They are called the “50K Club” – the universities in this country that currently charge a sticker price of over $50,000 to students in tuition and room and board fees. And the club currently numbers at well over 100 members. Scary, right? Not just for students but for the parents who are often footing the bill.
The cost of college has been rising astronomically in recent years. The College Board estimates that college tuition fees for four-year schools have increased by an average annual rate of 4.3% in the past ten years. (And that’s after accounting for inflation – i.e. the actual rate that colleges have increased their tuition has been nearly double that figure year after year.)
You can do the math. That means if you’re older sibling went to a school with a tuition price of $10,000 ten years ago, you’d have to shell out more than $15,000 today for the same education.
But in truth, just looking at the sticker price of a college education does not give the full story. The issue of college affordability is actually much more complex. The College Board puts out a study each year analyzing the trends of college costs. They find that the on-paper cost of a college degree often fails to tell the whole story.
For instance, after accounting for all grant aid (financial aid that does not include loans) a student at a four-year public university is only paying a few hundred dollars more for a degree this year than he or she would have ten years ago, after factoring in inflation, of course.
For students of private schools, the picture becomes even rosier: the average real cost, or net cost, of a college education has actually gone down slightly. It’s a testament to the increasingly high priority many schools are placing on giving students adequate financial assistance.
So is it smooth sailing from now on for families concerned about how to pay for their children’s’ college degrees?
Not quite, and one single statistic proves it: the rise of student debt
Dr. Richard Vedder of Ohio University and the American Enterprise Institute is one of the nation’s leading economists on the issue of college affordability, and he is very concerned over the rise of student debt.
“As an average, most students are in $24,000 in debt, while just a few years ago that figure was $19,000,” he said. “Moreover, I think those figures may be low. They don’t record certain informal relationships going on.”
So what is the cause of all of this student debt?
First and foremost, students still need to find a way to pay for the out-of-classroom costs: a place to stay, food to eat, books to read, clothes to wear, etc. These costs are continuing to rise regardless of a school’s pledge to make college affordable.
But secondly, because demand for a college degree continues to increase in the 21st century, the ability for lower and middle-class families to pay for such an education has been decreasing.
“College tuition charges are rising faster than people’s incomes are rising. Look at the cost of college as it relates to, say, medium family income. And most times, when doing the calculations, the numbers are still going up,” said Vedder.
It is a troubling but very real statistic. In the past ten years the real incomes for the average American families have dropped by 7%. For the bottom fifth of the income bracket, the drop in income is close to 11%. Thus, just as more and more lower and middle-class youth see the need for a college education, the price seems increasingly out of reach.
Is there a solution? Dr. Vedder thinks that colleges should do more than provide larger financial aid packages and get serious about cutting costs.
Colleges can get away without making serious cuts because “they have few incentives to do so. They are a protected industry, one that is subsidized heavily by the government and private philanthropy,” he said.
All of this in spite of the fact that the educational model has not changed even while colleges increase spending. As Vedder said: “We teach almost the same thing as Aristotle did back in the day, now we just have PowerPoint.”