According to the U.S. Census Bureau, in 1973, just 47% of those who earned a high school diploma went on to college. By 2007, the number had risen to 67%. And it's no wonder: over their lifetimes, people with bachelor's degrees earn nearly $1 million more than those with only a high school education, and their unemployment rates typically run three percentage points lower (Source: The College Board, 2010).
But as college campus enrollments have risen, so has another number: the cost of a college education. In fact, over the past 25 years, the combination of tuition and fees for a year in college has risen an average of 6.1% a year. That's nearly twice as fast as the general rate of inflation and faster than prices have risen for other big-ticket items like housing and medical care (Source: Bureau of Labor Statistics, 2010).
Tuition and Fees: Just Part of the Picture
According to the College Board, in 1987, tuition and fees for a year in the average private, four-year college totaled just over $7,000. In 2007, the number had ballooned to nearly $24,000 and jumped again in the current school year to $27,300. Throw in the cost of room and board, books, and personal expenses, and the fully loaded cost of a year at the average private university is now close to $40,000, and at "elite" schools the price is as much as $53,000 or more.
Meanwhile, the cost of public higher education - still a relative bargain with tuition and fees at "just" $7,600 a year this year - has risen faster: an average of 7% a year. Fully loaded, the average cost is around $19,000 a year for in-state students and $30,000 if your child attends a state university outside your home state.
"Sticker Price" Versus Actual Cost
Educators note that because of the increased availability of student aid in the form of scholarships and need-based grants that don't have to be paid back, most families don't pay the advertised price for college. While aid does soften the blow for consumers, on average it covers only about 35% of the expense of a year in college. And even at this discount from the sticker price, the net cost of a college education is still growing faster than average family income.
Driving College Costs
What accounts for the galloping cost of higher education? Observers cite several factors:
- Increased student aid, particularly the availability of loans and family willingness to take them out. Observers suggest this has fueled increasing demand for a college education despite the increases in costs.
- Competition for the best students. Successful students are a source of university fame and potential donations, and so universities compete to offer the best faculty, facilities, and amenities with ever-increasing budget expenditures.
- Increased support staff. To keep abreast of the demands of government reporting as well as the latest trends in technology, colleges and universities have hired ever-larger numbers of support staff employees.
Looking Ahead
Experts say that while the rate of inflation has declined recently, both for the general economy and college prices, they don't expect to see a change in the relationship between the two as long as the fundamentals above remain in place. If anything, there is recognition at all levels of government that U.S. higher education is vital to the future of our economy.
Please call if you'd like help with college funding.