerning. The US Chamber of Commerce disclosed that the health services, accommodation and food services, professional and business services, and trade industries have experienced the highest labor shortages.

Campus Experiences Require Dollars Spent

When you think of attending college, you will likely have images of well-equipped and well-maintained classrooms, libraries, quads, dining halls, dormitories, and administrative buildings. You will also think of student-run organizations, sports teams, and Greek letter societies, among other aspects of campus life.

Every single one of these campus experiences costs money—hundreds of millions of dollars in large, multi-campus colleges and universities. Guess where these institutions of higher education get the funds for these expenses? At least partly from the tuition costs and fees paid by their students.

There’s also the matter of achieving and maintaining academic excellence, particularly among private nonprofit institutions and prestigious institutions like Ivy League and Public Ivy universities. The best faculty members demand competitive salaries, a fact that’s true for skilled administrators and staff members, in addition to their health benefits and other compensation.

Keeping up with the technological advancements, particularly in online learning, and maintaining existing technological infrastructure require money. And then there are the investments in student support services, an integral aspect of both the on-campus experience and online learning experience.

students walking outside on a college campus

Changes in Federal and State Funding

In the post-recession United States, certain programs and projects have experienced funding cuts. In fact, according to Visual Capitalist, even as demand for a four-year degree has increased, state-level funding has declined. Visual Capitalist indicates that state funding per student fell from $8,800 (2007-08) to $8,200 (2018-19) while the share of tuition in college revenues increased.

Note that public colleges and universities rely on state and local funding for their operations in addition to tuition and fee payments by their students. According to the College Board, state and local funding accounted for 44% of revenues for public four-year colleges in 2018-2019. State and local funds, in contrast, accounted for 55% of public two-year college revenues.

Furthermore, many colleges and universities experienced decreased endowment returns in 2022 due to soaring college tuition inflation. Simply put, lower returns means a lower ability to meet demonstrated financial needs and operations costs. College students then bear the brunt of increases in tuition and fees to make up for decreased college revenues.

college student looking at a bill for college
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Is a college degree still worth it?

According to the Georgetown University Center on Education and the Workforce, individuals who don’t complete college usually have lower lifetime earnings in comparison to college graduates. In times of economic downturns, individuals without a college degree are also more likely to become unemployed.

These are backed up by the Bureau of Labor Statistics, too, in its oft-cited ”Education Pays″ article. With each step up in education, there’s a marked increase in median weekly wage and a decrease in the unemployment rate. For those with a high school diploma, the median weekly wage is $853, while individuals with some college but no college degree earn $935 in median weekly wages.

With an associate degree, the median weekly wages increase by $70 per week. From an associate to a bachelor’s degree, the increase is even more significant—a $427 jump in median weekly wages.

As for the unemployment rate, there’s a progressive increase in the unemployment rate from individuals with a high school diploma, with some college but no degree, and an associate degree to a bachelor’s degree. While high school diploma holders have a 4% unemployment rate, it’s lower, at 2.2% for those with a college degree.

The key to getting your money’s worth is ensuring that you seek the educational opportunity that best fits both your budget and your professional goals. There are numerous ways to offset the cost of your education through financial aid, scholarships, and more. For help capitalizing on these opportunities, check out the following resources:

And to find great schools that offer in-state tuition discounts, look for the best schools in your state!

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