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The Simple Reason College Tuition Costs Have Exploded

texaspgtexaspg 16478 replies340 discussionsForum Champion Pre-Med & Medical Posts: 16,818 Forum Champion
http://www.cheatsheet.com/money-career/the-simple-reason-college-tuition-costs-have-exploded.html/?ref=YF
In a nutshell, what’s happening is that the expansion of federal student loans and aid is causing schools to drive up what they charge in tuition. Why? Because they can, basically. It’s as simple as seeing more money available, and taking the necessary measures to secure it. In all, for every dollar awarded in grants and federally-backed loans, tuition goes up 55 to 65 cents.


Just because students can borrow more, they keep raising the price?
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Replies to: The Simple Reason College Tuition Costs Have Exploded

  • ordinarylivesordinarylives 3157 replies43 discussionsRegistered User Posts: 3,200 Senior Member
    I've never understood this logic. Recently, the fed put limits on the amount undergrads can borrow and stopped the guaranteed student loan program through private banks. How did making subsidized loans less available and capping the amount that can be borrowed an "expansion?"
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  • Erin's DadErin's Dad 32915 replies3643 discussionsSuper Moderator Posts: 36,558 Super Moderator
    edited April 2016
    for-profit institutions experienced significantly larger increases in disbursed aid over the years of the aid cap changes. Correspondingly, these institutions also displayed sticker tuition increases of about $212, on average, as compared to $56 for non for-profit institutions
    edited April 2016
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  • lookingforwardlookingforward 32674 replies349 discussionsRegistered User Posts: 33,023 Senior Member
    Agree with NJSue that student expectations have increased. Just listen to them.

    Immediately after the 2008 crisis, my U aggressively went after back room costs, reducing staff, hours, budgets, and extras, changing the structure for salary increases among faculty and staff. It's true there are new hires, some at generous salaries, but generally related to the mission or bringing in funds. An external committee dictates more than many are comfortable with.

    Consider what you and your own kids want in a college, who fusses over dorm amenities, food quality, the gym, security, intramural sports, shiny labs, career services that hold hands, etc. It's complicated.
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  • MiamiDAPMiamiDAP 16183 replies1 discussionsRegistered User Posts: 16,184 Senior Member
    Supply / demand situation as with any other product / service.
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  • texaspgtexaspg 16478 replies340 discussionsForum Champion Pre-Med & Medical Posts: 16,818 Forum Champion
    Dorms and food are separate itemized costs. They really have stayed little closer to being real numbers compared to tuition which seem to have jumped up 5% year over year every year.
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  • lookingforwardlookingforward 32674 replies349 discussionsRegistered User Posts: 33,023 Senior Member
    That may be family costs, not cost of operation.
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  • hzhao2004hzhao2004 632 replies2 discussionsRegistered User Posts: 634 Member
    Student loan is definitely a very significant factor in driving up the tuition. The other is the reduction of state funding for state univerities. The third is expansion of bureaucracy of virtually all schools.
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  • DadfanDadfan 69 replies3 discussionsRegistered User Posts: 72 Junior Member
    @texaspg Yes I believe this is correct reasoning. A few years ago asked a Stanford Board of Trustee Member why tuition cost had gone up so high and this is the exact reason that was given to me. I was surprised at the time but have since done research and do believe this is absolutely the driver. Consumers then buy into the crazy idea of paying $250k+ for an undergraduate education at these institutions. Guessing once the Millennials get political power they will change this for the next generation--or at least hoping so.
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  • TooOld4SchoolTooOld4School 3316 replies12 discussionsRegistered User Posts: 3,328 Senior Member
    Let's not forget financial and school paid merit aid. A larger and larger portion of students receive assistance which drives up costs for full pay families. What is more amazing is the huge disparity in prices for an essentially similar service. Families with low(er) cost alternatives are sending their children to cheaper institutions ; witness the lower admission rates and higher yields for in-state flagships. A few years ago upper middle class families would not hesitate to send their children to full pay private schools, now they are considering the value option.
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  • texaspgtexaspg 16478 replies340 discussionsForum Champion Pre-Med & Medical Posts: 16,818 Forum Champion
    Stanford 2005-2006

    2005-2006
    Tuition $31,200
    Required Fees $425*
    Room and Board $9,932
    Room Only $5,275
    Board Only $4,656

    Total direct to Stanford - 41,557

    Stanford 2015-16

    FIRST-YEAR UNDERGRADUATES
    Tuition $45,729
    Required Fees $591
    Room and Board $14,107
    Room Only $8,346
    Board Only $5,761

    Total direct to Stanford - 60,427

    An increase of 45% over 10 years.
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  • MWCDSSMWCDSS 135 replies3 discussionsRegistered User Posts: 138 Junior Member
    I agree that there is no "simple reason" for the increase, and that several factors are at play. I have in the past included this link to a study which suggests that price discrimination is one of those factors at play, with "sticker price" increases serving to have full-payers subsidize financial aid packages, while net costs adjusted for inflation have not increased as dramatically.

    https://research.stlouisfed.org/publications/page1-econ/2014/01/01/the-rising-cost-of-college-tuition-financial-aid-and-price-discrimination/
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  • TatinGTatinG 6302 replies109 discussionsRegistered User Posts: 6,411 Senior Member
    30 years ago when my sister attended medical school, the cost was $3,000 a year. Now the cost of attending medical school is between $40,000 and $75,000 depending on the school and in-state versus out of state.

    I think for state medical schools the prime reason is that the state no longer provides as much support as it did in the past. So medical students must take out loans of $200,000 accruing interest from day one to attend. So fewer medical doctors can afford to go into rural practice or family practice as they have to pay off the crushing debt. So the country has fewer family practicioners or doctors in rural areas. So there are programs to subsidize those who will. So it goes full circle.
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