Why is College so Expensive? Part 2

Increases in Tuition Rates are Rising Faster than Increases in Grant Aid and the Tax Benefits Offered for Those Attending College. 

According to the College Board, over the last two years (2011-2012 and 2012-2013), “the average net price paid by full-time students enrolled in public 4-year colleges increased measurably” and the “average net price also increased for public two-year and private nonprofit 4-year students.”6 What this increase in net price means to you is that the increase in tuition and fees at the college you are currently attending will most likely rise, if the current trend continues, faster than your financial aid at that institution. In other words, expect to pay more for college each subsequent year that you remain enrolled.

This is what inflation is all about: paying more for goods and services even though you aren’t getting anything more in return. And whether you deal with inflation the easy-way (by planning and budgeting) or the hard-way (by borrowing and defaulting on loans), sooner or later, you will come face-to-face with the realities of inflation if you are pursuing your degree.

Currently, most college students enroll in a school charging one tuition price, only to have the cost of those tuition and fees rise the next year. It may seem all very theoretical at this stage, but the reality is when you get your new (and larger) tuition bill for your second year of college, you don’t want it to come as a surprise. You don’t want to be in a position where your planned budget no longer affords you enough cash for textbooks, gas for your car, or the ability to take the number of credit hours you’d really like to take that semester to push forward with your career path. You need a plan for rising tuition costs.

The State You Live in Makes a Huge Difference in How Much You Pay to Attend a Public College or University.

Contributing significantly to rising tuition rates at public colleges and universities has been a decline in the total dollar amount states contribute to their public state colleges and university systems. In an era of state budget cuts to education, colleges are increasingly passing on the financial burden of these budget shortfalls to their students. 

In fact, total state contributions to public colleges and universities declined, on average, by 3% in 2010-2011 and by a nearly unprecedented 11% in 2011-2012.7

Furthermore, each public college system sets its own tuition and fee rates annually according to its own historical and current educational budgeting system. As such, you’ll find that regionally within the U.S. there can be a significant price difference: 

Average published tuition and fees for in-state students at public 4-year colleges by region8:

New England (CT, MA, ME, NH, RI, VT): $11,019

Middle States (DC, DE, MD, NJ, NY, PA): $9,205

Midwest (IA, IL, IN, KS, MI, MN, MO, NE, ND, OH, SD, WI, WV): $9,267

South (AL, FL, GA, KY, LA, MS, NC, SC, TN, VA): $7,621

Southwest (AR, NM, OK, TX): $7,721

West (AK, AZ, CA, CO, HI, ID, MT, NV, OR, WA, WY): $8,730 

Though there is a sizable cost difference between regions, what the dollar numbers above can’t tell you is that over the last decade the percentage increase in college tuition in fees was over twice as large in the West (126% increase in tuition price over last decade!) as in New England. The numbers also don’t tell you about the significant variance in college debt and return on investment from state to state.


6College Board, Trends in College Pricing, 2012, p.1
http://trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

7College Board, Trends in College Pricing, 2012, p.2
http://trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf

8College Board, Trends in College Pricing, 2012, p.16
http://trends.collegeboard.org/sites/default/files/college-pricing-2012-full-report_0.pdf