College tuition
Encyclopedia
The term college tuition refers to fees that students have to pay to colleges in the United States
. Pay increases in the U.S. have caused chronic controversy since shortly after World War II
. Except for its military academies, the U.S. federal government does not directly support higher education
. Instead it has offered programs of loans and grants, dating back to the Morrill Act
during the U.S. Civil War
and the "G.I. Bill" programs implemented after World War II
. Developed countries
whose national governments directly support higher education
tend toward more moderate patterns of change in college
tuition
s and different forms of controversy.
over to students in the form of higher tuition. This has mostly applied to public universities which in 2011 for the first time have taken in more in tuition than in state funding and had the greatest increases in tuition. Implied from this shift away from public funding to tuition is privatization, although the New York Times reports such claims are exaggerated.
would otherwise support for students without the ability to take out a loan, then the tuition is 'bid up' to the new, higher, level that the student can now afford with loan subsidies. One rebuttal to that theory is the fact that even in years when loan limits have not risen, tuition has still continued to climb. However, that may not disprove this proposed cause: It may simply mean that other factors besides 'loan limit' increases played a part in the increases in tuition.
during the years from 1940 to 2000 and U.S. dollars adjusted to the year 2000 by using the U.S. Consumer Price Index
series.
Tuition at the University of Toronto
tracked close to inflation rates during the entire period. The University of Iowa
had rapid increases in tuition during the 1950s and then tracked close to inflation rates since that time. The Massachusetts Institute of Technology
(MIT), among the most expensive of the private U.S. educational institutions throughout the 20th century, had continual large tuition increases, dipping slightly below inflation rates only during the World War II years.
Over the 60-year period charted, the inflation-adjusted, long term, annual increases in tuition at these institutions were 0.4 percent for the University of Toronto, 1.4 percent for the University of Iowa, and 2.1 percent for MIT. Other institutions in the same categories differ in details but not in general patterns. The results of the trends are that over the 60 years shown, adjusted for inflation, the tuition at the University of Iowa increased by a factor of 2.3 and that at MIT by a factor of 3.6, while tuition at the University of Toronto rose only about 30 percent.
series. Data were not available for years 1994, 1995 and 1999.
During the 11-year period charted, both public and private, nonprofit colleges regularly posted tuition increases well above inflation rates. Peak increases for private colleges were in 1997, after the U.S. economy began booming growth. Peak increases for public colleges were in 2003, after state budgets supporting most of them were crimped by a sharp economic recession. Over this period, annual, inflation-adjusted tuition increases at public colleges averaged 4.0 percent, while those at private, non-profit colleges averaged 3.5 percent. Cumulative results over this period are average public tuitions growing 53 percent above inflation, and average private, nonprofit tuitions growing 47 percent above inflation. As of 2004, private, nonprofit colleges cost on average 3.3 times as much as public colleges attended by residents of their states.
The following graph shows the inflation rates of general costs of living (for urban consumers; the CPI-U), medical costs (medical costs component of the consumer price index
(CPI)), and college and tuition and fees for private four-year colleges (from College Board
data) from 1978 to 2008. All rates are computed relative to 1978.
Cost of living increased roughly 3.25-fold during this time; medical costs inflated roughly 6-fold; but college tuition and fees inflation approached 10-fold. Another way to say this is that whereas medical costs inflated at twice the rate of cost-of-living, college tuition and fees inflated at four times the rate of cost-of-living inflation. Thus, even after controlling for the effects of general inflation, 2008 college tuition and fees posed three times the burden as in 1978.
According to "College Board", the average tuition price for a 4-year public college in 2008-2009 is now $6,585 compared to 2004 where the price was slightly above $5,000. The average price of in-state tuition vs out-of-state tuition for 2008-2009 was $6,585 for a in-state 4-year college to $17,452 for out-of-state 4 year college (collegeboard.com).
sectors. These trends are sources of continuing controversy in the United States over costs of higher education and their potential for limiting the country's achievements in democracy, fairness and social justice.
Today, some companies offer tuition reimbursement to students.
debt. In the 2007-2008 National Postsecondary Student Aid Study (NPSAS), the median cumulative debt among graduating 4-year undergraduate students was $19,999; one quarter borrowed $30,526 or more, and one tenth borrowed $44,668 or more. In fact, for the first time in the history of America, 'Student Loan' debt has surpassed 'Credit Card' debt.
There is substantial evidence that students are still getting good value for their investment in an education. Since the mid-1980s, education has played a large part in potential wages, with bachelor's degree holders taking home an average of 38% more than those with only a high school diploma. While college-educated workers' wages have increased over the past two decades, those with only a high school education have seen decreases in annual salaries in the same time period.
There is also substantial evidence that students are not getting good value for their investment in an education. Some colleges and universities in the United States
are now participating in grade inflation
. Some economists believe that too many people attend college. Not all positions require an individual to obtain a college degree. College students who have acquired a burden of college debt often risk defaulting on their student loans which can lower the individual's credit score. Some employers will be reluctant to hire an individual with bad credit.
The U.S. spends more on education than most other developed countries, and the U.S. has a disproportionate share of the top-ranked universities in the world.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Pay increases in the U.S. have caused chronic controversy since shortly after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. Except for its military academies, the U.S. federal government does not directly support higher education
Higher education
Higher, post-secondary, tertiary, or third level education refers to the stage of learning that occurs at universities, academies, colleges, seminaries, and institutes of technology...
. Instead it has offered programs of loans and grants, dating back to the Morrill Act
Morrill Land-Grant Colleges Act
The Morrill Land-Grant Acts are United States statutes that allowed for the creation of land-grant colleges, including the Morrill Act of 1862 and the Morrill Act of 1890 -Passage of original bill:...
during the U.S. Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
and the "G.I. Bill" programs implemented after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. Developed countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
whose national governments directly support higher education
Higher education
Higher, post-secondary, tertiary, or third level education refers to the stage of learning that occurs at universities, academies, colleges, seminaries, and institutes of technology...
tend toward more moderate patterns of change in college
College
A college is an educational institution or a constituent part of an educational institution. Usage varies in English-speaking nations...
tuition
Tuition
Tuition payments, known primarily as tuition in American English and as tuition fees in British English, Canadian English, Australian English, New Zealand English and Indian English, refers to a fee charged for educational instruction during higher education.Tuition payments are charged by...
s and different forms of controversy.
Bubble Theory
The view that higher education is a bubble is controversial. Most economists do not think the returns to college education are falling. In a financial bubble, assets like houses are sometimes purchased with a view to reselling at a higher price, and this can produce rapidly escalating prices as people speculate on future prices. An end to the spiral can provoke abrupt selling of the assets, resulting in an abrupt collapse in price — the bursting of the bubble. Because the asset acquired through college attendance — a higher education — cannot be sold (only rented through wages), there is no similar mechanism that would cause an abrupt collapse in the value of existing degrees. For this reason, many people find this analogy misleading. However, one rebuttal to the claims that a bubble analogy is misleading is the observation that the 'bursting' of the bubble are the negative effects on students who incur student debt, for example, as the American Association of State Colleges and Universities reports that "Students are deeper in debt today than ever before...The trend of heavy debt burdens threatens to limit access to higher education, particularly for low-income and first-generation students, who tend to carry the heaviest debt burden. Federal student aid policy has steadily put resources into student loan programs rather than need-based grants (see graph), a trend that straps future generations with high debt burdens. Even students who receive federal grant aid are finding it more difficult to pay for college."Cost shifting and Privatization
One proposed cause of increased tuition is the reduction of state and federal appropriations to colleges thus making them shift the costCost-shifting
Cost-shifting is either an economic situation where one group underpays for a service resulting another group overpaying for a service or where one group pays a smaller share of costs than before resulting in another group paying a larger share of costs than before...
over to students in the form of higher tuition. This has mostly applied to public universities which in 2011 for the first time have taken in more in tuition than in state funding and had the greatest increases in tuition. Implied from this shift away from public funding to tuition is privatization, although the New York Times reports such claims are exaggerated.
Student Loan
Another proposed cause of increased tuition is U.S. Congress' occasional raising of the 'loan limits' of student loans, in which the increased availability of students to take out deeper loans sends a message to colleges and universities that students can 'afford more,' and then, in response, institutions of higher education raise tuition to match, leaving the student back where he began, but deeper in debt. Therefore, if the students are able to afford a much higher amount than the free marketFree market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
would otherwise support for students without the ability to take out a loan, then the tuition is 'bid up' to the new, higher, level that the student can now afford with loan subsidies. One rebuttal to that theory is the fact that even in years when loan limits have not risen, tuition has still continued to climb. However, that may not disprove this proposed cause: It may simply mean that other factors besides 'loan limit' increases played a part in the increases in tuition.
Lack of consumer protection
A third, novel, theory claims that the recent change in federal law removing all standard consumer protections (truth in lending, bankruptcy proceedings, statutes of limits, the right to refinance, adherence to usury laws, and Fair Debt & Collection practices, etc.) strips students of the ability to declare bankruptcy. This is especially true because the government, if it is the lender or guarantor of the loan, has the ability to garnish the borrower's wages, tax return, and Social Security Disability income without a court order. Some have called the Federal Government 'predatory' for making loans which will have such a high default rate, since the default rate for Student Loans is projected to reach 46.3% of all federal loans disbursed to students at for-profit colleges in 2008.Additional factors
Other factors that have been implicated in increased tuition include the following:- The practice of 'tuition discounting,' in which a college awards financial aid from its own funds. This assistance to low-income students by the college or university means that 'paying' students have to 'make up' for the difference: Increased tuition. This factor becomes more pronounced in modern times, since more students nowadays are going to college, which means that there are less State and Federal grant funds available per student.
- According to Mark Kantrowitz, a recognised expert in this area, "The most significant contributor to tuition increases at public and private colleges is the cost of instruction. It accounts for a quarter of the tuition increase at public colleges and a third of the increase at private colleges."
- Kantriwitz' study also found that "Complying with the increasing number of regulations – in particular, with the reporting requirements – adds to college costs," thus contributing to a rise in tuition to pay for these additional costs.
Recommendations
Based on the available data, a number of recommendations to address rising tuition have been advanced by both experts and consumer and students' rights advocates:- Colleges and universities should look for ways to reduce costs of instructor and administrator expenditures (e.g., cut salaries and/or reduce staff).
- State and Federal governments should increase appropriations, grants, and contracts to colleges and universities.
- Federal, state, and local governments should reduce the regulatory burden on colleges and universities.
- The Federal Government should enact partial or total loan forgiveness for students who have taken out student loans.
- Federal Lawmakers should return standard consumer protections (truth in lending, bankruptcy proceedings, statutes of limitations, etc.) to Student Loans which were removed by the passage of the Bankruptcy Reform Act of 1994 (P.L. 103-394, enacted October 22, 1994), which amended the FFELP (Federal Family Education Loan Program).
- Cut lender subsidies, decrease student reliance on loans to pay for college, and otherwise reduce the 'loan limits' to limit the amount a student may borrow.
- Regulatory or legislative action to lower or freeze the tuition, such as CanadaCanadaCanada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
's tuition freezeTuition freezeTuition freeze is a government policy restricting the ability of administrators of post-secondary educational facilities to increase tuition fees for students. Although governments have various reasons for implementing such a policy, the main reason cited is improving accessibility for working-...
model, should be enacted by federal lawmakers:
- More research should be done: Recognised financial expert, Mark Kantrowitz, issued the following recommendations:
-
-
- "The National Center for Education Statistics should increase the frequency of the National Postsecondary Student Aid Study to annual, from triennial, in order to permit more timely tracking of the factors affecting tuition rate increases. Likewise, NCES (National Center for Education Statistics) should take steps to improve the efficiency of the data collection and publication for the Digest of Education Statistics, so that all tables will include more recent data. The most recent data listed in some tables is five years old."
-
-
-
- "The US Department of Education should study the relationship between increases in average EFC (Expected Family Contribution) figures and average tuition rates. In addition, it would be worthwhile to examine how historical average EFC figures have changed relative to family income when measured on a current and constant dollar basis for each income quartile."
-
- Lastly, in order to offset the costs of tuition, some colleges help students in job searches and job placement after graduation.
Historical trends
The first chart compares standard undergraduate annual tuition and fees charged by major U.S. public, U.S. private and Canadian public 4-year college, showing both current U.S. dollarsUnited States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
during the years from 1940 to 2000 and U.S. dollars adjusted to the year 2000 by using the U.S. Consumer Price Index
Consumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...
series.
Tuition at the University of Toronto
University of Toronto
The University of Toronto is a public research university in Toronto, Ontario, Canada, situated on the grounds that surround Queen's Park. It was founded by royal charter in 1827 as King's College, the first institution of higher learning in Upper Canada...
tracked close to inflation rates during the entire period. The University of Iowa
University of Iowa
The University of Iowa is a public state-supported research university located in Iowa City, Iowa, United States. It is the oldest public university in the state. The university is organized into eleven colleges granting undergraduate, graduate, and professional degrees...
had rapid increases in tuition during the 1950s and then tracked close to inflation rates since that time. The Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
(MIT), among the most expensive of the private U.S. educational institutions throughout the 20th century, had continual large tuition increases, dipping slightly below inflation rates only during the World War II years.
Over the 60-year period charted, the inflation-adjusted, long term, annual increases in tuition at these institutions were 0.4 percent for the University of Toronto, 1.4 percent for the University of Iowa, and 2.1 percent for MIT. Other institutions in the same categories differ in details but not in general patterns. The results of the trends are that over the 60 years shown, adjusted for inflation, the tuition at the University of Iowa increased by a factor of 2.3 and that at MIT by a factor of 3.6, while tuition at the University of Toronto rose only about 30 percent.
Recent trends
This chart compares average undergraduate tuition and fees charged by about 600 U.S. public and 1,350 U.S. private, non-profit 4-year colleges during years from 1993 through 2004., both unadjusted and adjusted to the year 2004 by using the U.S. Consumer Price IndexConsumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...
series. Data were not available for years 1994, 1995 and 1999.
During the 11-year period charted, both public and private, nonprofit colleges regularly posted tuition increases well above inflation rates. Peak increases for private colleges were in 1997, after the U.S. economy began booming growth. Peak increases for public colleges were in 2003, after state budgets supporting most of them were crimped by a sharp economic recession. Over this period, annual, inflation-adjusted tuition increases at public colleges averaged 4.0 percent, while those at private, non-profit colleges averaged 3.5 percent. Cumulative results over this period are average public tuitions growing 53 percent above inflation, and average private, nonprofit tuitions growing 47 percent above inflation. As of 2004, private, nonprofit colleges cost on average 3.3 times as much as public colleges attended by residents of their states.
Disproportional inflation of college costs
"Disproportional inflation" refers to inflation in a particular economic sector that is substantially greater than inflation in general costs of living. This kind of inflation for medical costs in recent decades is well known. However, that of college tuition and fees exceeds that of medical costs.The following graph shows the inflation rates of general costs of living (for urban consumers; the CPI-U), medical costs (medical costs component of the consumer price index
Consumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...
(CPI)), and college and tuition and fees for private four-year colleges (from College Board
College Board
The College Board is a membership association in the United States that was formed in 1900 as the College Entrance Examination Board . It is composed of more than 5,900 schools, colleges, universities and other educational organizations. It sells standardized tests used by academically oriented...
data) from 1978 to 2008. All rates are computed relative to 1978.
Cost of living increased roughly 3.25-fold during this time; medical costs inflated roughly 6-fold; but college tuition and fees inflation approached 10-fold. Another way to say this is that whereas medical costs inflated at twice the rate of cost-of-living, college tuition and fees inflated at four times the rate of cost-of-living inflation. Thus, even after controlling for the effects of general inflation, 2008 college tuition and fees posed three times the burden as in 1978.
According to "College Board", the average tuition price for a 4-year public college in 2008-2009 is now $6,585 compared to 2004 where the price was slightly above $5,000. The average price of in-state tuition vs out-of-state tuition for 2008-2009 was $6,585 for a in-state 4-year college to $17,452 for out-of-state 4 year college (collegeboard.com).
Economic concerns
Long-term price trends make higher education an especially inflationary sector of the U.S. economy, with tuition increases in recent years sometimes outpacing even explosive health careHealth care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
sectors. These trends are sources of continuing controversy in the United States over costs of higher education and their potential for limiting the country's achievements in democracy, fairness and social justice.
Today, some companies offer tuition reimbursement to students.
Social concerns
Besides economic effects of rapidly increasing debt burdens placed on students, social ramifications are felt. One of these is the increase in suicides directly attributable to the stress related to distressed and defaulted student loans.Student loan debt
A closely related issue is the alarming increase in student borrowing to finance college education and resulting student loanStudent loan
A student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education...
debt. In the 2007-2008 National Postsecondary Student Aid Study (NPSAS), the median cumulative debt among graduating 4-year undergraduate students was $19,999; one quarter borrowed $30,526 or more, and one tenth borrowed $44,668 or more. In fact, for the first time in the history of America, 'Student Loan' debt has surpassed 'Credit Card' debt.
There is substantial evidence that students are still getting good value for their investment in an education. Since the mid-1980s, education has played a large part in potential wages, with bachelor's degree holders taking home an average of 38% more than those with only a high school diploma. While college-educated workers' wages have increased over the past two decades, those with only a high school education have seen decreases in annual salaries in the same time period.
There is also substantial evidence that students are not getting good value for their investment in an education. Some colleges and universities in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
are now participating in grade inflation
Grade inflation
Grade inflation is the tendency of academic grades for work of comparable quality to increase over time.It is frequently discussed in relation to U.S. education, and to GCSEs and A levels in England and Wales...
. Some economists believe that too many people attend college. Not all positions require an individual to obtain a college degree. College students who have acquired a burden of college debt often risk defaulting on their student loans which can lower the individual's credit score. Some employers will be reluctant to hire an individual with bad credit.
The U.S. spends more on education than most other developed countries, and the U.S. has a disproportionate share of the top-ranked universities in the world.
See also
- EdFundEDFUNDEdFund is the United States' second largest provider of student loan guarantee services under the Federal Family Education Loan Program . It is organized as a non-profit public benefit corporation. EdFund offers students and their families a wide range of information on the value of higher...
- Free educationFree educationFree education refers to education that is funded through taxation, or charitable organizations rather than tuition fees. Although primary school and other comprehensive or compulsory education is free in many countries, for example, all education is mostly free including...
- Higher education bubbleHigher education bubbleThe higher education bubble is a speculative boom and bust phenomenon in the field of higher education. According to the theory, while college tuition payments are rising, the rate of return of a college degree is decreasing, and the soundness of the student loan industry may be threatened by...
- Higher Education Price IndexHigher Education Price IndexThe Higher Education Price Index is a measure of the inflation rate applicable to United States higher education; more precisely, the increase in costs in a defined basket of goods and services typically purchased by institutions of higher education...
- Post-secondary education
- Private universityPrivate universityPrivate universities are universities not operated by governments, although many receive public subsidies, especially in the form of tax breaks and public student loans and grants. Depending on their location, private universities may be subject to government regulation. Private universities are...
- Student benefitStudent benefitStudent benefits are transfer payments that are given to students for purposes of full-time study, and require progress in studies, or obtaining academic credits. Student benefits are found in countries where education is free of charge, e.g. Finland and Sweden...
- Student debtStudent debtStudent debt is a form of debt that is owed by an attending, withdrawn or graduated student to a lending institution. The lending may usually be a student loan, but debts may be owed to the school if the student has dropped classes and withdrawn from the school Student debt is a form of debt that...
- Student loans in the United StatesStudent loans in the United StatesWhile included in the term "financial aid," higher education loans differ from scholarships and grants in that they must be paid back. They come in several varieties in the United States:...
- Tuition agencyTuition agencyA tuition agency is a commercial organisation which specialises in introducing tutors to students requiring help in the academic area. Tuition agencies exist largely due to the problems parents and students face in finding a specialist who can help them with the study of one or more specific...
- Tuition centerTuition centerTuition center is a special term for private educational institutions; they are especially abundant and ubiquitous in Malaysia,India,The Middle East and Singapore. Many school teachers earn their supplementary income through tuition centers and agencies...
- Tuition fees
- Tuition freezeTuition freezeTuition freeze is a government policy restricting the ability of administrators of post-secondary educational facilities to increase tuition fees for students. Although governments have various reasons for implementing such a policy, the main reason cited is improving accessibility for working-...
External links
- "College, Inc.", PBS FRONTLINE documentary, May 4, 2010
- U.S. Dept. of Education