Tuition increases can no longer be ignored. Parents and their students should look carefully at and plan for a tuition increase at the college or university they plan on attending. According to the College Board, published increases in college tuition and fees rose 3% from last year. Even when inflation on goods and services in the rest of the US economy over the past 12 months was 0%, tuition inflation was still at 3%! On top of college tuition inflation, the College Board also estimated that financial aid amounts were lower thus increasing the net cost of attending college. Over the long haul, increases in tuition inflation over any 17 year period from 1958 to 2001 was between 6% and 9%. That is 1.2 times to 2.1 times higher than the general inflation rate. On average tuition tends to increase about 8% per year according to finaid.org.
College Tuition Inflation
Forty-five percent of full-time undergraduate students attend public universities in their state and the increase in college tuition and costs were up 2.9% from last year. The average for a year at a state university was $24,061. Increase in college tuition and costs for private colleges where 20% of the full-time undergraduate population attends, was up 3.4%. The average cost per year for private universities was $47,831. At community colleges where 26% of full-timers attend, the tuition increase and other costs of college also increased 3%. However, students who attend community college and lived at home, the average cost was $3400.
Plan in Advance for Tuition Increase
There is no way to tell what kind of tuition increase there will be at the college or university a student decides to attend. The key, however, is to try and get a feeling of what it has been in the recent past for your university and plan accordingly. Thinking that your annual costs will remain level is having your head in the sand when it comes to tuition inflation. How you satisfy the increase in college tuition is usually left to borrowing more money. Borrowing more money puts an additional burden on college graduates to pay what already has become a gigantic hole for many graduates to dig out of, forcing many to live at home, delay purchases such as a home, or delay having families.
Don’t Let College Tuition Inflation Dissuade You from Attending College
Even though the increasing costs seem like a daunting and overwhelming experience, a college degree is totally worth it. The average earnings of a high school graduate are around $580,000 over an earning career whereas the average earnings of a college graduate are more than double that at $1,190,000.
Be Careful On How You Save for Tuition Increases
A lot is written about 529 plans in saving for college. Albeit that there are some nice features to these state sponsored plans one cannot minimize the risks of the stock market in which a lot of these funds are invested. A double whammy would be to try and save for these ballooning tuition increases and costs with 529 plans only to have a significant retraction in the market values of your plan. There are other ways to get the same benefits without the risk of the stock or bond market diluting your attempts to save for and pay for college tuition increases. One should also be cognizant of the impact 529’s have on what potential aid you may receive.
With all of what has been said above, make sure your head is out of the sand when it comes to increases in college tuition and costs. It is worth the effort to become a college graduate.