College costs a decade ago sound downright affordable. Recent price increases have been stark.
“The average published tuition and fee price of a full-time year at a public four-year institution is 40 percent higher, after adjusting for inflation, in 2015-16 than it was in 2005-06,” according to the College Board.
The data, pulled from the National Center for Education Statistics, shows a 29 percent increase in the cost of public two-year colleges and a 26 percent increase in private four-year colleges, too.
Published college prices can be misleading because it doesn’t factor in institutional aid and other grants. That can discourage students from applying because they think it’s unaffordable. It also makes it difficult for students and families to make a plan for paying college bills. Hence, the College Board also includes net prices to determine a realistic figure.
Net prices, however, have also increased.
The net price of college experienced a brief five-year decline in 2005, but since 2010, “average net tuition and fees increased” for public two-year and four-year colleges and private four-year colleges. By 2015-16, net tuition and fees averaged $3,980, an $1,100 increase from a decade ago for public four-year colleges. Their private counterparts, however, only saw a $190 increase to $14,890 in the same time period.
Those price increases have been “moderate by historical standards, but persistent.” The boom in total student debt has come from large increases in the number of students attending college, though enrollment growth has slowed for most institutions except public four-year colleges.
Government expansion of student aid has made pricing information more unreliable at first glance, too.
“During the Great Recession, the federal government stepped up to significantly increase student aid, widening the gap between published prices and the net prices students and families actually pay for college,” the College Board noted. “On average, after subtracting grant aid and tax benefits, students paid less in tuition and fees in 2010-11 than they had five years earlier. But while this funding is still available, and colleges and universities have continued to increase the institutional grant aid they offer, net prices have grown as the economy has started to recover.”
One explanation of that price growth isn’t tied to economic growth, but the expansion of federal student loans. As students have more access to grants and student loans, they can afford college price increases. Their ability to pay expands, and colleges can charge more without losing students. The Bennett hypothesis predicts that more student loans leads to higher prices for students.
That explanation correlates with the increase for average net prices since 2010. In 2010, the federal takeover of the student loan industry occurred and offered students lower interest rates than they could get from a private loan.
Other factors, such as faculty salaries, administrative bloat, student demand, and the advantages of earning a college degree make it difficult to restrain costs. However, easy loan access, regardless of how likely student completion and repayment is, can drive prices higher.
“If you want more of something, subsidize it,” Ronald Reagan once said. Federal largesse to college students has led to more loans and its corollary, more debt. Until “college for all” policies are changed, college prices will likely continue their persistent increase.
