Trends in college tuition rates

Trends in college tuition rates

Tuition has been and continues to be on the rise. Published tuition rates at private, nonprofit colleges and universities are increasing an average of 4.6 percent for the 2011-12 academic year, according to a survey of member institutions conducted by the National Association of Independent Colleges and Universities (NAICU).^[5]

The story on tuition is much the same across the country. Over the last 3 decades, the mismatch between the cost of college and the cost of living has grown, with tuition rising six fold while the cost of living only about two and a half times.^[6] Just looking at Minnesota as an example, even the last ten years have been dramatic, with the average tuition at a Minnesota State Colleges and Universities school rising from $3,200 to $6,800. The University of Minnesota, possessing one of the largest student bodies in the country, saw their tuition almost triple from $4,800 to more than $12,000 over the same time period.^[7]

Projections for the future are stark. Some expect that by 2021, tuition costs for a public institution could be $95,000 for an undergraduate degree. A private college could run towards $240,000.^[8] For many families wanting to send one, two, three, or more of their children to college, these are unsettling numbers.

Reaction to tuition rates

In a time of struggling state budgets, it will be interesting to see how states and the education system deal with these systemic funding challenges. Going back to the NAICU survey, while tuition is rising at 4.6%, student aid is outpacing it at around 7%.^[9] So universities are, at least in the short term, doling out more money to students to offset rising rates. The sustainability of that strategy is, however, another matter.

Other sectors of society are re-examining their tuition assistance structures. The Defense Department appears to be one such entity, considering changes to its tuition assistance for active-duty military members. The budget-cutting move would affect more than 300,000 students who receive tuition assistance, especially those who pay less than $250 per credit hour -- a group that includes many community college students as well as students at for-profit institutions, which frequently tie their tuition prices for military service members to the maximum benefit payment.^[10] One such remedy would be to revert back to a 75-25 split, away from the current format where the military pays 100 percent of the cost of a college education (instituted in 2002 as a recruiting measure for the armed forces).^[11]

In Minnesota, both the University of Minnesota and the Minnesota State Colleges and Universities have trimmed budgets in past year by laying off workers and ending some academic programs.^[12] In Washington State, budget proposals are aiming to close a $5.3 billion shortfall over two years and are making some of the largest cuts in higher education. While K-12 education is protected in the Washington State Constitution as a core responsibility of the state government, higher ed isn't.^[13]

The University of Washington forecasts that tuition would have to theoretically increase about 20.5 percent per year for the next two years to cover all of the cuts proposed by the governor. Under that scenario, tuition would reach about $13,300 for the 2012-13 school year, up from $6,802 in 2008.^[14] Elsewhere in the state, the Higher Education Coordinating Board has reported a 57 percent increase in applications for financial aid increase in the last three years.^[15]

So what does that mean for Washington’s schools? For one, investigating new sources of revenue. With universities poised to lose about half their state funding over four years, legislators have ideas on the table that include looking for money from the private sector, ending tax exemptions and protecting higher ed in the state constitution.^[16] Otherwise, tuition has to go up, dramatically.

Community Colleges not exempt from tuition increases

Finally, while community college has historically been a more cost-effective option for students and families, the tuition problems at four-year institutions could end up affecting the two-year programs also. According to a report by the National Center for Public Policy and Higher Education, tuition increases at the four-year schools have pushed more students to two-year schools, thereby increasing costs for the community colleges. Over the last decade in Tennessee, for example, the state's two-year schools have increased tuition by 73 percent, one of the most dramatic increases at the state level over that timeframe.^[17]

Endnotes