College tuition in the United States

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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 tuitions and
different forms of controversy.

Contents

1 Causes

1.1 Bubble
Theory

1.2 Cost shifting and
Privatization

1.3 Student
Loan

1.4 Lack of consumer
protection

1.5 Additional
factors

1.6 Recommendations

2 Historical
trends

3 Recent
trends

4 Disproportional inflation
of college costs

5 Economic and social
concerns

5.1 Economic
concerns

5.2 Social
concerns

6 Student loan
debt

7 See also

8 References and
notes

9 External
links

Causes

Bubble Theory

Main article: Higher education
bubble

Study comparing college revenue per student by
tuition and state funding in 2008 dollars.[1]

The view that higher education is a bubble is controversial. Most economists
do not think the returns to college education are falling.[2]
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[who?]
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."[3]

Cost shifting and
Privatization

See also: Privatization and Private
university

One proposed cause of increased tuition is the reduction of state and federal
appropriations to colleges thus making them shift the cost over to
students in the form of higher tuition.[4][5]
This has mostly applied to public universities which in 2011 for the first time
have taken in more in tuition than in state funding[5]
and had the greatest increases in tuition[1].
Implied from this shift away from public funding to tuition is privatization,
although the New York Times reports such claims are exaggerated.[5]

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 market 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.[6]
One rebuttal to that theory is the fact that even in years when loan limits have
not risen, tuition has still continued to climb.[7][8]
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, etc.) strips students of the ability to declare bankruptcy,
and, in response, the lenders and colleges know that students, defenseless to
declare bankruptcy, are on the hook for any amount that they borrow -including
late fees and interest (which can be capitalized and increase the principal loan
amount), thus removing the incentive to provide the student with a reasonable
loan that he/she can pay back.[7][8]
Under this theory, it would be more profitable for the lender if the student
defaulted (due to the increases in the amount of the loan after fees and
interest are capitalized), and thus there is no free market pressure-type
motive for the lender or the college to help the student avoid default. 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.[9]
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.[10][11]

Additional factors

Other factors[4]
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).[12][13]

State and Federal governments should increase appropriations, grants,
and contracts to colleges and universities.[12][14][15]

Federal, state, and local governments should reduce the regulatory
burden on colleges and universities.[4]

The Federal Government should enact partial or total loan forgiveness
for students who have taken out student loans.[13][16][17][18]

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).[13][19][20]

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.[13][21][22]

Regulatory or legislative action to lower or freeze the tuition, such as
Canada's tuition freeze model,
should be enacted by federal lawmakers:[23]

More research should be done: Recognised financial expert, Mark
Kantrowitz, issued the following recommendations[4]:

"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.[24]

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. dollars 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.[25][26][27]

Tuition at the University of
Toronto tracked close to inflation rates during the entire period.[28]
The University of Iowa
had rapid increases in tuition during the 1950s and then tracked close to
inflation rates since that time.[29]
The Massachusetts
Institute of Technology (MIT), among the most expensive of the private U.S.
educational institutions throughout the 20th century,[30]
had continual large tuition increases, dipping slightly below inflation rates
only during the World War II years.[31][32]

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.[33]
Other institutions in the same categories differ in details but not in general
patterns.[34]
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.[35]

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.,[36]
both unadjusted and adjusted to the year 2004 by using the U.S. Consumer Price
Index 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 (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. [37]

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 and social
concerns

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 care sectors.[38]
These trends are sources of continuing controversy in the United States over
costs of higher education[39]
and their potential for limiting the country's achievements in democracy,
fairness and social justice.[40]

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.[41][42][43][44]

Student loan debt

A closely related issue is the alarming increase in student borrowing to
finance college education and resulting student loan 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.[45]
In fact, for the first time in the history of America, 'Student Loan' debt has
surpassed 'Credit Card' debt.[9]

Nevertheless, there is substantial evidence that students are still getting
good value for their investment in an education.[citation
needed] Since the mid-1980s, education has played a large
part in potential wages,[citation
needed] with bachelor's degree holders taking home an
average of 38% more than those with only a high school diploma.[citation
needed] 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.[46]

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.[47]

See also

EdFund

Free education

Higher education
bubble

Higher
Education Price Index

Post-secondary
education

Private
university

Student benefit

Student debt

Student
loans in the United States

Tuition agency

Tuition center

Tuition fees

Tuition freeze

References and
notes

^ a
b
"Trends in College Spending 1998-2008" Delta Cost
Project.

^
Claudia Goldin, Lawrence F. Katz (2008). The
Race Between Education and Technology. The Belknap Press of Harvard
University Press.

^
Hillman, Nick (2006). "Student Debt
Burden, Volume 3, Number 8, August 2006". American Association of State
Colleges and Universities. http://www.aascu.org/media/pm/pdf/v3n8.pdf.

^ a
b
c
d
Kantrowitz, Mark (2002). "Research Report: Causes of faster-than-inflation increases in
college tuition". FinAid. http://www.finaid.org/calculators/tuitionanalysis.pdf.

^ a
b
c
"Public Universities Relying More on Tuition Than State
Money", The New York Times

^
"Federal Student
Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up
to the 2007-08 Loan Limit Increase". gao.gov. 2011.
http://www.gao.gov/products/GAO-11-470R.

^ a
b
"Student Loans in Bankruptcy". lawyers.com. 2011. http://bankruptcy.lawyers.com/consumer-bankruptcy/Student-Loans-In-Bankruptcy.html.

^ a
b
"Student Loan Bankruptcy Options". money-zine.com. 2011. http://www.money-zine.com/Financial-Planning/College-Loan/Student-Loan-Bankruptcy-Options.

^ a
b
Dvorkin, Howard (2010). "Student Loan Debt Surpasses Credit Card Debt-What to Do?".
foxbusiness.com. http://www.foxbusiness.com/personal-finance/2010/09/20/student-loan-debt-surpasses-credit-card-debt.

^
"46 Percent Of Federal Loans Paid To For-Profit Institutions Will
Go Into Default". huffingtonpost.com/AOL.com. 2010.
http://www.huffingtonpost.com/2010/12/23/46-percent-default-rate-o_n_800283.html.

^
Turner, Katrina (2010). "Subject: Default Rates for Cohort Years 2004-2008".
ifap.ed.gov. http://ifap.ed.gov/eannouncements/122010CDRlifetimerate2010.html.

^ a
b
Kantrowitz, Mark (2002). "Research Report: Causes of faster-than-inflation increases in
college tuition". FinAid. http://www.finaid.org/calculators/tuitionanalysis.pdf.

^ a
b
c
d
Watts, GordonWayne (2011). "Higher-Ed Tuition Costs: The ‘Conservative’ view is not on
either extreme". ThirstForJustice.net. http://thirstforjustice.net/Higher-Ed-Tuition-Costs.html.

^
"Affordable Higher
Education: Student Debt". U.S. PIRG. 2011. http://www.uspirg.org/higher-education.

^
"Fight
to Protect Students and Taxpayers Moves to Senate! - House Voted to Slash Pell
Grants and Block Gainful Employment Rule". ProjectOnStudentDebt.org.
2011. http://projectonstudentdebt.org/update_3711.vp.html.

^
Applebaum, Robert (2009). "The
Proposal". ForgiveStudentLoanDebt.com. http://forgivestudentloandebt.com/content/proposal.

^
"Real Loan Forgiveness". ProjectOnStudentDebt.org. 2011. http://projectonstudentdebt.org/initiative_view.php?initiative_idx=8.

^
"Take
Action for Real Loan Forgiveness!". ProjectOnStudentDebt.org. 2009. http://projectonstudentdebt.org/update_61909.vp.html.

^
Collinge, Alan (2011). "Private
Student Loan Bankruptcy Bill... The 4th Attempt".
StudentLoanJustice.org. http://studentloanjustice.org/action-room.htm.

^
"Bankruptcy Relief for Private Student Loan Borrowers
Advances". ProjectOnStudentDebt.org. 2010. http://projectonstudentdebt.org/update_91610.vp.html.

^
"Affordable Higher
Education: Cutting Lender Subsidies". U.S. PIRG. 2011. http://www.uspirg.org/higher-education.

^
"Commission: Private Loans are Not the Solution!".
ProjectOnStudentDebt.org. 2006. http://projectonstudentdebt.org/update_8706.vp.html.

^
"Commission Calls for "Reduced Debt Burden" -- Time for Education
Department to Act". ProjectOnStudentDebt.org. 2006.
http://projectonstudentdebt.org/update_81806.vp.html.

^
"Top 10 Job Placement Colleges: INFORMATION AND TIPS ON
INTERNSHIPS AND PAID INTERNSHIP". CollegeTips.com. 2011. http://www.collegetips.com/college-money/college-job-placement.php.

^
"Bureau of Labor Statistics, U.S.
Dept. of Labor". Consumer Price Index. http://www.bls.gov/cpi/.

^
Powell, James (2006). "Bank
of Canada". A History of the Canadian Dollar. http://www.bankofcanada.ca/en/dollar_book/index.html.

^
To show a wide range of tuitions, the chart's vertical axis is logarithmic.
The span between two horizontal lines is a factor of ten.

^
"Canadian Association of University Teachers". Education
Review 4(1), Sept, 2002, p. 2, Table 1. http://www.gpoaccess.gov/stylemanual/2000/chapter_txt-15.html.

^
"University of Iowa". Fact Sheet, 2005. http://www.library.uni.edu/speccoll/unifacts.html.

^
For background on the emergence of MIT and other U.S. research universities,
see Geiger, Roger L. (1986). To Advance
Knowledge: The Growth of American Research Universities, 1900-1940. Oxford
University Press.

^
"MIT Undergraduate Association".
The Tech, 1994-2006. http://tech.mit.edu/.

^
"MIT Undergraduate
Association". The Tech, Archives, 1881-2009.
http://tech.mit.edu/browse.html.

^
Resident tuition rates are charted for public institutions; fees are averaged;
nonresident rates are typically higher.

^
Note the qualitatively similar patterns in inflation-adjusted tuitions for
three periods: 1940-1950, 1950-1980 and 1980-2000.

^
After 1960, these patterns show gradually widening ratios of private-school to
public-school tuition, but some public systems saw tuition increases similar
to those of the 1950s in Iowa during different decades.

^
"National Center for Education Statistics, U.S. Dept. of
Education". Average institutional charges for tuition and required
fees. http://nces.ed.gov/quicktables/result.asp?SrchKeyword=institutional+charges+for+tuition&topic=All.

^
Data sources listed in Uebersax, John (2009-07-15).
"College Tuition: Inflation or Hyperinflation?". http://satyagraha.wordpress.com/2009/07/14/college-tuition-hyperinflation/. Retrieved 2009-07-15.

^
Ehrenberg, Ronald G. (2002). Tuition Rising:
Why College Costs So Much. Harvard University Press.

^
Kane, Thomas J. (1999). The Price of Admission:
Rethinking How Americans Pay for College. Brookings Institution
Press.

^
Bowen, William G., Tobin, Eugene M., Kurzweil,
Martin A., and Pichler, Susanne C. (2005). Equity And Excellence In
American Higher Education. University of Virginia Press.

^
"Higher Ed NewsWeekly (p.57)". Illinois Board of Higher
Education. 2007. http://www.ibhe.state.il.us/NewsDigest/NewsWeekly/092807.pdf.

^
"Student Loan Debt Drives Man to Suicide". Newsalert, citing
The Chicago Sun-Times. 2007. http://nalert.blogspot.com/2007/09/student-loan-debt-drives-man-to-suicide.html.

^
Lewis, Libby (2007). "A Pastor's Student Loan Debt". NPR. http://www.npr.org/templates/story/story.php?storyId=11980696.

^
Collinge, Alan (2007). "Company’s march toward student loan monopoly scary".
TheNewsTribune.com. http://www.thenewstribune.com/2007/06/19/90638/companys-march-toward-student.html.

^
http://www.finaid.org/loans/

^
http://education-portal.com/articles/How_Much_More_Do_College_Graduates_Earn_Than_Non-College_Graduates.html

^
http://www.usnews.com/articles/education/worlds-best-universities/2010/09/21/worlds-best-universities-top-400-.html

External links

"College, Inc.", PBS FRONTLINE
documentary, May 4, 2010

U.S. Dept.
of Education

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