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What's Really Behind College Tuition Hikes?

Imagine you’re the third sibling in your family to enter college in your home state of Minnesota, and that each of your family members entered college four years apart. Believe it or not, you may spend twice as much on college as your eldest sibling. While consumer prices usually rise between one and four percent each year, many colleges have hiked tuition and fees at double or triple that rate.

True Sources of Hidden College Costs

While some critics have charged college administrators with overpaying faculty and with pursuing vanity real estate projects, the real reasons for spikes in college costs mirror changes in the broader economy. For instance:

Technology Upgrades. Although universities helped originate the Internet as we know it, college and university IT professionals have spent hundreds of millions of dollars to upgrade campus networks and to implement stronger data security measures.

Staff Compensation. Many colleges and universities offer extensive benefits packages to both faculty and staff. To absorb sudden spikes in the cost of health care, some schools have resorted to raising tuition.

State Budgets. Like government agencies, state colleges and universities must respond to lawmaker demands to freeze or reduce budgets. Administrators in hard-hit states like California and Minnesota have hiked tuition rates to replace state funding.

Energy Prices. Just as volatile energy costs caused grocery prices to rise, transportation expenses have forced campus dining facilities to buy more expensive ingredients.

Stock Declines. Stock market shortfalls have even hurt college sports programs. Stanford, Ohio State, and Florida State all announced athletic cutbacks due to dwindling alumni donations and stalled ticket sales.

How Rising College Costs Impact Enrollments

Sharp increases in tuition and college fees have forced many young Americans to rethink their higher education plans. Instead of moving away to school, many first-year students have started choosing colleges closer to home. By living with family members instead of in the dorms, students can avoid many of the extra expenses of a college education, such as rent, meal plan charges, and utilities. Government statistics also indicate that more students are choosing to attend school part-time, paying for tuition with a combination of student loans and income earned from entry level jobs.

Gaps Between Private and Public College Spending

Private school administrators are no longer immune to the effects of a troubled economy. Some of the largest private university endowments suffered capital losses of as much as fifty percent over the past two years. In most cases, private universities now find themselves in the same position as state schools forced to raise tuition to cover other funding shortfalls. Although experts predict that tuition should continue to rise, students at state-run schools can expect to enjoy greater value relative to students at many private colleges and universities.

Fighting College Tuition Sticker Shock

Although college costs aren’t likely to drop anytime soon, students and parents can still take a few simple steps to trim their own education budgets, including:

Interview the Career Office. Colleges and universities that have invested in strong alumni networks and job placement programs may help you land the kind of job that can help you repay student loans sooner.

Mix and Match. Many students now complete core undergraduate courses at community colleges or at state universities before finishing their degrees at private colleges. This strategy can cut college costs in half while resulting in the same diploma.

Rethink Work/Study. Career-oriented students can complete an associate’s degree online or at a less expensive school to qualify for an entry level job in their desired industries. Many employers offer tuition reimbursement programs to help students complete bachelor’s or master’s degrees.

Keeping college costs down may require rethinking the traditional higher learning experience. By focusing your search on colleges and universities with a track record of smart spending and proven job placement, you can get the best return on your education investment.

Detroit Free Press
International Herald Tribune
Minneapolis-St. Paul Star Tribune
United States Bureau of Labor Statistics
U.S. News and World Report


Publish date: February 14, 2009