Rising Cost of College Tuition in the USA

Introduction

College tuition refers to the price that students are required to pay for attending public or private colleges. Revenue collected from tuition is used to cover some of the costs of running these institutions that are not covered by tax payers, as well as most costs of education and other related expenses. Towards the end of the 20th century, college tuition in the US was increasing at a rate far much higher than the rate of inflation. This was largely because of the rising cost of education and related expenditure as well as reduced tax payer support towards public colleges. Need-based grants funded through tax payer subsidies were also reduced and this move indirectly influenced the cost of tuition in private colleges as well. The result was tremendous, reducing the opportunity of attending college especially among African Americans and Hispanics as compared to the white population. The US system of education suffered a lack of equal opportunity and the issue of college tuition has since become a matter of national importance (Forest and Kinser, 2002, p.684).

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The rise in college tuition in the US

It is public knowledge that the cost of college tuition in the US has been rising at a very alarming rate. For the period stretching over the last three decades, college tuition inflation has been an issue of great concern within families, led to student anxiety, and given rise to congressional investigations. However, a quick solution to the problem doesn’t seem to be forthcoming mainly because this rise in college tuition is not a short term phenomenon, but a process that has been running for almost 25 years. Between the years 2002 and 2003 for example, the cost of college tuition in the US public institutions rose in every state. Massachusetts experienced a 24% increase from USD 3,295 to USD 4,075 while tuition in Texas, Missouri and Iowa increased by 20%. Several other states went through the same process reflecting different rates. But such an increase in college tuition has done little to drive down an increasing demand for higher education in the US. College enrollment in public institutions rose between 2002 and 2003 with over 15 million students enrolling for graduate courses, 65% of them in public institutions (Smart, 2005, p.307).

Tuition constitutes well over 80% of revenue collected in private colleges, and student enrollment is therefore very crucial for the financial stability of such institutions. Student enrollment in public colleges determines the amount of revenue such institutions get and how much support they get from the government. From the 1970s throughout to the 1990s, authorities in such institutions therefore focused very much on student attraction and retention. The cost of tuition in public institutions is relatively low compared to the private colleges mainly because in the US, most of the funding in public colleges comes from state governments. Tuition fees in private colleges vary with institutions and by 2007, top-tier schools like Stanford, Harvard, and Chicago charged tuition fees ranging between USD 32,000 and USD 34,000 per academic year. Revenue collected from tuition is however not sufficient to meet all operational costs of any academic institution and many institutions have been soliciting funds from other sources such as alumni, foundations, corporations and friends to subsidize education costs (OECD, 2007, p.128; Forest and Kinser, 2002, p.191, 271).

Throughout the 1970s, fees and tuition charges for undergraduate courses were relatively stable but the situation began to change in the 1980s when fees and tuition charges took an upward trend, affecting all types of higher education institutions. The cost of college education has risen substantially over the last 10 years and there are no signs that this trend will reverse. It is a reality that has raised great concern over the capacity that elite institutions have in providing learning opportunities to children from moderate and low income families. Selective public universities charge far much less for tuition than private colleges. But a combination of factors such as rising costs, less state support, and the need to increase tuition charges in order to maintain quality program offerings, makes it even less likely that students from the low-income group will enroll at such institutions (Conlin, 2007, p.106, 128).

Explosion in college tuition has over the years, tremendously affected the quality of education in institutions of higher learning. Attending college in prestigious institutions like Harvard and Slippery Rock Universities was quite a different experience in 1960 than it has been after the year 2000. By the year 2000, many college students opted to attend less expensive institutions than was previously the case. Two-year colleges which are far much cheaper have become very popular, a trend that has been accentuated by the emergence of online learning. But those in favor of the US system of higher education may be right to argue that there has been a sharp improvement in the quality of general undergraduate experience on college campuses. Students now enjoy better physical facilities such as air-conditioned learning halls, modern recreation facilities, and bigger and more representative students’ unions. University facilities in the US are said to rival those of exclusive resorts and country clubs. Computer technology has made learning interesting and it is now much easier to get access to college professors through innovations such as internet and email (Vedder, 2004, p.7).

The general cost of higher education has risen drastically over the years and the cost of tuition has gone far much higher than the rise in the average person’s income. Paying for college tuition in the US has almost become a lifetime investment because the larger part of a person’s annual income now goes to college tuition. In 1958 for example, the annual cost of tuition at an institution such as North-Western University was about USD 795, equivalent to 15.6% of an average family’s income. For the average family, it took less than 2 months to earn money that was enough to pay full tuition at North-Western University. By the year 2003, the tuition had risen to about USD 28,404, well over 53.3% of a median family’s annual income. Such a family would now have to spend about 195 days to earn college tuition for one child. But college tuition inflation has led to a sharp increase in scholarship assistance. More students are now receiving assistance in tuition expenses and the number of students paying full tuition is declining. Net charge payments to cover scholarship assistance have increased. But even with these scholarships, the cost of college education has taken an upward trend especially due to other non-tuition costs like accommodation and food. Even with tuition assistance, the financial burden of college education is gradually becoming a reality; and worse still, the burden has outgrown people’s incomes (Vedder, 2004, p. 8, 22).

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Beginning around 1980, the cost of college tuition at four-year public institutions has continually been on the rise for about 24 consecutive years. But such inflation has not been constant. Between 1980 and the early 1990s, tuition inflation stood at about 5% per year, slowing down to 2% between 1995 -2001. Inflation however returned with great intensity at the beginning of the century, with a remarkable rate of 28% between 2001- 2004 (Smart, 2005, p.309). Tuition inflation varies between different types of institutions, with private universities reflecting a higher increase in college tuition than the public universities. This is mainly because majority of two-year institutions whose tuition inflation has been quite low are public entities. Inflation is almost similar for four-year private and public colleges. Institutions that are research-intensive charge high tuition for under-graduate courses in order to cater for other expenses that may not necessarily be related to student instruction. Two-year colleges are primarily teaching institutions and this explains the lower rate of tuition inflation. This has made these institutions attractive to students from low-income backgrounds such that they now choose to attend pre-university courses in public two-year colleges as a means of gaining entry into university colleges (Vedder, 2004, p.10).

Factors that have contributed to tuition inflation

Over a lengthy period of time, the number of college going population, particularly the eighteen to twenty four year olds has risen with the exception of the period between the late 1970s and the 1980s when there was a notable decline. Such a decline led to changes in academic planning and capital budgets because university authorities anticipated a decline in student enrollment. New programs such as adult learning courses were introduced and a lot of capital was spent in marketing expenditures. Student enrollment nevertheless did not decline but the cost of tuition went up because all these expansion expenditures were transferred to the students (Vedder, 2004, p.16-17).

University colleges have continued to engage in increased expenditure and in due course, improvement of public services and research are costing these institutions a considerable amount of dollars while student instruction takes less. Better facilities, technology, and compensation, have accelerated the increase in expenditure; the costs of which are transferred to students by increasing the tuition fees (Smart, 2005, p.333-334). Both public and private university colleges also claim that one of the major causes of increased college tuition is the rise of faculty salaries. Such a claim is however questionable because faculty salaries have reflected an increase of only 0.5% to 1.0% over a period of about 25 years (Ehrenberg and Rizzo, 2004).

For a period of about 160 years, the American economy has undergone substantial growth and the living standard of most Americans has generally improved. Educational requirements for many jobs have also gone up and so has the desire for better education increased in most people. More families are now sending children to college than before and state universities have become more desirable among average citizens. High income parents now compete to send their children to reputable private institutions. An increased demand for higher education has therefore led to tuition inflation because institutions providing the same have had to improve facilities to cater for the rising number of students. But even with these improvements, the quality of education has unfortunately been on the decline. The length of the school years has for example shortened over a period of time, with students now going for up to five years in order to attain a bachelor’s degree mostly because of the class closeouts. Part-time adjunct graduates students or adjunct professors now constitute a better part of instructors as compared to full-time instructors from the senior faculty (Vedder, 2004, p.8, 18-19)

A large proportion of state funding for education goes to student grants and loans as compared to the amount availed to public institutions in support of higher education. This situation has been accelerated by aggressive and gradual movement from granting aid based on need, such that most of the aid that is now availed to students is mostly based on academic merit rather than financial need. Since 1993, many states have gradually implemented these merit programs. College tuition inflation in the private sector has been associated with factors such as rising costs of student services, technology, and financial aid to students by these institutions. Competition among such institutions to outdo each other in every field and the increasing cost of scientific research that research universities have to cater for also contribute to this inflation. This has been made worse by withdrawal of state support from such institutions; a withdrawal that has been associated with increased costs of healthcare that take up most of the state funds. Diminishing support from state governments led public institutions to increase their tuition charges at a rate higher than their private counterparts. But they generated income at a lower level because their previous charges were also low (Ehrenberg and Rizzo, 2004; Smart, 2005, p.331).

Student loans, scholarships and grants have increased. The government has also implemented work-study programs for part-time students and federal assistance for full-time students undertaking undergraduate courses. Examples are such as Perkins Loans, Pell Grants, Stafford Loans and Parents Loans for Undergraduate Students (PLUS). In the period 1992-1999, student borrowing was rising at an annual rate of about 10.9%. By the year 2000, about 58% of all undergraduate students on full-time study were beneficiary to some form of federal assistance. Tax credits to cater for tuition are administered federally while families with college-going children benefit from lower tax liabilities in some states. All these factors have led to increased demand for higher education and in the same way that private insurance, Medicaid and Medicare have affected healthcare services, so have all these factors led to high cost of services in university colleges, the costs of which have been transferred to students through increased tuition costs (Smart, 2005, p.319; Vedder, 2004, p.20-21, 206).

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In many states, students can get pre-paid tuition credits enough to pay for a full semester’s tuition at any of the universities within the state. Such plans openly invite university authorities to increase tuition fees because students who manage to get ample pre-paid credit are perfectly inelastic in their demand fro graduate courses. After all, the state governments have guaranteed to cover the costs of tuition over time. With the number of students desiring graduate courses rising, so does the number of students getting pre-paid credit also rise. Universities are therefore bound to make every incentive to raise tuition because students will be billed for full fees without directly hurting their financial life (Vedder, 2004, p.206).

Conclusion

It is now the third decade and college tuition continues to rise faster than family incomes and overall inflation. Since 1978, tuition inflation has caused great congressional concerns but student enrollment into public colleges has nevertheless continued to grow. Enrollments increase when tuition inflation slows down but when it accelerates again, enrollment appears to accelerate too. As a result, the general assumption that tuition inflation negatively affects enrollment is slowly becoming questionable. Tuition inflation has subsequently become a controversial topic between state and campus leaders. While campus leaders blame the states for reduced state support, state policymakers on the other hand blame college tuition inflation on uncontrolled spending on college campuses. The amount of tuition in any institution results from negotiations by several parties who have special interests and no institution can therefore take the sole blame for tuition inflation (Smart, 2005, p.313, 336).

References

Conlin, S. and Rubenstein, R. (2007). Economic inequality in higher education: Access, persistence and success. New York: Russel Sage Foundation

Ehrenberg, R. and Rizzo, M. (2004). Financial forces and the future of American higher education. AAUP. Publication & Research. Academe 2004 Issues. Web.

Forest, J. and Kinser, K. (2002). Higher education in the United States: An encyclopedia. Santa Barbara, CA: ABC CLIO.

(OECD) Organization for Economic Co-operation and Development (2007). OECD economic surveys: United Sates, vol. 2007, issue 9. Paris, France: OECD Publishing.

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Smart, J. (2005). Higher education: Handbook of theory and research. Warren, MI: Springer.

Vedder, R. (2004). Going broke by degree: Why college costs too much. Washington DC, NY: American Enterprise Institute.

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