Why college costs aren't as dire as you think

University educations are getting more expensive, but at an exaggerated rate when financial aid isn't considered.

By Aimee Picchi Aug 23, 2013 1:40PM

Graduation cap (© Stephen Wisbauer/Getty Images)If there were a class called "College Costs 101," the first thing parents might learn is that the sticker price isn't the last word on tuition.


With financial aid thrown into the equation, the rise in the "actual cost" of a college education is far from the dire situation many believe, The New York Times reports.


The annual, inflation-adjusted, actual average increase for a private college is then just 1.6% above inflation, or about 4% per year, during the past two decades, The Times notes. At public colleges, it's a slightly higher 5% per year, given state budget cuts. Two-year community colleges have actually seen actual costs decline compared to inflation, at an annual rate of 0.3%. 


The increases don't include the impact of loans on a student's tuition and room and board, The Times adds.


Still, rising college costs are alarming the middle class, and many feel that the price of a university education has bounded out of reach. After all, while college costs have continued to rise, median household income has not: Americans still earn less than before the recession started in 2007. 


At the same time, students are taking on more loans. The class of 2011 is graduating with average debt of $26,600, a rise of 5.3% from a year earlier, according to the Project on Student Debt.


President Barack Obama is asking colleges to take steps to hold down costs. "We can’t price the middle class and everybody working to get into the middle class out of college," he said at a speech on Thursday at the University of Buffalo.


Drilling down into the numbers illustrates that those increases aren't shared equally by all students. The bottom line is that the richest students, who get the least aid, are shouldering the burden of college price hikes, according to the public policy organization Demos, citing data from the College Board.


For the poorest students, the annual cost of college rose just $307 from 1992 to 2007, or 3.4%. But the cost of tuition and room and board jumped by $3,305, or 24.4%, for the richest students.


As Demos points out, because wealthier families are more politically connected than poorer ones, they're likely to create a louder backlash. In the end, that might help everyone if it leads to higher subsidies for public colleges. 


Follow Aimee Picchi on Twitter at @aimeepicchi.


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31Comments
Aug 23, 2013 1:58PM
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" In the end, that might help everyone if it leads to higher subsidies for public colleges."

You just can't fix stupid.
Aug 23, 2013 2:13PM
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Why are people paying so much for college? Community colleges and state universities are relatively inexpensive. They are also much better than most private colleges. I have one kid that has graduated from a state university, lived away from home for 4 years, and has  no debt with no help from me. My youngest is at home going to the local CC. No out of pocket costs for either one even though I make too much for need based aid. Here in FL, if you have a 3.0 or better HS GPA and a decent score on the ACT / SAT tuition is paid for.  2 years at a CC is a lot smarter than loads of debt somewhere else.
Aug 23, 2013 2:59PM
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"President Barack Obama is asking colleges to take steps to hold down costs."

 

I bet this will be just as effective as his job creation.  The moron has no plan or any idea of how to do anything.

Aug 23, 2013 8:12PM
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"In the end, that might help everyone if it leads to higher subsidies for public colleges."

 

Because subsidizing inefficient things makes them efficient, right?  Because throwing more money at something that is overpriced makes the price go down, right?  Because governmental subsidies are free money, right?

Aug 23, 2013 3:05PM
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Funny how everything comes down to Middle class and Rich, nobody cares about the working class which includes people like me who have worked our butts off for a college education, and are now in debt 30 grand.  What does the government do, allows interest rates to double, oh and to top it off jobs that require a Bachelor's degree are now trying to weasel out of salary by decreasing workers to part-time at minimum wage no matter your education (In Missouri at least).  My main concern is where is all this money that the lottery advertises is going into our colleges and schools?  And when is all this political talk of an affordable education going to become a reality?  All this just seems like a hoax, just so someone can make money off our hard work, charging thousands for books, college, and placing us into debt slavery with a bank.  Its obvious that our education system has now become a big corporation just like the government itself, with no remorse for the American people.
Aug 23, 2013 3:59PM
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At any cost, what do we get?   They can text, stare at Facebook all day, and, feel sorry for themselves.

 

Most need to study, spelling, speech and ambition 101---then go to work ANYWHERE, just to get a start in life.  Sorry, but you don't get a job as an art history,sports journalism, social sciences major starting at $90,000, full benefits, 4 weeks vacation and company car.

 

College has become a 4-6 year party with no good result to society.  Colleges are self-sustaining entities that raise money just to keep this "system" going with no good result.

 

Learn a trade and do something for the world.

Aug 23, 2013 7:11PM
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Big Bad student loans are primarily Big Bad decisions.

My daughter and 3 grandchildren (so far) have college degrees and no BIG BAD loans not because we have a lot of money but because we make good decisions.  Live home, community schools, on line courses, etc. 

Aug 23, 2013 6:06PM
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The whole debate about costs of college is absurd. Drop government subsidies and easy loan policy for students studying non employable curriculums for which there are no jobs. Make loans difficult to get, promote community colleges, trade schools and limit the amount a student may borrow  indexed to projected income. A Phd in mediveal literature and music, knowing they are most likely to wind up in a fast food job, should get very little in loans.

Oh well, they can live with their parents, stay on their parents insurance, get disability for chronic depression, food stamps and have their loan fogiven. Some approach to education for the 21st century. I am sure the Chinese are watching.

Aug 23, 2013 3:04PM
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We'll know shortly, Aimee... I suspect there will be a lot of no-shows on campus who worked hard to get there but fell short, and tons of deadbeats on dole from Obama who bring groups, hatred, bigotry and a lack of commonsense with them. What's the number one ticket in college today: Sports. What isn't a viable or likely career course in the world today: Sports. They don't even teach Self-Employment or Enterprise in college... it's the most likely career option for everyone now.

 

Hey Barrack... resign, we just can't take any more of your Change everyone can believe in. I can't believe how much America has changed for the worse since you took your Oath.

Aug 23, 2013 2:43PM
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I can't believe how stupid and arrogant obo is. That jac ka ss went to two colleges on move in day. My daughter is under lockdown because that asz is at her school.
Aug 25, 2013 3:17AM
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What a joke of an article. If this journalist truly believes the BS written here, i hope (we) taxpayers didn't subsidize all their college education (invariably its guaranteed we subsidized part of it. 

The logic here is that what should concern families is only how much money comes out of their pocket (directly) and not to worry about all the indirect funding the school will take from their wallets in the form of gov't subsidies) - as if somehow those subsidies were not real money. And schools call themselves non-profit entities. Yeah, ok. (And yes i know non-profits are allowed to make money, that isn't my point, my point is that these so-called non-profits are behaving no differently than any other fortune 500 company and receiving a boatload of government funding (read: taxpayer $)

Its time we taxpayers start paying attention to all these handouts we give schools and companies (in the way of gov't contracts/funding). In the end, we have to consider the total cost to society, and not any one sliver of the pie alone. 
Aug 24, 2013 4:11AM
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They still have the GI bill, but strangely, I almost never hear anyone talk about joining the military and THEN going to school, like my nephew is doing right now.  Too bad I was one of the dumb ones and am just now nearing the end of paying for undergrad 14 years later.
Aug 26, 2013 12:10PM
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This article if full of sound bites - "

For the poorest students, the annual cost of college rose just $307 from 1992 to 2007, or 3.4%. But the cost of tuition and room and board jumped by $3,305, or 24.4%, for the richest students." 

 

I find it hard to believe the cost only went up $307 for the poorest students since '92.  The rest has been covered by increased grants and scholarships?  And the cost of tuition and room and board only jumped $3,305 for the richest students?  Middle Class students didn't see a similar jump?

 

Costs going up 4%/year for the last 20 years is too much, especially when Americans are making less than they were making in 2007.  College students can join a gym if they want Pilates or a rock climbing wall.  Colleges don't need to supply them.  Colleges need to tighten the belt and stop trying to be Club Med for the college crowd.

Aug 23, 2013 7:13PM
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Hold down costs and improve programs like the President does.
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