The trend of rising college costs is alarming – most recently exemplified by Vanderbilt University's staggering admission letter quoting an annual expense nearing $100K for students.
While an eye-popping figure, this rise is part of a years-long and nationwide trend: “between 1980 and 2020, the average price of tuition, fees and room and board for an undergraduate degree increased 169%, according to a recent report from the Georgetown University Center on Education and the Workforce.”
Many factors have contributed to higher education inflation, including the following five:
Rising salaries in higher education: Economics professors Robert B. Archibald and David H. Feldman point to a concept they call “cost disease.” Namely, while industries like manufacturing benefit from economies of scale, colleges, often still involving ten-student seminars, largely do not, without compromising quality.
More support services: Colleges are supporting students with mental health, help securing needs such as food and housing, academic advising, and career advising.
Federal programs favor existing players: The establishment of new colleges could increase the number of spots for students, and make college more accessible and less expensive. However, the college accreditation process –which is controlled by existing colleges – is stacked against new players, meaning very few new colleges succeed.
Increasing housing costs: New dorms feature perks like “swimming pools and granite countertops” which have contributed to “the least expensive bed increas[ing] by a median of 70% in today’s dollars” according to a Wall Street Journal study of 12 public universities.
Administrative bloat: According to Penn’s student newspaper, the Daily Pennsylvanian, “the number of full-time, non-medical school administrators at Penn over the past 20 years increased by 78% — compared to a 40% increase in full-time, non-medical faculty” – reflecting a nationwide trend.
But is this rise in tuition sustainable? Some headlines suggest, no.
Other Colleges Drastically Reducing Fees by 50%+
While college tuition has spiked in the past decade, the past 5 years have seen a significant shift: growth rates have finally slowed since 2019. Even more striking, some colleges, particularly smaller private colleges, are reversing course: Colby-Sawyer College opted for a “tuition reset,” cutting its official tuition for the 2023-24 academic year by 62%. Other school have engaged in similar tactics, from Lasell College in Massachusetts to Mills College in California.
The reasons are twofold: slashed tuition prices more accurately reflect what students are actually paying, and many schools are struggling to fill seats. Lesser-known colleges are facing serious financial pressure, with a dwindling pool of college-age students and increasing skepticism about the value of a college degree vis-a-vis its cost. But perhaps more important is the discrepancy between sticker prices – the prices listed on college admissions websites – and the actual prices students pay for college, after factoring in financial aid and merit scholarships.
Whether top schools will continue increasing tuition at the rate they have over the past decade is up for debate: new-lows in acceptance rates reflect continued high demand for top degrees, while increasingly generous financial aid packages and student loan debt cancellations make college more affordable than sticker prices suggest for the students who are most in need. Nonetheless, as tuition rates show a slow-down, we may finally be at a breaking point, and the slowdown may extend through more challenging economic conditions. While we can’t predict the future, the most important thing is for students and families to prepare for the various possible outcomes.
For students applying to college, financial-fit – and preparedness – is more important than ever
College expenses have become a labyrinth, from skyrocketing prices to the disparity between listed prices and actual payments. But despite the intimidating figures, many students benefit from substantial financial aid packages, significantly reducing their out-of-pocket expenses.
Accessing those financial aid packages is perhaps more complicated than it ever has been. Despite a stated intent to simplify college financial aid, the federal government has significantly delayed financial aid decisions this year, with significant impacts on students, many of whom have had to accept or reject college acceptance decisions without knowledge of their financial aid package. The delay has left colleges and students scrambling – particularly students who are low-income. With more uncertainty, the chances of students attending college dropped for many.
While the FAFSA delay will hopefully be resolved by the next admissions cycle, families can take several steps to prepare for college admissions, and the earlier they start, the better:
1. Saving Early
Starting to put away money for college early can help families prepare for college expenses and expand students’ options. Moreover, families can work to understand tax-advantaged options like 529 savings plans
2. Researching Colleges’ “Financial Fit”
More and more, families are considering not just the best “fit” college from an academic or personal perspective, but also a financial one. Families can use colleges’ admissions websites to learn about tuition, but should note that the “sticker price” is rarely the full story. Students can check their eligibility for financial aid by using “net price calculators” for each school on the Common App website, or college admissions websites. Students can also learn about merit scholarship options on college admissions websites.
3. Tracking Financial Aid Application Processes and Deadlines
FAFSA, and colleges’ own financial aid processes, which often rely on the federal program as a data source, is more confusing than ever, meaning it’s key for students and their families to stay up to date with deadlines and changes.
4. Identifying Scholarships, Student Jobs, and Loans
Paying for college is increasingly dependent on more than savings, with 70% of college undergraduate students taking on education debt by the time they graduate. By applying to private scholarships – searchable on several websites including through the CollegeBoard – researching and applying to student job opportunities on campus and over the summer, and understanding loan options – including subsidized federal or college sponsored loans, students can help put a college education within reach.
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