As the school season is kicking off, new research has come to light showing that there is a growing number of students in colleges that are reviewing their decision to get a bachelor’s degree.
Today, college tuition is the highest it has ever been. Considering the tuition of colleges from the late 1980s to the 2017/2018 school year, it is clear to see that the cost of a typical undergraduate degree increased by 213% at public schools and by 129% at private schools. This figure was reached after it was adjusted for inflation. And as 45 million Americans are currently drowning in student loan debt of over $1.5 trillion, it begs the question: why are colleges so expensive?
Reasons for growing college costs:
- Growing number of college applicants:
It seems like the high cost of college is fueled by the increase in the number of people who wish to get a degree. According to the Department of Education, colleges in the country experienced a total of 20.4 million students in 2017, over a 5 million increase from 2000.
According to Richard Vedder, an author and distinguished professor of economics emeritus at Ohio University, this is because the rewards offered by obtaining a college degree have expanded and grown over the years. When demand goes up, and supply does not match it, it is sure to raise prices.
And most times, the cost of these high prices are felt solely by the students and their family. In a bid to circumvent this, most people have no choice but to borrow money. According to a report made by the American Academy of Arts & Sciences, between 2000 and 2012, the percentage of students who took out loans increased by 10%. The medium grand loan sum borrowed by students also experienced an increase from $16,500 to $20,400 within the same time period.
- More Aid, Higher Costs
According to Vedder, student borrowers could also be the reason why government financial-aid programs have increased and also why tuition is on the rise as well.
He said “In 1970, financial-aid programs were almost nonexistent. Generally, middle-income people didn’t get money from the federal government; the large majority of students did not.”
In 1978, Congress passed a bill known as the Middle-Income Student Assistance Act. This made all undergraduates regardless of income class eligible for subsidized loans and middle-income students eligible for Pell Grants, according to NASPA, Student Affairs Administrators in Higher Education.
More and more students started applying for financial aid, knowing that students will get this financial-aid money, the university raises fees and takes advantage to capture that themselves.”
According to him, this is a concept referred to as the Bennett Hypothesis named after the former education secretary who held the belief that increased government aid for students could lead to increases in college costs.
- It costs money to pay for college lecturers:
In as much as it costs students money to learn, it also costs money to pay lecturers. According to a professor who spoke with Business Insider, Higher education is a labor-intensive industry that has productivity gains come slowly. He said:
“The primary mechanism for delivering higher education at most institutions are highly educated people. Acquiring and recruiting highly educated faculty and staff costs money, especially in jobs with significant demand outside academia.”
- Like other things in the economy, student services are getting expensive:
Let’s face it; the growing high prices does not stop at education. Today everything costs more than it was a few years ago. And colleges are not immune to this. Beyond the expense of staff salary, costs of services like academic support, personal counseling and healthcare have also increased.
According to a professor who spoke to Business Insider: “These services are always added because of student needs, and most schools, once they begin to offer them, are very reluctant to take them away,” he said, also noting the reallocation from instruction to administration expenses — known as institutional support — and research.
With these in mind, when students were told to rank in ascending order what causes the most pain as regards to college, tuition came in first followed by paying for textbooks. 85% of students said paying for books was more stressful than paying for food, healthcare of rent and some students said they deliberately reduced the number of classes they had to take so as to reduce the cost of books.
According to the CEO of Cengage Michael Hansen, “the survey’s results should be a wake-up call for everybody involved in higher education. This is especially true for the publishing industry, including our own company, as we historically contributed to the problem of college affordability.”
Regrets Over a Degree
For a growing number of American graduates who took out a loan to pay for the rising cost of books and tuition to get that degree, it was not worth it to many students who face high interest rates and high monthly payments, especially for those who cannot get a high-paying job out of school in their field.
This was according to a study done by Varo Money which found out that over a third of recent college graduates said that the degree they received was not worth the sum of which they were not indebted to. The survey also discovered that those still in college showed more optimism about the value of their degree as opposed to their graduate colleges suggesting that the disillusionment may have set in after graduation.
And according to Ira Rheingold, the executive director and general counsel of the National Association of Consumer Advocates (NACA), this is very disheartening news.
“I find it pretty disheartening. If we lived in a nation where college and health care were affordable and jobs provided workers with good wages and benefits, consumers would not be so dependent on credit to live a good life or even simply make ends meet.”
Finally, as the cost college continues to rise and the value of degrees declining in today’s world, is it a matter of time before the majority of students choose to completely circumvent the system completely? When determining whether to go to college or not, it’s important to educate yourself as to whether or not the cost of college is worth it. If you are confident that your education will pay off, then going to school may be worthwhile for you.
It’s important when applying to colleges to look at the financial aid package you are eligible for and how much you will owe in loans, as well as what the median income is for what you want to study. Remember too that budgeting is important when it comes to paying off any debt, including student loans.