A recent report by the College Board might be an indicator of how fast the sands of higher education are shifting. The prices that most people actually pay for college, which had remained stable for several years, are on the rise again, as tuition and other cost increases outpace financial aid awards.
In its latest annual survey, the College Board reports that after rising swiftly since the 1980s, these “net prices” began to level off in the past decade and actually dropped a little during the recession, before climbing again.
Concern is rising that this year’s increases in what students really pay at four-year colleges could be a sign of things to come—and might intensify what many already feel about the value proposition of an undergraduate degree.
Rising rates of student loan debt (up 15% since 2007) and decreases in reported household incomes (down 11% since 2007) could conspire to cause a drop in college enrollments. Although official numbers have not yet been published, state-by-state enrollments appear to be down.
Some suggest colleges will price themselves out of the market as tuition and fees rise a good deal more than the rate of inflation. The National Association of Independent Colleges and Universities has announced that its members raised fees an average of 3.9% for 2012-13, almost double the 2% increase in the U.S. Consumer Price Index. Public higher education tuition and fees have risen even more—up close to 5%, about 3% after adjusting for inflation on average from last year.
Others are concerned about the rate of return on the college investment. According to The Institute for College Access and Success, two-thirds of the national college class of 2011 finished school with loan debt, and those who borrowed walked off the graduation stage owing on average $26,600—up about 5% from the previous class.
Does a value gap exist? In considering the return on investment of a college education existing data suggest that it does. Companion surveys conducted by The Chronicle of Higher Education and the Pew Research Center in 2011 reported that 80% of the general population thinks that education at many colleges isn’t worth the price.
Reflecting the dilemma many are experiencing, consider the recent New Yorker cartoon depicting a student in his advisor’s office, explaining “I’m looking for a career that won’t be obsolete before my student loan is paid off.”
With tuition and fees relentlessly increasing, student loan debt climbing and unemployment receding at a glacial pace, the numbers may not add up for most of this year’s college graduates. The number of recent graduates in the job market grew to around 1.5 million in 2011, and the time to complete a degree is also increasing. According to the National Center for Education Statistics (NCES), many college students are not completing college in six years—let alone four. NCES found that nearly two of every three students who started college did not graduate from that same college in four years, and more than 40% did not graduate in six. Accordingly, the U.S. has the highest college dropout rate in the industrialized world.
Moreover, research shows that even a college degree no longer guarantees a good job.
Assessing the cost and the value
So, here is where we stand today. The annual price tag for a college credential has risen dramatically with no sign of slowing down. The cost of college rose 440% between 1982 and 2007, compared to the cost of living rising by 106%, and family income growing 147% during the same period.
Accompanying all of this is a looming student loan bubble with student debt burdens amounting to $110 billion borrowed last year.
And just when the need for career preparation is becoming more obvious, the cost obstacle is growing dramatically. Consider the following:
• Growing numbers of college students are ending up in relatively low-paying jobs traditionally held by persons with modest levels of educational attainment, or, worse, are becoming unemployed.
• A recent study by the Federal Reserve reports that 27% of the 37 million student-loan borrowers in the U.S. are delinquent on their loans.
• America’s student loan burden is poised to hit $1 trillion this year, according to FinAid.org and Fastweb.com (note: in 2000, student debt was $200 billion).
• Student debt is piling up so quickly, it now outpaces credit card debt growth.
With most institutions hiking tuition, traditional universities under attack on many fronts, and state and federal support in flux, some observers question the worth of a degree.
There is a growing recognition that something is not quite right—that the focus on a college degree may in fact be an outmoded concept—not serving the needs of all citizens in a knowledge-based economy. There are many roads to an educated life, and higher education institutions may be the perfect incubators for non-degree credentialing and expanded learning options.
Philip DiSalvio is dean of University College at University of Massachusetts Boston.