Students in the United States spend about $30,000 per year on tuition-nearly twice what students in other developed nations spend. Over 44 million Americans are underwater on their student loans, which add up to a staggering amount of $1.5 trillion across the nation. In light of their implications on people’s long-term goals, this statistic is of particular concern.
Millennials face unique financial challenges that previous generations never had to, like saving for higher housing costs, which doesn’t help when they are burdened with student loan debt. And although wages have increased by 67% since 1970, tuition is increasing at an even faster rate, causing sticker shock for many students, according to a recent Student Loan Hero report.
The report also states that public and private schools have experienced steep increases in undergraduate degree costs since the late 1980s, with public schools increasing by 213% and private schools increasing by 129%, adjusted for inflation.
The average tuition and fee costs at public and private colleges rose by more than 3% from 2016-17 to the 2017-18 school year. On average, tuition and room and board at a four-year nonprofit private institution are $46,950. A student at a four-year public college pays an average of $20,770 a year for tuition, fees, and living expenses. In comparison, an out-of-state student pays $36,420, according to the college board report.
Student loan borrowing increased from about 50% in 2000 to 60% in 2012. The median cumulative loan amount also rose from $16,500 to $20,400 during this period. Students borrowing more might explain part of the huge growth in government financial-aid programs – but with that growth comes higher tuition fee.
What is the reason for the high cost of college? Well, numerous factors account for the surge in tuition costs – rising student demand for a degree, rising financial aid, tighter state funding, escalating administrative costs, and bloated student amenities packages, all of these elements have contributed significantly.
Even as the cost of other goods and services has declined in many industries over the past three decades, higher education’s costs have risen significantly, and especially in the USA.