Rising Tuition Costs Outpacing Inflation

Every year, most all colleges and universities announce increases in tuition rates and fees to the chagrin of students and families who are trying to overcome the current economy as they seek higher education.

Current increases, while not as steep as in recent years, are rising faster than the rate of inflation and faster than increases in household income.

According to a recent Star-Ledger survey of over two-dozen college and universities in New Jersey, the cost of paying for college has increased from .02% to 6.1%, while the rate of inflation remained at approximately 2%.  There are several contributing factors to this situation including a decline in enrollment, leveling off of Federal grant aid and apprehension of acquiring debt.

Enrollment vs. Operating Costs

One reason the numbers continue to increase is a slight dip in enrollment.  It is a rare occurrence in a poor economy to see any decline in student enrollment.  The decline, coupled with the costs of operating an institution of higher learning, forces the hand of college officials to boost the costs for enrolled students to make up the difference.

Federal Grant Aid 

In recent years, there was a steep increase in grant aid being offered by the Federal Government, but those rises have currently leveled off.  According to a recent College Board Advocacy & Policy Center report, the amount of Federal grant aid had almost doubled in 2008-09 to $52 billion but has now declined somewhat in 2011-12 to $49 billion.

Loans 

Some colleges are also seeing a push-back by students and families against extensive borrowing. The College Board report also stated that student and parent borrowing had declined by 4%, the first drop in over twenty years. Those without strong career prospects must keep this in mind when choosing schools.