Higher education has a bigger price tag than ever – far outpacing our rise in income – and it’s distancing a lot of lower and middle class families from the hopes of sending their kids to college or university. That’s the consensus of new data published by the reputable think tank, the Pew Institute, among others. But just how high have college costs soared, how are we still paying them, and why?
What’s not under dispute is that higher education still pays off in terms of job and income prospects – according to the aforementioned Pew, Americans ages 25 to 32 who were college graduates earned $17,500 more on average than their peers who were only high school graduates. Over the working life of an adult, that gap probably only widens – a huge testament to why we still endeavor to send our children to a university campus in the fall.
First, a look back at the context of college education 50+ years ago, post World War II. With GI’s returning from war and the population booming, universal access to public education was considered the ladder to pull yourself to a better life. A college degree (sprinkled with a lot of hard work and loyalty to/from the same employer for life) was the key to open the American Dream – financial comfort, security, home ownership, and the never-ending entitlement of each generation being more prosperous than the last. It didn’t matter who you were, how much money your parents had, or where you came from – education was seen as a birthright for all who wanted to take advantage, and especially by lower and middle class families.
Even 20 years ago, less than 50% of college graduates received their diplomas with any student loans to debt to pay, and it was less than $10,000 on average (adjusted for inflation.) Fast forward to 2013-2014 and the number of college graduates with significant debt has skyrocketed. The latest numbers for the 2012-2013 school year show that about 70% of college graduates have student loans and other debt to pay from their education. Even more telling is that each student with loans has an average of nearly $30,000, according to the Institute for College Access and Success.
However, there is more to the story. At quick glance, it would seem that the cost of college tuition has actually slowed its ascent, or is actually plateauing. Last year, the average cost of four-year public colleges went up only by 2.9%, which was the smallest percentage increase since the middle of the 1970’s.
Not so fast. While tuitions may be leveling off after a precipitous thirty-year climb, the cost of college is still shooting skyward. Factor in fees, school supplies, room and board, books, etc., and it’s easier to see why more would-be students are getting squeezed out of a college education. When factoring in tuition AND those various essential fees, the average cost of a public four-year university has increased 27% over inflation over a five-year period, from the 2008-9 school year to 2013-14.
When looking at college costs, it’s best to consider what experts call, “Net Cost.” That is, tuition plus those fees we discussed, less the amount of aid and grants available to help students in need, amounting to their net out-of-pocket expenses. This is a significant distinction because ever since the GI Bill was created, the United States government has been in the business of incentivizing college education through grants and aid. Most common are Pell Grants, Academic Competitiveness Grants, and school-dispensed financial aid. In theory, this makes college education possible and affordable for millions of deserving kids ever year. In reality, the financial aid system has been described as, “Arcane and inconsistent,” in a recent report by National Public Radio. Applicants must show a, “demonstrated need,” to gain financial aid and grants, yet the economic math to qualifying still allows just as many middle class families to fall through the cracks as those that qualify.
During the recent years of our recession, rolling into 2008-2009, the White House pumped huge money into public education support as a way to offset stalled incomes shutting the door on higher education. Pell Grants alone doubled from 2008-9 to 2010-2011, an astronomical number. So even though the country was feeling the pinch, the cost of higher education was like a leaking boat with a lot of people bailing water out at once – still afloat, but destined to sink eventually. Since 2008-9, Federal grants have been decreased by at least 10%, contributing to the feeling of seasickness among families looking at a tuition bill, once again.
No matter how you slice the cost-of-education pie, we’re left with a disturbing reality – the cost of education, adjusted for inflation, has more than tripled between 1973 and 2013. Current data shows that the cost of a four-year, in-state public university or college averages $8,893. The corresponding cost for a private university is $30,090, a 3.8% increase since only a year ago.
