Paying for college is expensive, and many families have felt the burden of rising college prices over time. Because of this, most college graduates are leaving school with significant amounts of student loan debt. But there’s some potentially good news on the horizon: college tuition is going up at a slower rate vis-à-vis inflation for the first time in recent history.
Trends in College Tuition Costs
The 2021-22 academic year’s nominal tuition rates increased by 1.6%. However, if you were to adjust for the 5.3% inflation seen during that period, it’s clear that the
average college tuition decline is really happening. What’s more, net college tuition may be on a downward trend.
Tuition rates generally refer to the “sticker price” tuition published by colleges before financial aid is applied. As such, the average amount students end up paying is much less. It’s also important to consider that colleges tend to boost financial aid as tuition prices increase, which means students will spend less on average.
Now, looking ahead to the 2022-23 academic year, students and families can expect much of the same. And there are several reasons for this trend.
Impact of Consecutive Sagging Undergraduate Enrollments
For one, the demand for higher education is falling nationwide. This decline is more evident at less-selective colleges and two-year colleges. With fewer students chasing bachelor’s degrees, colleges will most likely reduce their sticker prices and provide tuition discounts to lure them back. Since the sticker price is usually the number students encounter when they research colleges, institutions will want to market the fact that they’re not increasing tuition.
Tuition freezes also helped keep average sticker prices flat during the pandemic. Colleges across the country froze tuition fees during the first two pandemic years as they scrambled to retain and attract students. Tuition freezes kept college somewhat affordable not only at colleges of all levels, from open-access public colleges to elite universities. However, many colleges are still hesitant to implement significant price hikes on the recognition that the Covid-19 pandemic continues to have adverse financial impacts on students and their families.
With state coffers enjoying record surpluses, public colleges may receive appropriation increases in the upcoming fiscal years. Higher education leaders are bidding for increased funding and financial aid, which means expanded scholarship funding and reduced net tuition for students. It means that institutions may no longer rely on tuition increases to meet budgetary requirements. Moreover, governors are likely to offer increased appropriation in exchange for continued tuition freezes.
Higher Education Emergency Relief Funds to Cover Operation Costs
On the subject of funding, higher education institutions have received several pulses of federal funds since March 2020. The Higher Education Emergency Relief fund was meant to cushion colleges, allowing them to increase per-student funding without increasing hiking costs.
Given that the notion of exceedingly high college prices still looms large in most conversations, there’s a growing realization among higher education institutions that they’re in danger of pricing students out of the market. There’s also the added pressure on the government for student loan forgiveness and the lingering economic uncertainty from the pandemic. On account of these reasons, there’s an increased effort to make college tuition more affordable across the board, so a decline in college tuition prices may soon be a reality.