Why are college tuition prices on the rise?
College costs are increasing, and fast. A recent study by the New York Times indicates the cost of higher education is increasing at almost double the rate of general inflation and the College Board reports the price students pay out of pocket to attend a typical college this academic year is around almost $2,000 more than last year. Although inflation has acted as a factor, this isn’t the only reason for the hike in tuition prices.
There are five trends going on that are driving the cost of college upward. For one, both universities and colleges are trying to stay ahead of the times with new, cutting edge technology. It is a competitive factor between universities, and it’s not cheap. In fact, building libraries to expand the use of computers and other forms of information technology can cost more than $50 million. As technology becomes a necessity to universities, they must find ways to pay the price.
In addition to technology, research requirements and academic programs need revenue in order to build new resources and sites for the university to house them. Adding faculty members to teach and maintain them then becomes necessary which further increases costs.
College Board economist Sandy Baum said one partial explanation for the increase in prices may be that government funding of public universities has been declining. While total state appropriations on higher education have been rising, they haven't been keeping up with booming enrollment, so the contribution per student today is lower than it was 20 years ago. Schools are often forced to make these increases due to reductions in state financing. Schools can be put in the uncompromising position to increase tuition or cut programs; so most are likely to hike the tuition.
Faculty compensation also plays a big role in college tuition prices. Increasing health care costs and maintaining salaries comparable to those at peer institutions for faculty members contribute to schools raising prices.
Finally, financial aid is often the cause of price hikes since it is often financed through tuition. As more universities improve access to lower- and middle-income students, the cost of tuition may rise in general.
A college bound student may be left assuming they will graduate with a big amount of debt, but we can look to the brighter side of things, where many schools are offering more financial aid options and ways to finance an education.
In addition, salary figures are considerably higher with a college education. Studies have shown that with a high school diploma, annual salary reaches around $28,600. With a Bachelor’s degree, annual salary can reach around $51,600 and even higher with an advanced degree, reaching around $78,100. The value of a dollar is continually changing and recent history shows that the value of higher education has risen faster each year, immensely over the past two decades.
Investing wisely can bring you closer to the debt free mark upon graduating as well. At College Savings Bank, you can save for college with indexed to inflation CD. The CollegeSure CD is FDIC insured to at least $100,000 per depositor, free of enrollment fees or other management charges, and indexed to college costs. It is designed to meet the rising cost of college.
Also, the new InvestorSure CD allows college savers the ability to see the upside of the S&P 500 without the accompanying risk. It is offered with a 5-year maturity, doesn’t have any fees and has FDIC insurance to at least $100,000 per depositor.
No one can deny the rising costs of higher education or the fact that higher education is becoming more in demand than ever. College Savings Bank is dedicated to making college affordable for families and rising college tuition prices manageable.