HOW TO GET A SUPERIOR EDUCATION, BY KEEPING SOARING COSTS IN MIND

Summary:

Many important questions about higher education are related to
its cost. Is higher education a good investment for students? Is
higher education affordable to students from middle income
families? Is higher education accessible to students from low
income families? Is higher education a good value? How are
the costs of higher education shared between students, their
families, and government? Join Upromise and earn up to 8% of your bill in college savings rewards when you dine out at any of over 8,000 participating restaurants.



These questions are interrelated with some highly publicized
issues. For instance, reports of tuition charges of $20,000 or
more have raised fears that college has become unaffordable.
Some believe that federal financial aid policy should help more
people finance their education. Others argue that too much federal
financial aid is provided in the form of loans as opposed to
grants. Further, as governments face increased pressure on their
budgets, public higher education institutions have had to cope
with smaller appropriations and are relying more on tuition as a
source of revenue. Finally, average faculty salaries have recently
been rising faster than inflation, but only after much of their
purchasing power was eroded during the high inflation years of
the 1970s. Join Upromise and earn up to 8% of your bill in college savings rewards when you dine out at any of over 8,000 participating restaurants.


Tuition and fees in constant dollars grew at a rate of 3.1 to 5.6
percent per year between 1980 and 1990, depending on the type of
institution. On the other hand, median family income did not keep
pace with inflation. It fell in constant dollars from $42,500 in
1980 to $40,500 in 1993.1 Since 1990 the rate of increase at public
institutions has been greater than that at private institutions or than
it was previously. For example, at public universities, the annual
rate of increase was 4.3 percent between 1980 and 1990, but 6.2 percent
between 1990 and 1993.

* Average annual rate of increase in tuition and fees
(in constant dollars)
* Academic years beginning
* Type and control of institution 1980–90 1990–93 1980–93
Public (percent) Universities 4.3 6.2 4.7
Other 4-year colleges 4.3 8.3 5.2
2-year colleges 3.1 7.4 4.1
Private
Universities 5.6 3.6 5.1
Other 4-year colleges 4.8 3.5 4.5
2-year colleges 4.1 1.4 3.5
SOURCE: NCES, IPEDS Institutional Characteristics Survey

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Despite increasing tuition charges, college-going rates have continued
to rise. Overall the rates of recent high school graduates
continuing on to higher education immediately following high
school have climbed from 49 percent in 1980 to nearly 62 percent
in 1993. Moreover, there is no evidence that students are switching
to lower cost 2-year colleges.

The percentage who enrolled in 2-year colleges did not rise very
much: it climbed from 19 percent in 1980 to 20 percent in 1990 to
22 percent in 1993. Enrollment rates among low income families,
who may be more affected by rising college tuition, also
increased over the period, rising from 33 percent in 1980
(including both 4-year and 2-year colleges) to 47 percent in 1990,
and 50 percent in 1993. However, only 50 percent of high school
graduates from low income families went directly to college
compared with 79 percent of graduates from high income families
in 1993.

• Rising tuition charges appear to have little
impact on students’ higher education enrollment
decisions.









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