The Skyrocketing Costs of College
Historically, college costs double every 10 to 12 years. And the costs of college usually rise at a rate faster than inflation and family income.
Unfortunately, there is every reason to believe that history will continue to repeat itself.
Why Do the Costs Keep Going up?
Good question! There are many reasons why costs have been increasing and will continue to do so:
There are more students on campus than ever. As a result, colleges need more money to hire more faculty, enlist more support staff, build more dorms, offer more dining facilities, and so on.
Colleges want to attract and retain the best faculty possible. This translates into rising personnel costs for salaries and benefits.
Ever-changing technology forces colleges to continually upgrade their facilities. For example, the minute colleges were hard wired for the internet, wireless technology became the norm. The cost of keeping up with the times can be steep.
Utility costs (heat, electricity, water and sewer systems, etc.) continue to soar everywhere.
Improved student housing
Dorms as you may know them no longer exist. Colleges now offer "residential facilities," "apartment suites," and other living arrangements that are attractive to today's students. Such housing can be expensive.
More student services
Students are demanding more services—more dining options, better health and fitness centers, etc.—and colleges must offer these services to stay competitive with other colleges. The costs can add up.
Environmental concerns (asbestos, lead paint, etc.) make many older buildings hazardous. The price tag for removing these hazards can be hefty, and many colleges choose to build new buildings despite the higher short-term costs.
Many schools invested in significant construction projects over the past decade because of historically low interest rates. Schools that borrowed money for these projects must now start paying off those loans. Increasing the cost of tuition is one way to cover this new expense.
A struggling economy
The recent downturn in the economy has created significant problems for colleges—rocky investment portfolios, reductions in state and federal funding, fewer private donations. Colleges try to make up for these losses through tuition hikes.
Because of these many factors, there is no easy or sure way to predict what college costs will be when your child goes to school.
What Can I Do to Prepare?
While you can't control or predict how much college will cost, you CAN control how well prepared you are. Here are five tips that can make paying for college a little more manageable:
- Start a college savings plan NOW. It is nearly certain that your child will have to pay something toward college costs. If you plan to contribute to your child's education, having money saved will give you options.
- Focus on scholarships. Your child can improve his or her chances of getting scholarships by taking challenging coursework, getting good grades, having good attendance, being involved in school and community activities, and making good impressions on others.
- Be open minded and diverse in searching for colleges. Look at a variety of schools that offer the degree your child wants. Keep in mind that a school's cost does not necessarily reflect the quality of its education.
- Avoid debt. As the college years approach, avoid taking on any large, long-term debt. This will leave you in a better position to take on college expenses.
- Explore student aid. When your child enrolls in college, take full advantage of student aid programs, tuition payment plans, tax breaks, and any other options available to you.
Higher education is a very valuable and very expensive product. All indications are that costs will continue to increase. By preparing now, you can be well positioned to deal with the costs when the big day arrives.
Want to Know More?
- A safe bet is to assume that costs will increase by an average of 5% per year and then plan for what the costs will be when your child enters college.
- Visit YouCanDealWithIt.com for more ways you and your college-bound son or daughter can prepare for the future.