Guide to the Rising Cost of College

Published: Jun 18, 2021
Updated: May 22, 2023

Steady growth in the cost of tuition for both private and public four-year colleges has contributed to a dramatic rise in student debt. But why is tuition continually on the rise? And what can you do about it as a student?

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If you are really just interested in saving money, you can jump directly to our look at the most affordable colleges and universities in the US.

Or, to learn more about the rising cost of college, read on...

How much does college tuition cost?

The average college tuition costs $10,000+ per year for in-state public colleges and an average of $36,801 for a year in private school, based on figures from 2020. According to U.S. News & World Report, the average yearly cost of tuition and fees among 120 ranked private colleges is more than $50,000.

But it is also important to note that very few students actually earn a college degree in four years. According to the National Center for Education Statistics (NCES), 33.3% of public university students will graduate in four years; 52.8% of private university students. So as you 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.

How much has the cost of tuition risen?

The 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.

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 was 236%. By contrast, average college tuition and fees grew by a staggering 1200% during that same span.

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.

Does increased tuition mean increased wages for college grads?

Increased tuition has not led to increased wages for college grads. While those with a bachelor’s degree typically earn significantly more than those with a high school diploma or associate degree, these earnings have not kept pace with the rapidly growing cost of college.

Forbes indicates that According to figures from the Federal Reserve Bank of St. Louis, the average annual growth in wages was only 0.3% between January 1989 and January 2016.

While a bachelor’s degree is still worth the money, it is clear that the rise in tuition is not justified by increased wages for college graduates. It now costs substantially more to qualify for a wide range of jobs that pay roughly the same as they did 30 years ago.

Why is the cost of college rising?

The cost of college is rising for numerous reasons including growing demand for degrees, reduced state-level funding for public colleges, rising administrative expenses, and more. Indeed, the last several decades have seen massive growth in the demand for a four-year degree. Just between 2008 and 2018, reports Visual Capitalist, undergraduate enrollment grew by 26%.

Some researchers also believe that there is a direct connection between the growing use of federal student loans and rising tuition. These researchers argue that as the supply of student loans grows, colleges are given greater freedom to charge higher tuition rates. A study by the New York Fed, for instance, finds that college tuition across the board goes up $.60 for every dollar spent on subsidized federal student loans.

These findings imply that colleges are choosing to hike tuition and costs in response to financial opportunity. However, Visual Capitalist also finds that, 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.

These trends are compounded by growing institutional spending in areas such as student services, administrative support, and campus maintenance. All of these factors contribute to a dramatic growth in the cost of college.

How has the pandemic impacted rising tuition costs?

The COVID-19 crisis disrupted every aspect of higher education, including the long-term growth in the cost of tuition. In the face of the pandemic, 2021 marked the first year in decades that the number of college applicants actually declined from the previous year. As families worked to navigate pandemic-related economic challenges, and as students struggled to get back on track after a critical lost year of education, the demand for seats at America’s college actually decreased.

This removed at least one major catalyst for the continued rise of tuition. Without the usual increase in demand, For the 2020-21 academic year, average tuition and fees increased by just 1.1% for in-state students at four-year public colleges, reaching $10,560, and 2.1% for students at four-year private institutions, to $37,650 - the lowest percentage increases in three decades, according to the College Board.

Is a college degree still worth it?

A college degree is still worth it as the bachelor’s degree remains a basic threshold for many professions. If you are pursuing a technical, vocational, or service industry profession, you may do better with a professional certification or training program. Both of these are often far more affordable than a college education. But for those entering a wide range of white collar professions, a bachelor’s degree remains the basic threshold to higher earnings.

For instance, in 2017, according to the Bureau of Labor Statistics, those with a high school diploma earned a median salary of $712 per week; those with an associate degree earned a median of $836 per week; and those with a bachelor’s degree earned a median of $1173. The lifetime earnings for those with a bachelor’s degree show the likely return on your investment. This return is valuable even as the cost of a college degree continues to rise.

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!