Keeping up with Modern Society: Rising Cost of Higher Education

Noa Maltzman
May 8, 2017 · 10 min read

SARATOGA SPRINGS, NY —

The Rising Costs

Since 1963, college tuition (tuition, fees room and board) has increased approximately 1,640 percent. College tuition has risen faster than the rate of inflation and faster than health care costs. According to Gordon Wadsworth, author of The College Trap, the cost of higher education has increased over 2 ½ times the inflation rate. Not only is tuition rising but the cost of running a university is also rising.

Tuition data from National Center for Education Statistics and inflation data calculated using 1963–1964 tuition and tuition increase at rate of inflation from CPI Inflation Calculator. Graph by Noa Maltzman.

Higher education has reached such a high price that it is unaffordable for most Americans. A Huffington Post 2013 YouGov Poll found that 53 percent of people agreed that a college education is necessary in order to get ahead in life, but 62 percent disagreed “that public college costs in general are such that most people are able to afford to pay for a college education.”

“Education is the great equalizer in this country. It is the facilitator of the American Dream. People can grow up poor, in an urban or rural setting, but can hope to pull themselves up out of poverty with education,” reported Steve Odland. “Currently in the U.S. the likelihood of earning a bachelor’s degree depends to a large extent on a person’s family income and race,” said former Vassar College President, Catherine Hill.

“What does this mean for the future of the country when your pricing models are not attainable to the majority of the population?” asks Angel Perez, Vice President for Enrollment and Student Success at Trinity College.

Number of full time weeks of minimum wage work needed to pay for the average tuition of a four-year public or private institution. Graph from attn.com.

Today, “when higher education institutions cost 70,000 plus dollars there are less and less people who can pay it and those people who can pay it have a lot of options.” said Perez. If something is not done in regards to the rising costs of higher education, college tuition is going to reach a price that students are not going to be willing to pay. I don’t think people are going to pay 100,000 dollars to go to college, and we are not that far away from that. In about ten years we will be there” said Perez.

Graph from The College Board, “Trends in College Pricing,” 2014, Based on The College Board’s 2014–2015 average cost of tuition, fees, and room and board. The future tuition cost prediction assumes that the average college-cost inflation rate is six percent.

Factors Leading to the Rise

There are many factors that have led to the drastic increase in college tuition. One reason for the increase is that “higher education is trying to keep pace with modern society,” said Perez. What students and faculty expect to find on college campuses today is very expensive and has increased costs for universities. For example, expected quality of information technology (IT) infrastructure and facilities is now more expensive than in the past.

In Malcolm Gladwell’s podcast Food Fight, he compares Vassar and Bowdoin’s food quality and the amount each school spends on financial aid. “Vassar has terrible food. Bowdoin practically has a Michelin star. Two otherwise almost identical schools that on this one measurer couldn’t be more different and why because Bowdoin doesn’t spend nearly as much on financial aid as Vassar does,” said Gladwell. Therefore, Vassar has a higher percentage of low-income students — who are typically aided by Pell Grants, roughly 6,000 dollar Federal grants given to low-income students to help them afford higher education. About one-fifth of the Vassar student body receives Pell Grants compared to roughly 14 percent of the Bowdoin student body. When the former president of Vassar, Catherine Hill, started at Vassar in 2006, just over ten percent of the student body received Pell Grants.

Vassar was recently recognized for making strides in enrolling low-income students and supporting them to graduation by receiving the inaugural Jack Kent Cooke Foundation Cooke Prize for Equity in Educational Excellence.

Gladwell’s podcast, Food Fight, also explores how each time a school spends less on financial aid and does something fancier, it puts Vassar in a spot where the rich kids, on whom Vassar relies on to pay full tuition, room and board fees, are less likely to want to go to Vassar. “Every dollar that you spend on financial aid is a dollar that you don’t have to spend on something else,” said Hill, in Gladwell’s podcast.

Colleges and Universities rely on full-paying students to help offset the costs for those who cannot afford the sticker price (the school’s advertised tuition, room and board). But in order to stay competitive and recruit these wealthier students, these schools must also spend a lot of money to keep up with expectations for high quality college dining and a more beautiful campus. Click here for more comparisons of food quality versus low-income students (number of students on Pell Grants) at other Liberal Art Colleges.

The increase in college tuition also stems from a decrease in public funding for higher education. In the past “higher education was seen as a public good. Government would invest in your education because they knew investing in your education would produce a better society,” said Perez.

Ronald Reagan, as governor of California, long ago promoted the idea that education is a private good. At a press conference on February 28, 1967, then governor Reagan told a crowd that taxpayers should not be subsidizing intellectual curiosity. So slowly but surely, the government started reducing funding for higher education. In recent years, public funding has continued to decline. As of 2016, funding for public two- and four-year colleges was nearly ten billion dollars less than just prior to the Great Recession that began in 2008. From 2008 until the fall of 2012, public funding for higher education declined by roughly 14.5 percent.

Dealing with High Price Tuition

Making college education affordable is a “multi layer approach. Entire responsibility can’t be on colleges or communities or governments,” said Perez. There are many different approaches on how to make college affordable. The 2013 Huffington Post YouGov Poll proposed one way of changing the tuition-pricing model, reflecting views of many college administrators, as Perez notes, that “colleges and universities need a better pricing model.” The poll asked people “would you favor or oppose a plan to replace paying tuition at state colleges and universities with students paying 3% of their income for 24 years.” There was no consensus that this was the right option.

Data from 2013 Huffington Post YouGov Poll. Graph by Noa Maltzman.

Other approaches focus on saving students money based on their course of study, or the amount of time they spend in college. In the future, as costs rise, “I think there will be more students who decide to start their education at less expensive options and transfer rather than stay one place for four years” said Jenny Rickard, President and Chief Executive Officer at The Common Application.

Students can also focus their education on choosing careers that cost less to get a degree in. For example, “careers that only require two year certifications that provide viable employment. I.e. Lab techs, LPN [licensed practical nurse], respiratory therapists etc. may be the way [for students] to start” and then later they can decide to continue their education said Jim LaVigne, Executive Director of Saratoga Sponsor-A-Scholar (a college access program).

As Perez said the entire method cannot be on just the college, community or government, and the “government needs to find some way to show its commitment to higher education.” One way the government makes higher education affordable for many students is by funding the Pell Grant program. The number of students on Pell Grants has increased since the program’s creation in 1973 and so has the amount of each grant. Funding this program is one way that the government can help to show its commitment to higher education. The Trump administration has, however, proposed program cuts that could make higher education unaffordable for more Americans (Click here for my thoughts on why the Pell Grant program should continue to be funded).

Colleges can also do their part in helping to make higher education affordable without changing their pricing model. For example, Rickard thinks that one way more colleges, in the future, will make higher education more affordable will be by offering programs with a shorter time to degree.

Another option for colleges it to “cut back so we can charge less,” suggested Perez. For this to be a successful method, it is likely that all colleges will need to start cutting back because if only a few schools do so, then those that cut back will have a harder time recruiting students. If one school builds a fancier building and another school does not, full paying students who desire the fancier buildings will go to the school that offers them. Therefore the other school, who might have lower tuition due to not having built new buildings and because they cut back, will have a harder time recruiting full paying students.

“If you don’t have a really beautiful ecstatically appealing campus, students in today’s age won’t consider you. Twenty years ago, you didn’t need a beautiful campus to be competitive and recruit students,” said Perez. “We’re trying to update to be competitive in the market,” said Scott Joyner, Vice President for Institutional Advancement at Newberry College in South Carolina.

Vassar is an example of a school that has generally cut back — at the cost of investing less in campus food, in order to offer more financial aid. But Vassar still needs every full paying student they have because “without them everything falls apart financially” and Vassar asks these full paying students “to do without some of the luxuries they were raised with and that’s a hard sell” said Gladwell, in his podcast Food Fight.

Relying on full paying students is not enough for colleges and universities to cover their costs as tuition is lower than actual costs. At Skidmore and many other colleges tuition only covers about 80 percent of the cost for a student to attend. The other about 20 percent comes from donations to the college.

Making Higher Education More Affordable

There are many options for how the United States can work to make higher education more affordable, and this is necessary because as the cost of college rises post secondary education is becoming more important than in the past. Anthony Carnevale and Nicole Smith found that 66 percent of all jobs in the United States require some form of post secondary education or training.

When college tuition costs as much as it does today, it is not only hard for students to afford it but it is “hard for universities to survive” said Perez. It is unknown whether higher education will actually ever reach 100,000 dollars a year like some predict, but if something is not done immediately and the pricing models stay the same it is very likely that college tuition will continue to rise every year.

If tuition keeps rising or even just stays at its current amount, more students will have to start looking at alternative ways in order to be able to afford higher education. During the 2014- 2015 school year, about two-thirds of full time students were on some form of financial aid (grants and scholarships). Approximately 57 percent of this was in the form of grants, and 34 percent was in the form of Federal loans (click here for more on rising student debt). If tuition rises, these numbers are likely to increase, but in the meantime “students have to keep a really open mind about where they go to college,” so that they can find a financially suitable option said Perez. The school down the street or the brand name institution might not be the place where the student gets the best deal.

Students “don’t understand that money is available or how to get it particularly if they come from economically challenged families who don’t have a history of attending college and who balk at the gross number,” said LaVigne. This is why students should “first understand what their goals are for attending college. And then research colleges that offer the kind of education that they seek and that are affordable. They need to do their research on how much a school might actually cost since it is rarely the sticker price” said Rickard.

Low-income families typically “don’t encourage their kids to go [to college] as they don’t realize it’s affordable” said LaVigne. This is why Perez said, students need to “look for help” for the college admissions and financial aid process because “there needs to be a lot of hand holding.”

Other articles that are a part of Noa Maltzman’s Rising Cost of Higher Education Series:

Funding Pell Grants: Creating a Safer Society (Op-ed)

Pell Grants Have Been on the Rise

Is there a Tradeoff Between College Food Quality and Student Diversity?

How Much is Too Much Debt?