How much does attending College Cost?
College Board published its 2010 Trends in College Pricing providing astounding results. “Over the decade from 2000‑01 to 2010‑11, published tuition and fees at public four‑year colleges and universities increased at an average rate of 5.6% per year beyond the rate of general inflation.” However, one of the most important pieces of information of the report has to do with the hike in rates seen this year 2010-2011, when the increase went beyond the 5.6% to an average 7.9% for in-state tuition and fees at public four-year universities. In 19% of these schools, the increase was over 12%.
As explained by College Board, one third of full-time students do not get the assistance of government grants to pay for higher education. For these students, seeking other sources of help such as merit scholarships, tax deductions or credits is more important, when looking for ways to lower their total schooling costs.
If we talk about average published prices, we find the following:
Public four-year universities have in-state tuitions averaging $7,605, and total costs per year (tuition plus fees, room and board) of $16,140.
Public four-year universities have out-of-state tuitions averaging $19,595, and total costs per year of $28,130.
Public two-year colleges average $2,713 per year and usually, there are some additional costs involved such as the price of purchasing books and supplies, however, as many students commute and seldom have to incur in additional room and board costs, these costs could be lowered. In this higher education setting, students also usually are able to devote time to a full-time job that would enable them to more easily subsidize their education.
Private four-year non-profit colleges and universities average $27,293 in tuition only, and $36,993 in total fees.
However, there is also good news in the published report, and those have to do with aid increases. “Although average published tuition and fees increased by about 24% at public four‑year colleges and universities from 2005‑06 to 2010‑11, by 17% at private nonprofit four‑year institutions, and by 11% at public two‑year colleges, average net price for full‑time students, after considering grant aid and federal tax benefits, declined in each sector over this five‑year period, after adjusting for inflation.” Total grant aid increased by 22% from 2009-2010, reports College Board. This is highly due to an increase in Pell Grant funding and Veteran’s Benefits. Considering inflation-adjusted dollars, the increase is about $600 in total net expenditures at public colleges, and none at private.
The pressure to support students has paid off, as colleges and the government provide more funding than before, with average grant aids of about $6,100 at public four year institutions, and of $16,000 at private nonprofit institutions.
The report also shows that it is worth it to spend on education. The median family income in 2009 for families holding a Bachelor’s degree was $99,707 vs. $48,637 for those with a high school diploma.
How to counteract the effects of tuition inflation:
1- Sign your kids up for an in-state college plan such as the Florida Prepaid Plan. This is the moment to do it, as it is not open year-round, and every year that passes, what you need to pay in order to sign your children up for this plan increases
2- If you are a corporate employee and your company offers 529 plans, this could be a great option for you and your family. Find out about tax breaks and corporate matching. Having a 529 can help your children especially if thinking about out-of-state schools. Make sure that the program you sign up for is invested matching your goals, many financial advisors will tell you to lean towards a conservative program that ensures the fund continues to grow in the long-term.
3- Plan ahead! It is never too early to start thinking about your kids’ future. Aside from housing, the largest investment you and your kids will ever make in their lives will be on education. It takes time and effort to prepare for this next step of their lives, ensuring that all doors are open and remain open in terms of educational alternatives. I’ve seen great students that later on are not able to attend a university because they did not have enough financial support or their scholarships/financial aid package was not enough for them to take the leap. They had to settle for less. Don’t let this happen to you and your children, if you plan ahead, it won’t.
Undoubtedly, the U.S. workforce is getting educated, the government supports it, the higher education institutions support this, it is what will help our economy thrive once again. It is the right step for the country, for me and for you.