Why Is College So Expensive?

Life is much more expensive today than it was 20, 30 or 40 years ago. Thanks to inflation, we now have to spend much more on our homes, cars, food, and clothing than our parents or grandparents did at our age. But one thing that didn't keep up with inflation: the cost of college. In fact, it increases faster, much faster.

How much does college cost?

Going to college is a much more expensive prospect today than in previous decades. However, the amount you must spend on college varies greatly depending on the type of institution you attend.

For example, two-year community colleges offer much lower tuition and annual fees than a four-year college. Students from other states will pay even more, while private universities tend to charge the highest fees overall.

For the 2020-21 school year, the average cost of a US college by type of school is as follows:

Two-year hearing (in district): $ 3,770
Four-year hearing (in-state): $ 10,560
Four-year hearing (out of state): $ 27,020
Four-year private non-profit organization: $ 37,650

Why is college so expensive?

As you can see, the cost of obtaining a title can rival that of buying a home. But it was not always like this. Here's a closer look at why college is so expensive.

Less state funds

One of the main reasons that college costs have risen so much is because government funding has not kept up with the underlying cost of college, shifting the burden of paying for college from the government onto families, said Mark Kantrowitz, editor and vice president for research. in Saving For College and author of "How to Appeal for More Financial Aid for College."

This is especially true after the 2008 financial crisis, as state funding never recovered after the recession. Between 2008 and 2018, 41 states spent less per student. On average, states spend 13% less (about $ 1,220) per student. Meanwhile, the median enrollment rate in all 50 states increased by an average of 37% .2

On the other hand, family incomes have remained practically stable since the late 1970s.3 “This forces families to borrow more or change tuition from higher-cost universities to lower-cost ones, such as private universities. public and four schools. one- to two-year colleges, ”Kantrowitz said.

Inflated retail prices

The retail cost of college is largely a reflection of supply and demand, according to John Pearson, a certified college financial advisor with Barnum Financial Group's Center For College Planning.

"Over the past three decades, the demographics of college-age children echo the baby boomers, a generation for whom the college experience has often changed their lives," he said. "A large percentage of this group wants their children to have a similar, if not better, experience."

Colleges understand how to market to this group of parents and that boomers often equate price with quality, Pearson added. It is common for universities to create the illusion of selectivity, creating a flow of candidates far beyond what they can accept.

"This, coupled with the use of a tuition discount, allows them to set an artificially high retail price and then offer scholarships, really just discounts, that lower the net price."

While the "tag price" for a degree may seem exceptionally high, most students end up not paying that amount, even if they attend one of the most expensive colleges in the United States. It is a strategy to make the school look more exclusive and of high quality.

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Although the cost of paper tuition is much higher than what most college students actually pay, that doesn't mean families don't outgrow themselves financially, even with scholarships and other grants. Additionally, the net cost of college has increased by 63% over the past 20 years or so at four-year public institutions.

Another reason college enrollment soared is that college attendance has risen steadily since the 1940s and 1950s, when the federal government made enrollment for military veterans and ordinary citizens more accessible, explained Andrew Pentis, a counselor at credit. Certified student and student loan specialist.

As enrollment increased, there was less money available per student. So not only is there less aid available to schools, but the dollars don't go as far as they used to.


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Source: CNBC

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