America doesn’t need free college tuition for all subsidized by taxpayers. What it needs is smart consumers of higher education who push back on the unsustainable rate increases.
In 2000, a semester of classes cost an in-state student $2,514 at the University of Colorado’s flagship school in Boulder. After 17 years of reliable annual increases, ranging between 2.4 percent and 27.8 percent, the CU Board of Regents voted last week to raise tuition to $10,248.
Thatap a 4.91 percent increase over last year.
Over that same time, student fees have increased from $674 to $1,839 per semester.
Yes, incoming freshmen will be helped by the fact that their tuition is locked in for four years, the result of a smart promise the regents put in place in 2016 so students wouldn’t be priced out of their education midway through a degree.
But the inexorable rise in tuition will continue year after year for those just entering the institution, putting a college education higher on a shelf. At an average 5 percent per year increase in tuition costs, four years at CU would cost almost $85,000 in 10 years.
Many factors are driving the cost of education beyond what increases in wages can support or what the consumer price index or inflation indicate are necessary. There’s a myriad of pressures being put on our higher education institutions: flagging financial support from the state, sharp increases in the price of health insurance and retirement plans for employees, and the arms race for modern, luxury facilities.
But also driving the cost of higher education is the willingness of 18-year-olds to take out $48,348 in student loans for a four-year degree, if not more, to also accommodate cost of living and books.
Student loans can be a great investment. According to the Federal Reserve Bank of New York in 2014, the return on investment for kids who pay cash for their education, realize a state-based income tax savings and receive the average financial aid package is a respectable 15 percent. That even accounts for the opportunity cost of not earning anything for four years.
However, the less financial aid a student receives and the higher their student loan rates, the harder it becomes to justify investing in a college education. The real rub can be which major a student selects, making the liberal arts a bad investment for those paying sticker price, with borrowed money, at our nation’s more expensive institutions.
Unfortunately that kind of financial analysis isn’t occurring among our high school seniors, and the march to unaffordability continues.
Can we really expect 18-year-olds to be making these kinds of financial analyses?
Yes, we should. And when graduating seniors vote with their dollars on wise investments, the system will begin to correct itself. Think students opting to spend their first two years at community colleges or attending universities with a lower tuition, lower fees and lower cost of living.
Parents, teachers and counselors play an important role in these conversations, but universities should be playing a role in these decisions, too, helping kids understand the full cost of their education, how much more even a low interest rate (2.8 percent currently) tacks onto the price tag and what alternatives are available.
The Colorado’s Department of Higher Education is already doing an admirable job on this front. Visit www.collegeincolorado.org if you or someone you love is on the cusp of making financial decisions about higher education.
That said, the state and the university system need to do a better job in keeping down the costs for students. Colorado’s share of state spending for our state universities has steadily declined over the years, despite an expected $20 million increase this year in state funding, Colorado is among the worst in the nation for its contributions to higher education.
We all have a collective interest in Colorado remaining among the most highly educated states in the nation. The benefits of a highly educated populace are apparent.
But sadly, with the return on investment for a college education steadily decreasing (most notably driven by the opportunity cost of not working for four years, while simultaneously accumulating debt in pursuit of wages that are not keeping pace), we are headed in the opposite direction.
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