Career, Education 

How Higher Education is Responding to Higher Costs

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college campusOne of the big subjects of debate right now is whether or not student loans and education will account for the next economic bubble. Not too long ago, outstanding student loan debt surpassed $1 trillion, and student loan debt is now larger than credit card debt. The rising cost of higher education has caused many to pause and wonder if a college degree is really worth it.

Many parents, anxious about the cost of college, are looking for ways to prepare. It’s smart to prepare for college, of course, but some think that there are some things the higher education industry could be doing to help bring college costs back into the realm of affordability. Sure, it’s important for parents and kids to save for college, but shouldn’t schools be looking for solutions to the rising cost of college as well? Luckily, according to CNN Money, some are beginning to respond to concerns, and are offering options that can save college students money:

Tuitions Cuts and Freezes

Surprisingly, some colleges are actually cutting tuition. CNN Money reports that there are some colleges, like Seton Hall and the University of Charleston, that are dropping their tuition costs in order to make the experience more affordable for students. Tuition cuts are a great way to reduce the overall cost of going to school, especially when you consider that the rule of thumb for tuition increases is to plan for 8% a year.

Even those colleges that aren’t cutting tuition are looking for ways to help keep costs from getting out of control. Some colleges are institution tuition freezes for the next few years. Others are considering offering guarantees. For example, you can avoid tuition increases for four years. Your tuition costs remain the same throughout your college, meaning that you are exempt from tuition increases that may come later on — as long as you graduate within four years.

3-Year Degrees

One of the recent trends in college education has been to see an increase in the amount of time it takes to get a degree. Taking 5 years to complete a 4-year degree was starting to become commonplace prior to the financial crisis of 2008, and in some cases has even been encouraged by the recent economic troubles. However, taking 5 years to get through school can become quite costly. In order to help reduce overall costs of attending university, some schools are rolling out 3-year programs. These accelerated programs allow students to earn their bachelor’s faster, and save money in the bargain.

Other incentives, reports CNN Money, also include a graduation guarantee, that insists that students who meet certain requirements will graduate in four years — or the school will pick up the tab for extra time.

Bottom Line

These aren’t bad options for students (and their parents) looking to reduce the cost of attending college. However, it’s also important to realize that there might be some consequences with the lower costs. Financial aid might be harder to get, or you might not be offered as much of it. Additionally, some schools might skimp in other ways, such as in providing student services, or in quality of instruction. It will be interesting to see how the situation plays out.

(Photo: Mandy_Jansen)

{ 8 comments, please add your thoughts now! }

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8 Responses to “How Higher Education is Responding to Higher Costs”

  1. I’ve worked with colleges for years and the real problem is that no one is held to account for financial austerity. (Not that the government or Wall Street is a good example.)

    As long as efficiency is a dirty word and schools are run like a faculty club, students and parents will continue to face the squeeze.

  2. I agree with Debt and Buried. Running a college is unlike any other business (lots of land, buildings, activities, constituents, other interests including financial) that I’m not sure there is any good way to turn a profit while keeping expenses down. And therefore keeping tuition affordable. Community college is always a good cost-saving option…

  3. Matt says:

    You could always go to a community college for a few years to save some money.

  4. JamesV says:

    I agree the squeeze needs to be put on the colleges/universities. Prices today for 4 years colleges are out of control. Time for lean manufacturing trends to take places in the colleges/universities of today.

  5. All good points. The problem with state schools is that they are run too much like other government industries, ie: Postal Service, DMV. They need to be run more like a business. A business will not succeed if it continues to operate at a deficit every year.

    I attended and worked at a UC school in California. They have plenty of students crammed into gigantic lecture halls and they still charge 20k+ a year. There is obviously some waste there that needs to be leaned out.

  6. Scott says:

    IMHO, student services need to be cut back, reducing the fees required of students each semester and helping to focus the environment on academics not a cushy social scene. Of course, if you had asked me this ten years ago when I was in college I would probably have said the opposite, but what did I know then? ;-)

    In chorus with many others here, colleges are not run like other businesses. I think this is because they have access to essentially unlimited no-risk credit. They can consistently give students an overpriced education and make them pay for it for the rest of their lives and face no risk of default since student loans cannot be cleared in a bankruptcy, unlike all other credit lines available to all other businesses. I think if we allow student loans to be settled in bankruptcies, you will see colleges get their costs in line VERY quickly. Of course, doing so may also cause major financial problems for many colleges and have an overall detriment to our US society – so it’s not a simple problem to solve.

  7. Dawn says:

    Yes, I agree that the cost for getting a college education is “INSANE”! And especially with the way our economy is these days we aren’t even sure we can obtain employement when we do graduate! We will never be able to pay back the loans we had to take out to pay for the classes, books etc. What really gets me is everyone says how important it is to get an education! Yes, I agree it is very important, but if everyone is so concerned about higher education you would think everyone involved would make it more accessable for example: Why is it that the publishers like “MCGRAW HILL” charge unheard of prices for textbooks? Why is it that colleges do everything possible to keep adding additional classes that have to be taken? Why is it that publishing companies can take a perfectly good book and change things around a little, add a few more sentences etc and turn around and call it the next edition? It’s all a money racket!! Truth is no one really cares about the “STUDENTS” all they care about is making that almighty dollar! I feel bad for the students that come after me! Do they really have a chance? It is really sad!! Thanks for letting me voice my opionion!!

  8. Educate4Less says:

    Colleges are actually doing very little when it comes to controlling costs because they have no incentive to do anything differently. Freezing tuition is like freezing the cost of a Honda at the level of a Porsche.

    College is the single largest scam in America today. Of America’s 1,900 non-profit, “four year” colleges, how many graduate over 75% of students in 4 years? 111. But despite this terrible performance, the Government continues to subsidize this industry with below-market rate loans, grants and subsidies. This distorts the supply/demand curve to the point that colleges do not really need to compete against one another (with maybe the exception of the top 1% of HS students).

    College costs have risen for three reasons: (1) Government keeps dumping truckloads of money at their doors, (2) colleges keep building gleaming new buildings and adding administrators – not teachers or researchers (Wake Forest’s admin costs have risen 600% over the last 20 years) – knowing there is no reason to rein in costs and (3) parents who have really never said “no” to their children have not decided to say “no” to them now.

    There are too many colleges, too many kids who shouldn’t go to college go (ACT recently reported that based upon their tests, only 27% of HS seniors are ready to earn a B- average at the average college) and too little is asked of colleges in return for the highly favorable treatment they get from college (i.e. the standard graduation rate quoted by the federal government for 4-year colleges is how many kids graduate in SIX years; why are they still called 4-year colleges?!).

    Another point worth noting is that on July 12th, the cost of student loans for aid-eligible families will DOUBLE. If parents are not looking at 4 year graduation rates and doing everything they can to maximize their savings on this giant rip-off, they’re crazy.

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