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Student Federal Aid to Blame for Increasing Tuition Costs?


February 9, 2016
by Susan Dutca-Lovell
Some 200 years ago, attending Harvard may have cost roughly $600.50 a year ($8,371 if you adjust for inflation) in comparison to today's cost of attendance of up to $69,600, according to Greg Daugherty. College Board reports the average cost of tuition and fees for the 2015-2016 school year was $32,405 at private colleges, $9,410 for state residents at public colleges, and $23,893 for out-of-state students at public universities - that's not including room and board, books and supplies, personal, or transportation expenses. What accounts for the tuition increase? There seems to be no definitive answer. However, a new study points to federal student aid, or the pursuit thereof by colleges and universities as the culprit of rising tuition.

Some 200 years ago, attending Harvard may have cost roughly $600.50 a year ($8,371 if you adjust for inflation) in comparison to today's cost of attendance of up to $69,600, according to Greg Daugherty. College Board reports the average cost of tuition and fees for the 2015-2016 school year was $32,405 at private colleges, $9,410 for state residents at public colleges, and $23,893 for out-of-state students at public universities - that's not including room and board, books and supplies, personal, or transportation expenses. What accounts for the tuition increase? There seems to be no definitive answer. However, a new study points to federal student aid, or the pursuit thereof by colleges and universities as the culprit of rising tuition.

The National Bureau of Economic Research reports that between 1987 and 2010, student aid has been the leading cause for college tuition increase. Due to the increased availability of subsidized loans and the appearance of unsubsidized loans, colleges raised tuition knowing that "financial aid will cover the difference," according to Inside Higher Ed. An assistant professor at Indiana University states that "you have to somehow structure it so that colleges can't just increase tuition and capture that money." Some don't buy into this logic - rather they believe that the "college's sticker price is set by its wealthiest student's ability to pay - and the wealthiest students never take out loans." Others blame the lack of state funding or the expense of paying costly faculty salaries.

Some have criticized the study's "hypothetical college" model because it is based on "data from private and public nonprofit institutions" which is a "too-simple way to view a complex problem." In addition to why tuition has to increase, another important question to ask is where is that money going? Not all of endowment money goes towards student aid, and Congress is scrutinizing 56 colleges with large endowments who were "valued in excess of $1 billion as of the 2014 fiscal year." Letters will be sent to these colleges this week, demanding the last five years of financial data as to where the endowment money has been used since the two congressional committees "are not able to accurately assess how colleges and universities are using endowment assets to fulfill their charitable and educational purposes."

Though college tuition is not as low as it was in the 1800's one solution for lowering your college costs and expenses always remains true: scholarships.

Credit attributed to Greg Daugherty, an editor, writer, and editorial consultant with features in TIME Inc., Reader's Digest, Consumer Reports, and other publishers.

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Discuss

Share your thoughts and perhaps thousands of students will benefit from your unique insight on the subject!



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MARY JEAN BOWEN  on  2/25/2016 2:05:01 PM commented:

Looking for scholarship for Masters Degree

Seif hassan abas  on  2/23/2016 1:37:18 AM commented:

Hey! Iam from Egypt, iam looking for a scholarship in u.s.a or u.k! Iam playing swimming.... I wanna join any collage's teams of swimming!.. Help me please...

Megan W  on  2/18/2016 8:15:44 AM commented:

"Go to college and get a degree because you will make more money" this is all I heard throughout my life. That a piece of paper that costs you thousands of dollars makes you more money, but is this the complete truth? Not exactly. Yes, you can make more money by completing a degree, BUT you need to secure a job first and in today's economy that's like winning the lottery. So the question is, is it really worth it to take out loans that have an interest rate of 8.5% or higher? Maybe. It is up to a person to make that decision whether they wanna make that investment and possibly end up with nothing but debt they can't pay and a job making $11.50 per hour. College tuition and fees are too much money these days for no garuntee of a job and good pay.

Kearstin Calhoung  on  2/17/2016 7:54:44 PM commented:

I think this is a very powerful message and a great thing to be doing!

cabdirahman saacid  on  2/17/2016 5:40:23 PM commented:

i wanna to apply scholaship by usa so help me please

Ashley C  on  2/16/2016 8:10:13 PM commented:

It's not right that tuitions are going up because more people are eligible for financial aid. Students and adults wanting to go to school are overloading in debt because of financial aid. Student especially are hit by this. Many coming out of high school plan on going to college and don't have many orang scholarships to lean on and getting financial aids leads them into the road of debt. And once they get out of college they don't see the point because now they're stuck with the debt of financial aid. I'm not saying tuition should go back like in the 1800's, but it should be lowered a little so when people come out of college they see the difference between having a degree, and just having a diploma.

Suze S  on  2/14/2016 10:02:45 PM commented:

A college degree is only good if it doesn't saddle you with overwhelming debt. If you can't afford the true college experience then you must get a job and get your degree 1 class at a time and pay for it upfront. You will need the work experience anyway. You can not ust walk into a company and say high I have no work history but I got three degrees please hire me.

Edward Frank  on  2/14/2016 5:32:51 AM commented:

After reading the article and comments below it sounds like we the people of these United States need to take action. There are power in numbers. The focus must be placed on closing federal loop holes and the force the universites to level set their practices and offer up a quality education for a fair price or we wont pay.

Donald B  on  2/11/2016 3:05:32 PM commented:

Federal Aid is one factor in ever rising student costs. But more significant factors are excessive college teacher salaries coupled with decreased teaching loads, excessive administrators, and costly new building, especially of fancy dorms, supposedly to attract students.

CA  on  2/11/2016 11:39:14 AM commented:

My concern, as a single parent, is how the economy is set up for the youth who needs, or would like, to attend a 4-year college program. The tuition is very high to the point that it suggests for the student to seek additional financial support, naming student loans. Which, I believe is an open door to ruin their credits. I graduated from Columbia College with a 4-year BA degree. It's been 20 years now that I have been working in the education field,( not in my field). I have been out of work for almost 2 years due to health issues. My sisters have BS & Masters in Computer Programming and Criminal Justice. Both have also been out of work for about 4-5 years now. Our youth are encouraged to seek the highest education, but yet they are not told the true facts about the financial burden they are undertaking . True, nothing is a guarantee. But this is also a continuous risk, as many of us have taken and have been left to face even nowany years later with wage garnishments, depression & fear of answering our phones because of student loan collectors.

Baggy  on  2/9/2016 10:15:45 PM commented:

No matter how fees goes up we must attend

Brandon B.  on  2/9/2016 6:50:24 PM commented:

College tuition is raised because of all the funding that goes into the recruitment process. Such as constructing new facilities and buildings for students to enjoy on their free time. Oregon is a great example of this.

michael davis-jones  on  2/9/2016 6:09:30 PM commented:

Alot of student that don't have the money to go to college this can make some student get a chance to go to the right college they would like to go to

Tracy L  on  2/9/2016 5:45:02 PM commented:

As usual, the government got involved and made things worse. Scholarships are great unless you are a white male.

Patti Left  on  2/9/2016 5:37:49 PM commented:

It can all be growing population/demand and limited supply. Nowadays roughly 59% when in those days was much lower. Since current demand has increased and supply is low the cost of education has also inflated.

James C.  on  2/9/2016 4:20:56 PM commented:

This article says the fault is with federal subsidizing, but that's not true is it? The fault is with the universities who, as this article states, raised prices solely because they knew federal aid would cover it. The universities have knowingly exploited the program, but the program gets the blame because it was willing to help students? That's pretty ridiculous.

Tiffany Spencer  on  2/9/2016 3:13:37 PM commented:

Apply for scholarships, get it done and you'll be rewarded, it's a lot of help especially when your in financial need.

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