How is the Cost of College Changing?October 1, 2021
In recent years, college has become more and more expensive. The change in the cost of a college education is driven by inflation, increased administrative costs, and degree requirements for jobs. In many fields, a degree is a necessity, so many students feel they can’t afford to not go to college.
However, there are ways to manage college tuition increases and reduce the need for student loans. Below, we’ll discuss what’s behind higher education costs and what you can do to lower your expenses.
What’s behind the cost of college increase?
Earning a bachelor’s degree is more expensive than ever. According to the U.S. Bureau of Labor Statistics, the cost of college tuition and fees increased by 63% between January 2006 and July 2016. To put that in perspective, keep in mind that the consumer price index for all items — including gas, housing, and food — increased by just 21% during that same period.
What’s behind the change in the cost of college? There are three major contributing factors:
1. Increased demand
In previous generations, a college degree was a luxury only a select few ever earned. But not having a degree wasn’t a significant hardship, because the majority of jobs didn’t require one. Today, the employment landscape is very different, and employers in almost every industry are requiring workers to have degrees.
Georgetown University’s Center on Education and Workforce estimated that 65% of jobs will require postsecondary education as of 2021. With the majority of jobs requiring degrees, more and more students feel pressured to go to four-year universities rather than pursue trades or other career paths.
2. Student loan availability
Some economists believe that the ready availability of student loans — particularly some federal loans that don’t have credit or income requirements — have caused schools to raise their prices.
Worse, many student loans don’t have borrowing caps, so students can take out hundreds of thousands of dollars in debt without knowing if they will be able to reasonably repay those loans.
The connection between student loan availability and college prices is debated, but studies do show a direct link in a particular sector: for-profit schools. Studies found for-profit schools that can accept federal aid have much higher tuition rates than schools that can’t.
For-profit schools have experienced increased enrollment rates in recent years, and students at those schools take on more debt than students at non-profit institutions.
3. College amenities
To appeal to incoming students, colleges have pulled out all the stops. Instead of touting their graduates’ accomplishments or faculty credentials, some colleges use luxury amenities to attract students. Campuses can have features you’d typically associate with high-end resorts, including lazy rivers, state-of-the-art workout centers, putting greens, and private ski slopes.
Those costly perks certainly have a wow factor, but colleges have to increase their prices to pay for them.
How to Handle the Change in Cost of College
How has college tuition changed? It’s absolutely skyrocketed. However, that doesn’t mean you have to pay an arm and a leg to go to college, and you don’t need to take on six-figures of student loan debt.
To handle the changing costs and reduce your expenses, consider these tips:
1. Commute to school
While it may not be an option for everyone, living with your family and commuting to school can be an effective way to save money. Room and board on campus costs between $11,620 and $13,120 per year depending on the type of school you attend. If you decide to commute rather than live in the dorms, you could save a significant amount of money.
2. Attend community college first
The average cost of a year at a four-year school ranges from $10,560 for an in-state public university to $37,650 for a private school. By contrast, a year at a community college costs just $3,770.
A strategy you can use to reduce your expenses is the 2+2 method. With this approach, you attend community college for two years and fulfill your core subject and elective requirements. After that, you transfer to a four-year school to complete your bachelor’s degree.
Your degree will be just as valid as the degrees of students that were there for all four years, but you’ll slash how much you have to spend on tuition and fees. Just be sure to speak to an academic advisor to be sure you’re getting the classes you need.
3. Research gift aid opportunities
Many people don’t realize how much gift aid is available. Unlike student loans, gift aid doesn’t have to be repaid. You can earn scholarships based on your achievements, or grants based on your financial circumstances.
You can get gift aid from colleges, private companies, state agencies, and non-profit organizations. FastWeb, Scholarships.com, and The College Board are great tools for finding these types of opportunities.
4. Work while in school
You can reduce your expenses and limit the need for student loans by working while you’re in school. With federal or state work-study programs, you can work with your financial aid office to get a job related to your field as part of your financial aid package. Or, you can get a part-time job or side hustle on your own. College students will find sites like Handshake and SnagAJob useful for finding local openings.
5. Consider your options
If you do need to borrow money to pay for your remaining education costs, research your options. As a college student, you may be eligible for federal and private student loans. If you end up with high-interest debt, you can use student loan refinancing after you graduate to lower your interest rates and save money.
To see how much student loan refinancing could save you in the long run, use ELFI’s Find My Rate tool.*