Why Tuition Costs are Rising

February 21, 2012

For over a hundred years, tuition has continually gone up at selective private universities and even public colleges. The costs have risen about two to three percent more than the rate of inflation for each year. Tuition growth really peaked in the 1980s, surpassing what was affordable for middle class America. During the 90s, a booming stock market didn’t change the rising costs of college. However, with the recent stock market lull, the rising costs have presented a real problem for sending kids off to school when there isn’t any money for tuition and living expenses cost. In addition, student debt has gone up in recent years in response to the higher restrictions on financial aid and higher tuition.

Selective academic universities have high tuition costs to bring in resources and attract students who want to go to the most prestigious schools. Schools need money for research, new technology, facility improvements and paying the staff. In addition, many families who can afford the private schools want to pay for the best. For that reason, private schools are the most expensive when it comes to course prices and fees. In addition, Ivy League universities offer a bigger return for graduates, who can use that education to gain a higher position and gain a bigger payoff.

For public institutions, funding and tuition is handled a bit different. Private institutions usually have a board of trustees which will grant more money for different projects. At public institutions, politics play a major part in who gets what and how much do they get. Administrators have to make the hard decisions at public institutions to see what deserves more funding and what needs to be cut. Rather than make cuts to staff, which administrators need to support the school, they will raise tuition.

Federal government policies also have something to do with the rising costs. The Justice Department broke up a collective agreement between many elite institutions to target their financial aid to students that needed it most, but this led to more merit aid and expensive financial aid packages. The value of the maximum Basic Educational Opportunity Grant (BEOG) is not keeping up with inflation, so the worth of a bachelor’s degree has continued to decrease. Universities have to make up for that with higher prices. Not only that but research has become another financial problem for universities. As these costs go up, the bill falls on students to pay because there is a lack of funding.

Colleges are struggling to pay their bills just like the rest of the country. There have been speculations on whether the education market will crash just like the housing market. There has been increased pressure to raise the standards for education to compete with many of the free educational opportunities that are being offered online as well as vocational training that many students are choosing instead of a formal education. All of these factors have persisted in creating a major financial burden for colleges, which has then translated into higher tuition.

There are various ways to cut college costs. If you apply for financial aid and you pick an in-state public school, you can end up paying less. There are also some very cheap state schools that still offer a good education for a fair price.

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