Since 1980, college tuition has risen 945%, in comparison with inflation’s rise of 193% during that same period–meaning all purchases have increased in price, but college tuition has increased at a ratio of 9 to 1–based on information from the Bureau of Labor Statistics. The University of California (UC) and California State University (CSU) systems are no exception. Tuition and fees from 2003 – 2013 have experienced triple digit increases:
- Tuition at the UC has increased 190% since the 2003-04 school year. In 2003, students paid $5530 annually, which in the upcoming 2013-14 school year will be $13,200. On average, tuition increases annually approximately 9.9%.
- CSU fees (i.e. tuition) increased in the triple digits, like the UC, at 145% since 2003. In 2003-04, students paid $2572 annually, while in 2013-14 students will pay $5472 for the year. Fees, on average, increase 9% annually.
Over the same time period, as we discussed in an earlier post, median household income has stagnated in growth, which means that families have less income to pay for both needed and wanted goods, like college tuition. Yet, record numbers of applicants are reported year after year; the UC reported a 10.7% jump from 2012 to 2013, and a 19.1% jump from 2011 to 2012. So, why is demand for college admissions continuing to increase given that families seemingly have less ability to pay for rising tuition?
One reason can be the expansion of the Federal government’s student loan programs. Colleges receive an upfront payment on tuition from Federally guaranteed dollars, when students and parents borrow. Students and their parents are responsible for repaying the government, years after the college experience is over. (Standard repayment plans are 10 years long, and aren’t required to start until 6 months after college graduation.) What incentive exists for colleges to reduce costs and tuition, when the institution will be paid no matter what? And, student loan borrowing has almost tripled in the last 9 years, according to a recent Wall Street Journal article. Total student debt is over $1 Trillion and rising in the United States, surpassing total credit card debt.
The increases in college student borrowing, and the current Congress’ disagreement about assessing student loan interest rates and increase challenges to borrow student loans, as well as the economic uncertainty of state budgets around the country are indicators that college tuition will continue its rise. Forecasting can be a part of the answer to families’ questions who have time to plan and save, and for families with high school aged children, who are facing college expenses in 4 years or less, adding a concerted effort to research and investigate potential colleges for application can help provide a fuller answer to affording college expenses.In addition to the above college tuition increase forecasts, knowing the family’s budget and assets to pay for college can help both parents and kids work together to afford college. Then, comparing the family’s resources to pay for college to forecasted expenses can show where there are gaps that will need to be filled with savings, more income, scholarships, choosing colleges based partially on price or a combination of all four. While college tuition is increasing and shows few signs of slowing down, a little forward planning may continue helping families afford the costs.
Note: the UC system did not increase tuition in 2012-13 nor in 2013-14–with Proposition 30 passing last November and additional one time funds being awarded to UC’s and CSU’s by the state. State allocations to subsidize higher education costs change yearly. See our previous post about the connections between state funding and public university tuition throughout the United States.
For more information about the connections between affording college and being selective in colleges for application, listen to our short, three-part podcast series. In addition, our six-part series on prudent planning teaches families how to gain understanding of the family’s financial resources and ability to pay for college.
Creative Marbles Consultancy is always available to advise individual families about affording college expenses, as well as how to choose quality colleges that are reasonable within the family pocketbook. Contact us at (916) 457-4090 for more details.
