Costs to Attend University Continue to Rise
October 23rd, 2009According to CNBC (see College Costs Keep Soaring):
The cost of attending a four-year nonprofit private college increased 4.3 percent in the 2009-2010 academic year compared to a year ago, bringing the average annual price to $35,636, according to an educational trade group.
Growing at an even greater rate was the cost of going to a public college. Public in-state college costs rose 5.9 percent, bringing the average cost to $15,213.
MY COMMENT: The cost of tuition at public colleges is currently increasing at a faster rate than at private colleges because public schools are beholden to battered state budgets. Nevertheless, they still represent a significant value (assuming there is little difference in the underlying quality of education across the two).
We certainly can debate the quality/price tradeoff between public and private universities, and I think families would be well served to carefully consider not just the sticker price, but the quality of the education along with the career services that students are likely to receive in exchange for that price. As I mentioned in a previous post (see The Future of U.S. Higher Education):
I agree that the cost of higher education might price some out of the market entirely. However, …the cost of higher education, coupled with what I view as a fundamental shift in consumer behavior as a result of the recession, will more likely usher in a shift in consumption versus an end to consumption.
Gone are the days of taking on exorbitant amounts of debt to send children to private institutions with tuition (not including living expenses) of $40,000 per year, or more. Instead, families will increasingly opt for public universities with tuition in the $10,000-$15,000 range.
For example, families in Texas might start asking tough questions like, “Is the difference in the price between Harvard and the University of Texas really worth the $120,000 difference?” I am not willing to argue that real differences between being educated at a private university and a public university do not exist; however, I am not sure whether those “benefits” (to the extent that they do, in fact, exist) justify the additional premium in all cases. And those considerations are likely to impact the decisions of consumers.
In addition, as I mentioned in another post (see More on University Enrollment and Affordability, quote from a WSJ article):
Facing shrunken savings and borrowing options, parents and students are making some tough trade-offs in choosing and paying for college, suggesting some shifting attitudes toward higher education may endure beyond the recession.
For me, this is where the action lies. It will be interesting to see whether the financial crisis ushers in a structural shift in consumer attitudes and behavior that ultimately puts a cap on the rate of tuition increases. My guess would be yes.
