The College Cost Environment

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The College Cost Environment

Paying for college is not a one-shot, one-year affair. Parents and grandparents will have to think in terms of four years for a baccalaureate, six years or longer for a graduate or professional degree, and an eternity if they have seven bright students spaced two or three years apart. Since you may be paying college bills for many years to come, it is essential to understand a bit more about the overall college cost environment.

Why tuition keeps rising

Tuition costs continue to outpace inflation. According to the College Board, average tuition and fees for four-year public colleges have increased at a rate over two times that of inflation. There are several reasons for the rapid increase in tuition:

• Faculty salaries must be raised to attract new professors and to keep tenured ones from leaving.
• Maintaining old buildings is very expensive.
• Colleges must continually update technology to remain competitive.
• The number of high school seniors is declining, so fixed costs are spread among fewer paying customers.

Despite this, colleges must compete for students because there aren’t enough students to fill all the waiting ivy-covered halls. This competition is both fierce and expensive, with recruitment costs as high as $1,000 per freshman enrolled. Competition also allows parents and students to become more sophisticated shoppers. Many post-secondary schools may offer competitive financial aid packages to get students to attend their institutions.