college tuition

What’s Behind The Rising Cost Of America’s College Tuition?

With a price increase of 538 percent in the past 28 years, both college tuition and the talks surrounding it have inflated exponentially. But just why is American education so expensive?

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Overlying the issue of college tuition is a massive amount of student debt, totaling over $1.2 trillion, and affecting more than 40 million Americans nationwide. The issue has even sparked a new legislative proposal by President Obama which intends to make 2-year community colleges free-of-charge.

Underlying, however, are a myriad of factors which often work congruously to fuel tuition prices and further submerge young Americans in debt.

Here are three facts that explain the high price of higher education in America:

1. Public institutions have seen their funding slashed consistently since 2008

According to the the Center on Budget Policy and Priorities (CBPP) in 2013, adjusted for inflation, states spent 28 percent less per student than in 2008 when the recession hit.

In response to this decrease in government funding, public universities have been forced to increase tuition to account for large budget gaps.

According to the CBPP, between 2008 and 2013 the cost of tuition increased by an average of 27 percent nationwide (depending on the state, prices rose from as little as 15 percent to as much as 70 percent).

To put these two statistics in perspective, in 2013, states were spending an average of $2,353 less on students, while students in 2013 were only paying an average of $1,850 more, on top of substantial cuts in funding.

As expected, price increases for such universities have showed no signs of wavering, as tuition for four year public universities climbed another 3 percent in 2014.

2. Public universities are increasing salaries and amenities

Confoundingly, while public universities jack tuition rates and eliminate full-time staff, both these universities as well as private ones continue to pay more and more money to the universities’ presidents, and administrators.

According to a 2012 report by the The New York Times, between 2001 to 2011, the median salary of a college president rose by 75 percent when adjusted for inflation.

Additionally, according to an investigative report by USA Today, in 2012, the average salary for an NCAA coach ballooned to $1.64 million.

Administrative positions, however, aren’t the only areas benefitting from increased expenditure. Universities (mainly private) have also devoted a significant amount of money to amenities (i.e. hot tubs, rock walls, athletic facilities).

Depending on how much a given university relies on tuition to pay off the school’s debt, such construction costs can often be shifted to students in the form of higher price tags for their educations.

Even schools that pay for such amenities using endowment, gifts, and donations are struggling to find the money for such spending. According to The New York Times, in 2001 to 2011, the amount of these donations declined by 40 percent relative to the amount that these colleges owe.

However unsustainable, this spending, according some college administrators, has continued in an effort to attract more students–the likes of which value such amenities according to research.

3. Spending has outweighed the benefit from increased tuition

At research universities, both public and private–institutions that account for 35 percent of enrolled college students–tuition and spending are both increasing. There’s one problem, however–the two don’t add up.

Even at public research universities, whose net tuition revenue has increased by $3,412 dollars between 2000 to 2010, overall spending totals reached $3,912 per student.

Additionally, private research universities like Harvard and Georgetown have increased their spending by over $12,000 per student in the same time period, and raised their tuition by only $3,200.

Consequently, such universities will have to continue to shift the cost onto students to account for their budget gaps.

The takeaway

While many critics blame rampant spending for the continuing rise of college tuition, some continue to point the finger elsewhere.

According to an interview with U.S. News and World Report, CEO of the Wisconsin Association of Independent Colleges and Universities and a former board member of the National Association of Independent Colleges, Rolf Wegenke, blames a cumbersome bureaucracy.

In the interview Wegenke cites a report (pdf) which centers around burdensome compliance fees that many Colleges are often responsible for paying.

The report, which looked at Hartwick College–a small liberal arts school in upstate New York–showed that the university was mandated to pay about $300,000 in yearly compliance fees.

While significant, this, as the U.S. News article explains, accounts for under 1 percent of Hartwick’s $76 million in operating income.

Whatever the factors are behind ballooning tuition prices, many Americans–namely the 40 million with a median of $33,000 in debt–can agree that tuition, however high it’s gotten, can afford take a leap.

 

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