Parents and children a like spend a lot of time trying to get into a good college. The college market is highly competitive among graduating seniors and parents push children to get into good schools. But with the cost of tuition what it is parents also worry about how they are going to pay for their high school graduates first choice college. The need to get a good education in order to compete in the job market is high. We all know that will the competition out there for occupations, employers really take notice of higher education. So with the need for higher education and the rising costs of tuition, many families find themselves struggling to cover the costs or just not sending their kids to school. Tuitions are high but just like everything else out there the cost can only reach a certain point before it starts to fall again. In the coming years the cost of tuition should drop.
Why are college tuitions rising?
When it comes to University costs, just like anything else, it’s all about supply and demand. As the demand for higher education in order to get better job has gone up so has tuition. Since many universities only have so many slots available to students the market has become very competitive and the universities have been able to raise their tuitions. When it comes down to supply and demand, the consumer loses out. Higher education institutions can set any price they want and students have to pay. If you look at Harvard University you can see the dramatic rise in tuition. The 1958-1959 school years tuition was $1,250 and the 2007-2008 tuition totaled $31,456. That’s a 245% increase if you factor in inflation. This rise in tuition is not limited to elite universities, public colleges show the same trends. The1970-1971 school year tuition for University of Virginia was $484 and this year it was $8,500. The College Board recently released a report that states that college tuitions have risen 35% from where they were 5 years ago. With the average cost of a years college tuition being half of a median family’s yearly income, it’s best to make use of all the resources available. There are five options available to those looking to cover the cost of college tuition and fees. With a combination of these options you maybe able to cover most if not all of your costs.
Financial aid is widely available
Financial aid is offered in many forms and you’ll never know if you qualify if you don’t apply. The college Board estimates that 68% of college students received some sort of financial aid in the 2006-2007 school year. Financial aid and scholarship are offered in many categories such as need based and merit based. You can find applications and information at your schools financial aid office.
Student loans
Another option is to take out a loan. The Project on Student Debt did a study in 2007 that showed 2/3 of graduating student have some sort of debt and their average amount is around $19,000 if not more. If you do take out a loan make sure it’s a loan that you will be able to pay back because it will be hard to file for bankruptcy due to the way the laws are written. Richard Vedder, the director of the Center for College Affordability and Productivity, says that as people borrow large amounts they are putting themselves at severe financial risk. However based on research done by the Western Interstate Commission for Higher Education, the number of graduating seniors will be decreasing steadily until the 2013-2014 school year. Hopefully due to this decrease the tuition will also decrease as colleges and universities compete for student enrollment.
Distance learning
Online colleges will also play a role in tuition reductions. School such as University of Phoenix have been expanding at a rapid rate. On a whole the number of accredited online programs has vastly expanded over the last 10 years. These programs not only offer cost effective education but also versatility. People are realizing that they can get their education on their own schedule from the comfort of their homes. In years to come more and more people will probably opt for online universities to meet their needs. So due to the competition traditional universities will have to lower costs in order to compete in the higher education field. When there’s competition it generally leads to lower prices for consumers.
Private loans
Another option that you can consider is a private loan. During the 2006-2007 school year 22% of loans taken out by students were private loans. Right now though due to the global credit freeze, private students loans not guaranteed by the federal government are being effected. The Education Resources Institute Inc, the nation’s largest private loan insurer actually filed for bankruptcy and they are not alone the problems in the credit market are effecting the entire industry. Since the credit crunch started 21 lenders have pulled themselves out of the private student loan market and a lot of banks are also pulling out. The lack of private student loans is causing families who need money in excess of what they get through Stafford and Perkins loans are struggling. The credit crunch is effecting everyone. Lines of credit are growing smaller and smaller. So when it comes to choosing a school students and parents a like will eventually be motivate more by cost than status. Vedder states, that the credit crunch should have a positive impact on tuition. Consumers will become more price conscious and in response to this price sensitivity colleges will have to lower prices in order to get students interested.
Government assistance
The final option out there is government assistance. The U.S. government is making efforts to help students will the cost of tuition. In September of 2007, President Bush signed a financial aid bill that made significant changes to federally guaranteed loan and financial aid programs. The Democratic party has made education a priority. They plan to pressure colleges and universities to lower their tuition costs. IN order to do this they are planning on imposing very rigorous reporting requirements on college tuition costs. If they are successful they could get schools to cut tuition costs by using their large endowments to supplement costs. Some schools are offering more financial aid programs in order to get congress of their backs and save their endowment funds. It’s hard to say whether or not college and university tuition costs will drop, stay the same or go up. But with pressure from the general population and government parties, we may hopefully see some tuition cuts in the years to come. As of right now out young adults are being deprived of higher education and a higher standard of living. Based on the current studies out there, institutions of higher education will have to start cutting costs and offering more financial aid in order to compete with each other as the demand for higher education declines. Remember that when looking at colleges and universities to always do your research. Spend the time to look at all your options and no matter how pain staking it is search for financial aid. The amount of scholarships and grants out there is astonishing. Also pay close attention to which institutions are lowering their few. Taking the time to look for money will save you money in the long run. So don’t give up, there are always options out there.
