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College Costs Education Funding Overview Achieving your financial goals requires a coordinated, integrated approach. Peace of mind is achieved from knowing that you have planned well. The sooner you start the better, since education costs are rising rapidly and aid sources are diminishing. College Planning Options College financing is a subject that causes great concern among families at nearly every income level. Unfortunately, issues surrounding college financing have become increasingly complex over the years, and this discussion is not going to be long enough to cover every aspect of every situation. The College Cost Environment Paying for college is not a one-shot, one-year affair. Parents and grandparents will have to think in terms of four years for a baccalaureate, six years or longer for a graduate or professional degree, and an eternity if they have several bright students spaced two or three years apart. Since you might be paying college bills several years into the future, it is essential to understand a bit more about the overall college cost environment. Tuition Costs Will Continue To Outpace Inflation Tuition costs will continue to outpace inflation. If tuition increases, continue at the rate of 8%, a $15,000 bill for the freshman year will be nearly $19,000 for the senior year. There are several reasons why tuition continues to increase at a rate nearly double that of inflation. - Faculty salaries are still low - Energy costs hit colleges much harder than a family - Building maintenance hits colleges harder than a family - Technology is expensive, and colleges must keep up - The number of high school seniors is declining - Some colleges play Robin Hood - Federal student aid lags behind rising college costs - Colleges must compete for students College Is Still A Good Investment One bit of good news is that college still pays. Not only does a college education greatly enrich students' intellectual and emotional lives, but it will enrich their bank account as well. Over the course of 60 years, a college graduate will earn up to $1.9 million more than a contemporary whose education stopped with high school. College is also more affordable than most people think, with more people eligible for financial aid than realize it. Back to top Education Funding Overview Achieving your financial goals requires a coordinated, integrated approach. Peace of mind is achieved from knowing that you have planned well. The sooner you start the better, since education costs are rising rapidly and aid sources are diminishing. Back to top College Planning Options College financing is a subject that causes great concern among families at nearly every income level. Unfortunately, issues surrounding college financing have become increasingly complex over the years, and this discussion is not going to be long enough to cover every aspect of every situation. Back to top The College Cost Environment Paying for college is not a one-shot, one-year affair. Parents and grandparents will have to think in terms of four years for a baccalaureate, six years or longer for a graduate or professional degree, and an eternity if they have several bright students spaced two or three years apart. Since you might be paying college bills several years into the future, it is essential to understand a bit more about the overall college cost environment. Back to top Tuition Costs Will Continue To Outpace Inflation Tuition costs will continue to outpace inflation. If tuition increases, continue at the rate of 8%, a $15,000 bill for the freshman year will be nearly $19,000 for the senior year. There are several reasons why tuition continues to increase at a rate nearly double that of inflation: Back to top • Faculty salaries are still low Most schools indicate that catch-up raises are necessary to attract new professors and to keep tenured ones from leaving academia for corporate America. Back to top • Energy costs hit colleges much harder than a family Not only must dorm rooms support blow dryers, popcorn poppers, personal computers and stereos, but also the big old drafty buildings are expensive to heat and cool. Back to top • Building maintenance hits colleges harder than a family Leaky roofs, crumbly foundations, cracking asphalt, inaccessible pipes, paint jobs, etc. Back to top • Technology is expensive, and colleges must keep up Each institution's academic reputation frequently depends on this fact. That means state-of-the-art computers and sophisticated laboratory equipment must be purchased and maintained at an ever-increasing cost. Back to top • The number of high school seniors is declining While some colleges have made up the difference by enrolling increasing numbers of non-traditional students, others have not. At these schools, fixed costs are spread among a fewer number of paying customers. Back to top • Some colleges play Robin Hood Some institutions raise tuition through the roof and hope that wealthy students will pay the increases out-of-pocket, thus generating funds with which to assist less fortunate students. Back to top • Federal student aid lags behind rising college costs Federal student aid has not been keeping up with college costs. Uncle Sam has cut and stretched his programs in a feeble attempt to help eliminate the multi-billion-budget deficit. Of equal concern is the unstable delivery of federal student aid. In order for Uncle Sam to cut and stretch his programs, each year he must fiddle with time tables, eligibility rules, interest rates and even the forms themselves. These changes come faster than Uncle Sam can communicate them and the result is confused students, confused parents, confused guidance counselors and extremely overworked financial aid administrators. Back to top • Colleges must compete for students There are not enough students to fill all the waiting ivy-covered halls, which means colleges must compete for students. This competition is both fierce and expensive with recruitment costs as high as $1,500 per freshman enrolled. Competition also allows parents and students to become shoppers that are more sophisticated. Families expect more for their money; nice dorms, heath club-like athletic facilities, extensive campus security, up-to-date technology and laboratory equipment, a complete range of health care services, dining halls that accommodate a variety of dietary requirements, extensive career placement and counseling services. All of this costs money which, in turn, takes the form of increased tuition. Isn't it a bit ironic that some of the very people who are affected by rising college costs are in part responsible for urging them upward? Back to top College Is Still A Good Investment One bit of good news is that college still pays. Not only does a college education greatly enrich students' intellectual and emotional lives, but it will enrich their bank account as well. Over the course of 60 years, a college graduate will earn up to $1.9 million more than a contemporary whose education stopped with high school. College is also more affordable than most people think, with more people eligible for financial aid than realize it. In recent surveys, the public consistently places the average cost of four-year institutions from $8,000 to $9,000 higher than the actual cost. Furthermore, many people who would easily qualify for federally subsidized loan programs mistakenly believe that families with incomes over $35,000 are not eligible for aid. Back to top |