The rise in College tuition 

The options and choices available for future students wishing to purchase a college education are going to change. If you look at what is happening in the US, diminished support from the government of public institutions, an increase in students attending college and a recession limiting available jobs at graduation, you see a lot of pressure building. Add to these elements the fact that University spending is increasing at record rates, skyrocketing cost of education, and the fact many students are misinformed about financial aid, and you have an unsustainable formula.

If the cost of attaining a four-year degree could kill your financial health, people and business models will inevitably invent a new system.

About two-thirds of bachelor’s degree graduates borrow money to attend college, and with the state of the current job market, unable to find jobs to pay for tuition loans. Unpaid student debt has reached a trillion dollars and has passed credit card debt in the United States.

Student loans are no longer dischargeable in bankruptcy, and you can now have your Social Security check garnished to pay a loan that you might have taken out 20 or 30 years ago. (NPR 2012) Murder and student loans have no statute of limitations. How is a government subsidy of education changing in the United States?

In a 2012 interview with NPR’s host Dave Davies, Kevin Carey, director of the Education Policy Program at the New America Foundation, stated subsidies have been declining for a while now. Carey says that colleges and universities that were receiving half of their money from the state government are now receiving only about fifteen percent.

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Until about 2008, state governments kept up with inflation when spending money on higher education. Carey says:

There’s a consistent pattern where every time there’s a recession, state revenues decline, state spending declines, and spending on colleges and universities is disproportionately cut, and it’s because state legislators know that colleges and universities can raise tuition on the back end. So it’s kind of a way of raising taxes without raising taxes. The problem, of course, is that when the economy recovers, nobody ever cuts the tuition back. So we have kind of a ratchet effect going on, where tuition goes up steeply during recessions and then goes up not quite as steeply during economic good times.

There has been a decline in funding from states to their universities, and dramatic tuition increases in states that used to have inexpensive state-funded options for students, such as those that used to be available to California residents. As late as the early 1990’s, the vast majority of college undergraduates left school with no debt. (NPR 2012) For decades, there was an understanding in this country, that if you wanted to go to college, and you were willing to work hard and attend a public university, you could work your way through college.

Carey attributes the rise in private college tuition at prestigious institutions like Harvard and Princeton as being largely attributed to competition to remain in a certain class of college: wealth, exclusivity and fame and the institutions pay whatever they need to attract the top students and faculty. Some students are looking to community college as they compare two and four-year institutions by cost. Some attribute the enormous rise in prestigious private universities to the dysfunctional behaviors of academia – prestige games. (Archibald 2012) To see the dramatic change in tuition costs, you have to look at some figures.

The cost of tuition has skyrocketed in recent years. In 1997-98, the nationwide average tuition was $13,785 per year at a four-year private or public university. Three-quarters of students attending school, the vast majority attending public institutions, paid less than $8,000 a year. (Ehrenberg 2000) The National Center for Education Statistics lists public school tuition at a four-year university in 2010-11 at $15,605 and a private institution in the same year $31,975. (Fast Facts 2013) This rise in costs to students makes it impossible for most to attend university without taking out student loans they will have difficulty repaying in the future. Are students going to look for other options? What other options are available?

Online classes are becoming increasingly available as an option for students at traditional brick and mortar schools. According to the Sloan Survey of Online Learning, the fall of 2009 showed an increase in almost one million students taking at least one class online, a 21.1 percent growth over the year before. The number of college students taking an online course has increased steadily since the Babson Survey Research Group’s annual survey began tracking the statistic.

The interview with Carey brought up a lot of interesting concepts. Professors at Stanford put their Artificial Intelligence class online for free to the public. The course has had about 200,000 participants. You’re not going to get the college credits that purportedly translate into a higher paying job, but you can compete with the Stanford students, and it has surely been an interesting experiment for the professors who administered this project on their own.

Online classes continue to grow and are an option for busy working people trying to fit school into their lives. If you want college credit, some institutions are springing up to fill the need for less expensive options. Straight Line, an unaccredited university, is offering online classes in introductory courses. The classes are offered at a flat monthly rate. Once you apply to an accredited school that they have an agreement with, the credits transfer and become applicable towards a degree. (NPR 2012) This is offering an additional marketing tool for universities that are looking to fill their enrollments with committed students who have jump-started their educations, without an enormous bankroll into the first year or two of school.

Another option is for students to attend smaller community colleges for their first two years of school, taking care of a lot of the larger lecture-type classes at a fraction of the price before moving on to a traditional four-year university, making it easier to pay off their loans after graduation. The other side of this is the effect this trend might have on the larger four-year schools. The large lecture halls class, more than likely taught by a student assistant, not a full-time faculty member, is a profit center for these schools – funding upper-division classes and graduate programs.

Community colleges are seeing an increase in students getting a two-year associate degree, and getting right back into the job market. It’s unlikely an associate degree will become more coveted than a four-year degree, but the gap may be closing. (Davidson 2012) As a vehicle for preparing for a four-year degree, community colleges can take care of a lot of basic requirements, often close to home.

If the cost of tuition continues its upward climb, more students will weigh the cost of the degree and the financial benefit of obtaining it and make some alternative decisions. As the pressure to find a solution increases, new options will continue to be tried. Many colleges and universities that would not have dreamed of setting up an online program are trying to play catch up as financial dollars walk next door. Those with early-established programs have found a new revenue source that doesn’t require adding a wing onto the building. Change is inevitable as the strain of student loans and tuition costs rise, and the job market continues to struggle.