College students return to school with more debt—and no help on the way
With a new academic year underway, college students are gearing up for another semester of challenging coursework—and higher tuition costs.
Nowhere is this more apparent than at elite private colleges, where average tuition rates for the 2023-24 school year have risen by at least 3.9%.
Stanford University leads the pack after its board approved a 7% tuition hike for the academic year. Undergraduates attending will pay $82,406 this year.
Duke University increased its tuition by 4.9%, bringing the total published cost of attendance to $83,263. Meanwhile, Yale students saw their all-in costs surge 3.9% to $83,880.
Although tuition hikes at public colleges weren’t as high, these institutions aren’t nearly as affordable as they used to be. According to the Education Data Initiative, the average annual tuition at public colleges reached $30,000 for the first time in 2021-22.
Fast forward to 2023-24, the average cost of college is now $36,436 per student—inclusive of tuition, books, supplies, and daily expenses.
The problem isn’t that tuition costs have increased. It’s the rate at which they’ve increased that’s cause for concern.
Tuition inflation is like no other
The average cost of college in the U.S. has more than doubled in the 21st century. But the disconnect between college tuition and all other goods and services goes back even further.
Over the past five decades, tuition rates have outpaced inflation by nearly five times—a staggering feat considering America’s prolonged battle with inflation throughout the 1970s and 80s. Average annual inflation never went below 3.3% between 1970-1985 and eventually peaked at 11.3% in 1979 and 13.5% the year after.
Still, college tuition costs forged ahead at a higher rate over the decades.
Research from Georgetown University found that the average price of tuition, fees, and boarding increased 169% between 1980-2020. The National Center for Education Statistics says the average cost increased 180% over that period—from $10,231 to $28,775.
Slightly different estimates, but all tell the same story: college tuition is ballooning out of control.
Colleges say tuition hikes are needed to pay for student support services and facilities, cover the ever-growing costs of higher education, and make up for a shortfall in state and local funding.
Beyond these obvious reasons, experts have debated whether federal student aid is the real reason colleges can increase tuition with impunity.
Federal support only exacerbates the problem
For many students, obtaining a college degree simply isn’t possible without loans and financial aid. According to Forbes, 55% of students leave school with debt.
The amount they owe has reached an eye-popping $1.8 trillion—or $28,950 per borrower on average. Federal student loans account for roughly 92% of all student debt—and the government guarantees all federal loans.
The federal government also provides other forms of financial aid to ensure more students have access to higher education. While this may be well-intentioned, some experts claim these government guarantees allow colleges to charge more for tuition.
A 2017 Fed study showed that the average tuition increase associated with the expansion of student loans is as much as 60 cents per dollar. “That is, more federal aid to students enables colleges to raise tuition more,” wrote David Boaz, a former executive at the Cato Institute think tank.
Colleges are spending money they don’t even have. According to the Wall Street Journal, median university spending increased by 38% between 2002-2022.
In other words, “colleges spend like there’s no tomorrow,” according to authors Melissa Korn, Andrea Fuller, and Jennifer S. Forsyth.
The cost of higher education has crippled millions of Americans with burdensome loans that carry an average interest rate of 6.54%. Interest rates on federal loans rose an average of 24% between 2020-21 and 2021-22, according to the Education Data Initiative.
With the government’s student loan forbearance program set to expire, 43.8 million borrowers will be required to pay back their loans starting in October.
Research shows that one-third of households can expect to pay at least $1,000 monthly—and that’s on top of their mounting credit card bills and rent payments.
The problem is that about one in three borrowers say they’ve already reallocated their debt payments elsewhere.
Despite the potential hardship, graduates are on the hook to pay off their balances in full. President Biden’s attempt to erase up to $10,000 of student loan debt per borrower was ruled unconstitutional by the U.S. Supreme Court.
All while college endowments grow into the tens of billions.
This massive disconnect has experts asking whether colleges should be held accountable for the student debt crisis.
This is a legitimate question, given the hordes of broke graduates who take on massive debt and still can’t find good-paying jobs.