Why Tuition Keeps Increasing

EvilPlans

Despite the Obama administration’s very public efforts to control the cost of higher education, many institutions continue to hike tuition dramatically. Is this about indifference to the Obama plans or is this, perhaps, a way of addressing them?

According to an article by Kevin Kiley at Inside Higher Ed:

Princeton University’s 4.5 percent tuition increase for next year, bringing the price excluding room and board to $38,650, is the university’s largest price rise in six years. Similarly, Dartmouth College’s increase of 4.9 percent, to $43,782, is larger than its increases in recent years. Yale University’s comprehensive fee will also increase about 5 percent next year.

Public four-year universities raised tuition an average of 8.3 percent last year, compared to an average 4.5 percent increase in privates. Increases in the University of North Carolina system for next year will average close to 9 percent. Price hikes will be similarly large for the California State University System. But because they are starting from a lower baseline, the total dollar increase for these institutions is still less than the smaller percentage increases at privates.

It’s worth pointing out that increases in the sticker price of college don’t necessarily translate into increases in the real cost that many families have to pay. As Kiley points out, many private institutions posting those big rate increases have such a large endowment that middle-class, and even relatively affluent, students are effectively protected from these increases.

As Matt Krupnick at the San Jose Mercury News demonstrated earlier this month, a middle-income family would actually pay less money to send a child to Princeton or Williams than it would to send the same student to Cal State or UC Santa Barbara. That’s because elite colleges offer better financial aid.

Something else may be going on here, however. Under the plan for college tuition that Obama announced in January, institutions’ eligibility for federal student aid—Perkins loans, work-study money, and Pell grants—would be tied to their success in keeping costs down. Essentially, fewer, or lower, tuition hikes mean more federal money.

But the government hasn’t actually instituted any policy changes yet. This means that now is the perfect time to hike tuition.

If in the future colleges are going to be punished for increasing tuition, and rewarded for lowering it, a great way to prepare is to just raise the baseline. It’s a lot easier to avoid raising tuition if the institution is at $43,782 a year when the federal government starts paying attention than if the college starts at $35,000 a year. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer