Recession Special - The Truth About Affording The Rising Cost of College (Part I)

Although I admit I'm not a financial aid expert, I am an expert in college admissions, which essentially means that I'm adept at guiding students and parents through the increasingly complex (and costly) college admissions process. Before you can even begin to consider the "will my child get in to her top choice college?" question, it's impossible not to reflect on the cost of attending college. In fact, you have probably been thinking about this since she was in diapers and - hopefully--saving some money for that very occasion! So, when your child starts researching colleges, you should get online next to her and start your own research on the various costs of those institutions she loves. Better yet, come up with some comparable but less expensive colleges to add to her list. In this uncertain economy, I would wager that almost all of us could benefit from taking a hard look at the cost of college.

College costs are rising. This is no revelation and I sincerely hope you're not shocked that college costs are escalating at more than twice the annual rate of inflation. This year alone the average cost of attending college has increased by more than six percent at both public and private colleges. According to the College Board, the average cost of attending a private four-year college is $23,712 (+6.3% from last year) and the cost of attending a public four-year college is $6,185 (+6.6% from last year). Regrettably, federal appropriations have not kept pace with the increasing cost of college. Over the past decade, they have declined from 66% to 58% of the total funds used to help finance a college education. Did you know that a college may spend one-fifth or more of its operating budget on student aid? Thus, many colleges have had to implement their own methods of paying for requisite research and financial aid and, in doing so, must increase tuition to make this possible. As a result, many students are turning to non-government loans to help pay for college; over the past decade, funding from private loans has increased from 3% to 12%.

To make matters worse, there are simply no incentives for colleges to cut costs, especially when considering the pressure from the public and other institutions to improve their students' educational experiences. They have to keep up with the Joneses to remain competitive with other comparable colleges. So, college administrators must develop ways to improve facilities, programs and endowments. As I tour colleges across the country, many institutions are quick to flaunt new research facilities, residence halls, extended library and computer lab hours, and smaller classes with top-notch faculty. But very few schools mention anything about cutting costs or reducing tuition. Finally, as businesses, universities are not immune to the increasing costs of employees' salaries, health care and retirement benefits, even fuel costs. The more they offer to students, faculty and employees, the more tuition will rise.

The aforementioned figures are alarming, to be sure. But before you reach for the Xanax, keep in mind that, according to the College Board, only 6% of students attend a college where tuition and fees are higher than $33,000. And 22% of students attend two-year public institutions where the average cost is only $2,361.

Any comprehensive college search website should note a university's current tuition. The key, though, is not to get too comfortable with the university's sticker price before taking a look at the total cost of applying to and attending college. It's not just tuition, room and board. Unfortunately, I must ask you, politely, to wait for my comprehensive guide to college costs (itemizing the final price tag and advising on possible savings) until the next blog.

Comments

[JMB378]

We cannot afford to wait to fix the economy before we consider our children's education. With more students attending university than ever before, high education has certainly become more of a necessity in the modern world's increasingly competitive job market (especially when compared to college matriculation only fifty years ago). And that shouldn't be cause for concern. Don't be discouraged ceu. There are a lot of resources available to today's capable kids.

Perhaps we can look forward to that in the next blog?

[collegeanalyzer]

I agree!!! If you have a will to get into school there is a definately a way. Life is only getting more competitive and specialized. If you don't have the training and the accreditations, no one is going to give you the chance. The more kids we have in college now the better!

[ceu]

You probably won't see this but....
I'm not discouraged. I've had two kids in colleges that I couldn't afford - and a third applying to colleges I can't afford. One was at a school whose annual costs & fees came to close to $50K (one of the erstwhile Seven Sisters). My part of the bill? Less than 10%. I was nervous about her applying there because of the cost - no way could I pay - but she definitely belongs. And, damn! Just cause I'm strapped financially doesn't mean my child shouldn't get the best education available to her. And hopefully someday her education will be of benefit to the community & the country.
That's why we should ALL have an interest in making colleges affordable - not just thru scholarships, but in raising the limits on Pell Grants & Stafford Loans. The benefits of good educations accrue not just to the students but to ALL of us. Good doctors, lawyers, writers, physicists, researchers, teachers, etc can only improve the quality of all of our lives and the technological advancements in the world.

[StephenJK]

I don't think there is a single middle-class family that can afford much more than the necessities right now. Let alone college and the exorbitant fees associated with it. First, lets fix the economy. THEN worry about college.

[collegeanalyzer]

Don't you think that educating our young should be a priority too? The economy is going ebb and flow just like any cyclical entity. We are definately in a down cycle right now but the answer to that is expansion not contraction. We need to be focused on education so that other countries don't pull farther ahead and render us obsolete. This economy will recover but an investment in education is one that is never a bad idea. I went to school on my own dime and don't regret it for one second.

[ceu]

I find this article to be a bit discouraging for parents with kids who deserve to be in college. I found that if you have such a student, encourage him/ her to apply to the best college available. Check the college's endowment & see how much is given in financial aid each year. Check to see if admissions are "need blind" - meaning that if your student is good enough to get admitted, the college will make sure that s/he can attend even if you can't afford to pay for it or if you don't qualify for loans; having declared bankruptcy is a disqualification for PLUS loans. Don't tell your child not to apply just because you can't afford it. Apply & see what happens next. Have him/her also apply to the public universities, too, just in case.
Check with your local Community Foundation - see what kind of scholarships or grants your child might apply for. Not all of them are large, but many don't get large numbers of applicants. Check also at places like FastWeb.com, a scholarship database. Keep in mind, however, that many colleges reduce the amount of aid they will give your child by whatever outside scholarships your child receives. Check with the college's financial aid office to see if the aid award reduces college grants or loans first based on scholarships.