The cost of a college education has increased at a faster pace than the cost of most other goods and services over the past several years. Parents with young children today who plan to fund a four year education during the next twenty years or so can expect to pay in the six-figure range for each child attending college. It used to be that these costs were expected if your child was attending a private institution but there were also public schools that offered tuition at more reasonable rates. A public university is still a more affordable option, but the cost of tuition even at in-state, public schools is expected to skyrocket beginning in 2010.
The average cost of a year of education at a public university this year is expected to be just over $7,000 while the average cost at a private university is now more than $25,000 a year. There are several factors leading to higher college tuition prices for both public and private schools and their impact is going to be felt by college students sooner rather than later. Here are some things to consider.
State Budget Cuts: With the economy just emerging from one of the biggest financial disasters in history, state budgets are a mess. Part of the reason tuition at public universities has been historically cheaper than private universities is that individual states subsidize funding for residents to attend these schools. Budget cuts are looming in most states, and college tuition subsidies are being slashed to make sure that essential programs and services can be maintained. The University Of California, for example, is anticipating tuition rates being between twenty and thirty percent higher this year compared to a year ago because of California’s ongoing budget crisis. States that have been hit the hardest during the most recent recession will probably see their tuition prices increase by the highest amounts but very few universities will be immune from the price hikes.
Financial Aid Eligibility: Another consequence of the downturn is that more students and families are in a position to qualify for financial aid than before the recession. Most students apply for at least some financial aid which makes the effective tuition rates that they pay much lower than the published rates. A recent study showed that public college students received an average of $5,400 a year in financial aid, reducing the out-of-pocket financial obligation for students and their families.
Demand for Education: In spite of rising rates and tuition prices that seem ridiculous at some schools, classrooms remain full and students are still turned away every year from most major universities. A poor job market has students staying in college longer, opting for grad school instead of fighting for the few jobs that are available to recent grads. As long as colleges are filling their open enrollment lists, they’ll continue to raise prices to meet the demand for higher education.