Why students can't keep up with rising college costs

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(MoneyWatch) COMMENTARY Most Americans earn their bachelor's degrees at public universities, and it's easy to see why.

State institutions, which are subsidized by taxpayer dollars, have always been the cheapest alternative for most college goers. But public universities have gotten far more expensive in recent years and are undermining the college dreams of a growing number of Americans.

That's the conclusion of a new study entitled "The Great Cost Shift: How Higher Education Cuts Undermine the Future Middle Class." The report, from the think-tank Demos, concludes that a chief culprit of the rising price of higher education can be traced to decreasing support from state governments across the country.

Declining state support

During the 20-year period ending in 2010, state support for each full-time student attending a public university or college declined by 26.1 percent when adjusted for inflation. This state disinvestment in public universities unfortunately coincides with a period when Americans' income has stagnated.

As state support has shrunk, institutions have expected students to pay a bigger share of their education, according to Demos. During the study's 20-year period, tuition and fees at public universities have jumped 116 percent, while the real price of community colleges has risen 71 percent.  

In many states, schools have instituted tuition hikes while also expanding state-sponsored financial aid programs. Yet a hefty portion of that aid is being awarded to rich students who don't need the assistance.

The allure of rich students

According to another study by The Education Trust, which I cite in the newest edition of my book, "The College Solution," flagship state universities give at least half of all merit awards to affluent students. The percentage rises to 55 percent at other public universities.

Why are universities dispensing scholarships to rich students while their middle and low-income peers are struggling to pay the tab? One big reason: State universities want to rise up in US News & World Report's influential college rankings.

Students from affluent communities tend to have better test scores and high school grade point averages, and those stats matter to the college rankings gurus. Such students also have the financial wherewithal to graduate in four years, which also helps with the college ratings. To compete with private institutions for these affluent students, state universities believe they have to kick in money.

As long as state universities behave so cynically, I'm afraid most American students are going to continue to feel the cost squeeze when they head to college.

[pbarber12]

The main reason for higher tuition and room/board is simple. College students are able to get excessive student loans without parents signiture. Thus, the colleges are ripping off the next generation who won't be able to afford homes, and will not have money to start small businesses. Congress needs to stop this now. We had a housing bubble, now we are having a college education bubble, because we eased up bank regulations. The banks are destroying the students lives, and ultimately destroying the base of the middle class. When will we learn?

[karek40]

"Students from affluent communities tend to have better test scores and high school grade point averages. State universities give at least half of all merit awards to affluent students." Hmmm ever hear of cause and effect or more specifically direct correlation, or in english what does merit awards meanto you. This article seems to be suggesting that merit awards should not be given for merit but to bring about social and economic change, therefore the author must be a democrat.

[blackbarbie]

Most affluent schools start prepping their students for the ACTs & SATs as early as their freshman year. Couple that with the rampant grade inflation at these schools (ask any teacher at a private or public school in a wealthy community what happens when she or he gives a student a B or C grade and you'll hear about multiple calls and complaints to the principal), parents who can afford test prep tutoring and multiple retesting (schools take the highest score so as long as you're willing to pay, you can keep taking the exam until you get a decent score) and you have a lot more affluent kids who look real good on paper than a middle class kids with comparable IQs. That said, it's not really "merit" if you can buy it.

[ConcernedCitizen961]

I agree with blackbarbie. I live in an upper middle class neighborhood, and even though I attend a public school, I can tell you that the super fancy private schools around here behave exactly as blackbarbie described. However, what I can't figure out is why lowering tuition for rich kids would significantly increase their rates of attendance at state universities. In fact, schools like University of Michigan are raising tuition costs to unheard of levels for a state university in order to raise their "brand name" and attract these kinds of students. Also, compared with fancy private schools, state universities are already an enormous discount. For example, I myself am struggling with the decision of Stanford versus my state university (more at http://cc-ytt.blogspot.com/, which is a work in progress). The only reason I am considering my state university is because it is literally a tenth of the cost of Stanford, and I am not a rich kid. However, for kids whose parents will pay for any college they're accepted to, cutting an already low price wouldn't substantially increase appeal.

[bcs89]

the real reason tuition costs are skyrocketing is because the states and the private institutions are taking advantage of increased amounts of federal student loans. tuition increases have far outpaced inflation in recent decades, but have exactly tracked the increase in loans made available to the students. congress needs to put the brakes on increasing these funds, and decrease the unreasonable burden larger loans put on the students who borrow them. the same kids will go to the same schools because, as the article points out, they need the kids with the best test scores to maintain their college rankings, regardless of who pays what. it is patently unfair to allow kids to borrow so much money just so schools can increase their endowments and states can underfund their public colleges.

[bcs89]

the real reason tuition costs are skyrocketing is because the states and the private institutions are taking advantage of increased amounts of federal student loans. tuition increases have far outpaced inflation in recent decades, but have exactly tracked the increase in loans made available to the students. congress needs to put the brakes on increasing these funds, and decrease the unreasonable burden larger loans put on the students who borrow them. the same kids will go to the same schools because, as the article points out, they need the kids with the best test scores to maintain their college rankings, regardless of who pays what. it is patently unfair to allow kids to borrow so much money just so schools can increase their endowments and states can underfund their public colleges.

[credibility2]

Kids go to dorm colleges mostly to party and goof off; getting an education is secondary. The majority of kids in college are suitable college material; many are functionally illiterate, rely on taxpayer funded government programs and do poorly academically. Most of these types should either consider going to a trade school or commuter community college.

[jdbynum3]

College is one of the biggest hoaxes going today. People are brainwashed in school to believe that college will make them successful. College WON'T make you successful. YOU make you successful. College should simply be viewed as a tool that you use on your way to success in the field you choose. It is a rip off that people are charged astronomical prices to listen to a teachers helper because the teacher is out giving speeches at $10.000.00 a shot.

[1notrub11]

I would agree. Although I would say that I have benefited from my degree and its experience, I have known many professionals in my life who have been completely successful without one.

Nevertheless, depending on your professional interests, one would have to say that a greater number of opportunities (rightly or wrongly) may be afforded you if you have a degree. You can make of it what you want, based on your own drive and effort - particularly if you are operating a self made business.

[rwsmith29456]

There is a reason for this. For a long time the ticket to a better paying job or promotion was to simply have a degree and if you didn't have a degree you wouldn't even be considered.