College costs for individuals and their families may include tuition, room and board, textbook and supply costs, personal expenses, and transportation.
After adjusting for inflation, average published tuition at public (4-year, in-state) and private non-profit universities has increased by 178% and 98%, respectively, from the 1990-91 school year to 2017-18. Net Price (tuition less aid received) has also grown, but to a much smaller degree, as most universities have increased their "discount rate" by offering more in student aid. After adjusting for inflation, average net price at public and private universities has increased by 77% and 17%, respectively, over the same time frame.
Because schools are assured of receiving their fees no matter what happens to their students, they have felt free to raise their fees to very high levels, to accept students of inadequate academic ability, and to produce too many graduates in some fields of study. Despite the vast expense and economic distortions that result from student aid, the proportion of graduates who come from poor backgrounds has actually declined since 1970. Analyst Robert E. Wright predicted cost increases without matching increases in quality would continue until professors were encouraged to own colleges in private partnerships; he predicted that would not happen until barriers to entry are decreased and government education subsidies are paid directly to students instead of to colleges and universities. A report in The Economist criticized American universities for generally losing sight of how to contain costs. Analyst Jeffrey Selingo in the Chronicle of Higher Education blamed rising costs on unnecessary amenities such as private residence rooms, luxury dining facilities, climbing walls, and sometimes even so-called lazy rivers similar to ones found in amusement parks. The 2014 documentary Ivory Tower described colleges as participating in an "arms race" to provide the best luxury facilities, and asked whether college was worth the expense in an era of "predatory loan systems" and job scarcity and rampant inequality. One analyst argued that second-tier schools with Ivy League Envy had become "so obsessed with rising up the academic hierarchy" that they focused too heavily on research while neglecting undergraduate education, and argued that schools should embrace Internet technology and online software to streamline costs.
Another issue is the rising cost of textbooks. There are textbook exchanges for students who will accept a used text at a lower price. Lower priced alternatives offered by Flat World Knowledge are now available but have yet to make a significant impact on overall textbook prices.
One theory for the continual increase in tuition is that universities prioritize endowment growth over educational interests. A possible explanation for this is that universities are concerned with intergenerational equity for the benefit of future generations of students, as well as the overall benefit to society. This means that the universities will usually seek to grow their endowments to sustain their level of activity well into the future. Arguments against this justification mainly focus on the idea that the intergenerational equity theory does not accurately reflect the behavior of institutions with large endowments. Peter Conti-Brown, for example, describes how many of the elite universities cut their budgets during the recession despite sitting atop multibillion-dollar endowments, which were theoretically supposed to act as cushions during such economic downturns.
An alternate explanation posits that tuition increases simply reflect the increasing costs of producing higher education due to its high dependence upon skilled labor. According to the theory of the Baumol effect, a general economic trend is that productivity in service industries has lagged that in goods-producing industries, and the increase in higher education costs is simply a reflection of this phenomenon.
Some universities describe being caught in a dilemma where they are pressured to offer broader curricula and improve facilities to attract new students on one hand, but on the other hand these universities must raise tuition to compensate for state spending cuts and rising expenses.
Annual undergraduate tuition varies widely from state to state, and many additional fees apply. Listed tuition prices generally reflect the upper bound that a student may be charged for tuition. In many cases, the "list price" of tuition – that is, the tuition rate broadcast on a particular institutions marketing platforms – may turn out to be different from the actual (or net) tuition charged per student. A student that has applied for institution-based funding will know his or her net tuition upon receipt of a financial aid package. Since tuition does not take into account other expenses such as the cost of living, books, supplies and other expenses, such additional amounts can cause the overall cost of college to exceed the tuition rate multiplied by the number of courses the student is planning to take.
In 2009, average annual tuition at a public university (for residents of the state) was $7,020. Tuition for public school students from outside the state is generally comparable to private school prices, although students can often qualify for state residency after their first year. Private schools are typically much higher, although prices vary widely from "no-frills" private schools to highly specialized technical institutes. Depending upon the type of school and program, annual graduate program tuition can vary from $15,000 to as high as $50,000. Note that these prices do not include living expenses (rent, room/board, etc.) or additional fees that schools add on such as "activities fees" or health insurance. These fees, especially room and board, can range from $6,000 to $12,000 per academic year (assuming a single student without children). Such fees are not at all government-regulated, allowing a theoretically enormous increase each year. While tuition is monitored to some degree in legislatures and is often publicly discussed, fees on the side are frequently overlooked in public opinion and regulatory policies. Although tuition costs have risen, the rising costs have had little effect on transfer rates and overall enrollment. In a study on effects of rising tuition costs, analysis revealed that the rising costs of colleges have "weak or no effects" on enrollment. Rising tuition costs have not deterred enrollment "as long as students believe the potential return of a college education is much greater than the cost".
In addition to tuition, living expenses, books, supplies and fees, students face a less-acknowledged opportunity cost in years of missed potential income. A high school educated person could expect to earn about $84,000 for four years of work; in choosing to attend and pay for college, an individual forgoes those earnings.
In 2010, community colleges cost an average of $2,544 per year for tuition and fees. A private four-year college cost an average of $26,273 annually for tuition and fees.
College costs are rising while state appropriations for aid are shrinking. This has led to debate over funding at both the state and local levels. From 2002 to 2004 alone, tuition rates at public schools increased by just over 14%, largely due to dwindling state funding. A more moderate increase of 6% occurred over the same period for private schools. Between 1982 and 2007, college tuition and fees rose three times as fast as median family income, in constant dollars. In the 2012 fiscal year, state and local financing declined to $81.2 billion, a drop in funding compared to record-high funding in 2008 of $88 billion in a pre-recession economy.
To combat costs colleges have hired adjunct professors to teach. In 2008 these teachers cost about $1,800 per 3-credit class as opposed to $8,000 per class for a tenured professor. Two-thirds of college instructors were adjuncts, according to one estimate; a second estimate from NBC News in 2013 was that 76% of college professors were in "low-paying, part-time jobs or insecure, non-tenure positions," often lacking health insurance. There are differences of opinion on whether these adjuncts teach more or less effectively than regular tenured or tenure-track professors. There is some suspicion that student evaluation of adjuncts, along with doubts on the part of teachers about subsequent continued employment, can lead to grade inflation.
Additionally, schools are increasingly using price discrimination, as a strategy to increase revenue or attract certain students. For example, a school may charge particular types of students (such as low-income or moderate-income students) less tuition in order to encourage enrollment. Another example is merit-based aid, in which the school will grant high-achieving students money.
Because of the decrease in public funding, public research universities have tried to compensate for those losses by increasing tuition revenue by enrolling more out of state students. According to a 2011–12 survey the average in state tuition was $8,775 while the out of state tuition was $27,539. On average the increase in non resident enrollments has gone up from 20.7% of total freshman enrollment in 2003 to 24.7% in 2013. In some states the increase has been significantly higher, particularly in higher ranking universities. In the University of California Los Angeles the enrollment went up from 7.7% in 2003 to 28.5% in 2013. In state students that would have previously been accepted at that high ranking university where no longer able to attend. Aside from compensating for the decreases in funding, the increase in out of state admission has also allows universities to address the ever-present concern in rankings as they are able to increase the academic requirements for admission due to the rising number of applicants. In higher ranking universities the increases in out of state admissions has had a significant effect on admission of in state low income and underrepresented minority students.
Princeton sociologists Thomas Espenshade and Alexandria Walton Radford published a book-length study of admissions that found that an upper-middle-class white applicant was three times as likely to be admitted to an American college as a lower-class white with similar qualification.New York Times columnist Ross Douthat has cited this as an example of how U.S. universities can exacerbate wealth inequality. A 2006 report by Future of Children, a collaboration of Princeton and the Brookings Institution, concluded that "the current process of admission to, enrollment in, and graduation from colleges and universities contributes to economic inequality as measured by income and wealth." According to Suzanne Mettler of Cornell, government policy towards higher education has an effect of deepening inequality and disadvantaging students from the lower classes.
Athletics have been increasingly subsidized by tuition. Fewer than one in eight of the 202 Division 1 colleges netted more money than they spent on athletics between 2005 and 2010. At the few money-making schools, football and sometimes basketball sales support the schools other athletic programs. Athletes, on average, cost six times what it cost to educate the non-athlete. Spending per student varied from $10,012 to $19,225; while the spending per athlete varied from $41,796 to $163,931.
Journalist Malcolm Gladwell stated of the cost of college degrees in America, "the amount of money thats wasted on meaningless education in [the U.S.], it never ceases to amaze me."
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