Thursday, October 22, 2009
Rising College Tuition and How to Handle It
By Leah Gorham
According to a survey released by the College Board Tuesday, tuition and fees at private 4-year schools rose 4.4% in the current school year to $26,273. Charges at public 4-year universities spiked as well, over 6% for both in-state and out-of state students. There are several reasons why tuition costs are going up. Private schools have seen their endowments shrink and public schools are suffering from a drop in state funding, which decreased 5.7% per student this year. Moreover, the availability of financial aid isn't keeping up with these climbing costs. Grant funding grew only 4.7% in the 2008-2009 academic year. As a result, student loans are also up, with total borrowing increasing by 5% between the 2007-2008 and 2008-2009 school years.
Looking at these numbers we may wonder, why even during a recession do college tuition rates continue to rise and where does all the money we pay for tuition really go? At many colleges with tuition rates on the rise, management is more similar to a political environment then that of a private corporation. In other words, colleges are not good at cutting programs when they add. For example, it is hard to cut faculty members because of tenure and many colleges also spend more on nonfaculty salaries than it does on pay for the teachers.
There are several strategies one can use to make paying for college a little bit easier on the wallet. It is important to use savings strategically, such as pulling money out of a 529 savings account before borrowing, even if the account has been devalued over the past year. It is also important to borrow smart by using Stafford loans and PLUS loans and check for available tax breaks for paying college tuition. Also, always encourage someone applying to college to apply to several safety schools and to apply to two or three schools with average GPA and SAT scores lower than theirs. They may be able to get more financial aid from these schools, who are looking to boost their reputation by attracting smarter students.