College tuition plays an important role in how you plan your college finances. For those looking to enter the college world within the next couple of years, you’ll be surprised to see that college tuition is falling for the first time in a long time. Factors involved could be attributed to the pandemic and the current labor shortage we are experiencing all across America.
Tuition Rates Dropping
College costs are often a reflection of the inflation rate across the country. For the first time in over 30 years, the college tuition rate rose at a much slower rate than that of inflation. According to data from College Board, from the school years of 20/21 – 21/22, tuition rates increased 1.6% at public colleges with an inflation of 5.3%. This significant difference has colleges cutting their tuition costs.
How tuition is usually presented is that there is a perceived price, often referred to as the sticker price, and the actual price students pay when financial aid and other aspects are factored in. Colleges will often boost their financial aid packages at the same time there is a hike in tuition prices. This helps to make the increase seem less dramatic. When students start to search for college costs online, they often see the sticker price. In times like what we are experiencing now when this number goes down, the purpose is to attract students.
The recent drop in tuition rates reflects that the demand for higher education has been going down in recent years. Enrollment dropped 3.2% between 2019 and 2021 for 4-year bachelor’s degree programs. This drop is even more significant for two-year programs and community colleges.
Why Are Tuition Rates Dropping?
The pandemic has played a large part in the changes experienced by colleges in the past few years. The challenges of the pandemic increased the fear associated with taking on student debt to finance schooling. Many colleges faced pushback from students who wanted in-person courses, not hybrid courses or fully online versions, which had to be implemented on many college campuses due to surges in covid-19. Students were wary to pay full tuition costs for what they considered to be half the experience.
Labor market shortages are still happening. While this raises questions for our economy, it opens an alternative route for non-degree individuals seeking employment beyond entry-level. For decades, a college degree has been the main route to seeking middle- and upper-class-level employment. The labor shortage has forced employers to raise their wages, as well as lower or erase their college degree requirements.
What to Expect in the Future for College Tuition
Several different colleges have already pledged to freeze their college tuition for the upcoming school year. Colleges such as the University of Carolina, Purdue, University of Vermont, and the University of Nebraska, just to name a few, have committed to holding their current tuition rates. For those who are looking to attend college in the next few years, this is great news. At College Benefits Research Group, we help students prepare for the expectations of college. Our workshops can help cover any college topic you want to know more about.