Current and prospective college students might not fully understand just how much a college degree is going to cost them, but recent college graduates sure do.
According to recent studies, the average student graduates with about $24,000 dollars worth of student loan debt, and Americans are now in more debt due to student loans than due to credit cards. College costs for students continue to rise at a rate multiple times the cost of living increases experienced by the average American. Attending college is becoming more and more financially challenging for middle class Americans.
But why do colleges and universities charge so much? And can anything be done to reverse the trend?
Below you will find several basic possible reasons behind the ever-increasing cost of a college degree:
1. The side effect of Federal student aid.
Federal student aid, while a necessity for many talented individuals who otherwise might not have been able to finance their college educations, could actually be contributing to the problem of rising tuition costs. There are two major reasons for this. First, easy access to federal student aid causes students to ignore the numbers in front of them. Knowing that another party is financing their bill makes students less concerned about the price tag, and, if students do not protest tuition prices, what incentive do university administrators have to lower them?
Secondly, federal student aid has risen steadily over the years in order to keep up with college admission prices. The goal of these aid programs is simple: to reduce the cost of college for students. However, as aid amounts have increased, so too have tuition costs, effectively negating the benefits of increasing federal aid. Colleges and universities know that they can raise their prices and that students will still attend – in part because the government is handing them money.
2. A college degree is perceived as a necessity.
In today’s job market, a college degree is widely considered to be a necessity, even in many professions where it was once considered superfluous. This has contributed to an increase in students attending college to prepare for professions where they do not necessarily need degrees. Colleges are well aware of public opinion regarding college degrees, so they are also aware that they can set tuition almost as high as they’d like and still attract a sizeable student body. To combat this problem, American students would need to seriously reevaluate their life paths and decide whether they truly need a college degree in order to pursue their desired career. Professional, vocational, or technical training should be viewed as a viable alternative to a four-year degree, not a less worthy undertaking (as it is viewed by many now).
3. Colleges do not see students as their customers.
Partly because college administrators know that their product is in high demand and is guaranteed to sell at virtually any price, they sometimes view student attendance as an inevitability. Therefore, some schools tend to focus more on the demands and needs of their professors, alumni, investors, and other important “customers” rather than the needs of their students. Expensive athletic programs (supposedly benefiting alumni more than students), trustees’ whims, and professors’ demands are just a few examples of ways that educational institutions have been known to cater to the needs of their customers at the expense of their students.
4. Peer pressure is powerful.
As one college increases its rates, a competing “classy” school follows suit and raises its rates accordingly. The domino effect is copied throughout the nation as school administrators feel the next rate increase is justified since neighboring institutions have already jumped onto the bandwagon. Colleges that keep rates intentionally low are quickly viewed as sub-par by other schools and may run the long term risk of devaluing the worth of education received through their brand.
5. Student acquisition costs are skyrocketing.
Amidst all the criticism for nonsensical increases in the cost of American college education, one final point is worth noting. The cost for acquiring an individual student at an American college is rapidly increasing. Each year, new for profit colleges are created while other similar institutions rapidly expand. These for profit colleges directly compete for students with the historic US universities, state institutions, private colleges and community colleges. The annual increase in student openings at American colleges far exceeds the annual increase in the number of students entering colleges. American colleges find themselves forced to target adults and pressure them into beginning or returning to college in order to create a continuing yet non sustainable student population growth.
Out of desperation, colleges pay $35 or more merely for a new prospective student’s contact information. A long food chain of marketing firms and affiliates then take advantage of this desperation by using traditional and nontraditional techniques to lure unsuspecting individuals into submitting their personal information which is then sold to these colleges. Many of these contacts prove to be worthless, but only after a college spends in excess of $50 per contact through phone calls and promotional mailings as well as hefty payments to those who obtained the prospective student’s personal information.
As college student recruitment and admissions offices fork over hundreds of thousands of dollars each year to obtain enough students to keep their schools operational, that escalating student acquisition cost contributes directly to the tuition costs that wildly continue to increase to levels an average American family will soon find unfathomable.
What can be done?
We invite our readers to share their thoughts into what can be done to salvage the American higher educational system before it is too late.
This article originally was posted in December of 2011, but it is just as relevant today, and the average amount of student debt upon graduation is inevitably only increasing.