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Contrary To What Everyone Thinks, College Costs Less These Days

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Reprinted with permission from Forbes. Original is here: https://www.forbes.com/sites/dereknewton/2018/03/26/contrary-to-what-everyone-thinks-college-costs-less-these-days/#5c47fcb918ff 

The notion that the cost of a college education is spiraling out of control is a myth. Over the past decade, the real cost of college has been largely flat and, in many cases, going to college is actually less expensive than it was ten years ago.

According to research by The College Board, the actual price that students and their families pay for tuition and fees at private, non-profit four-year colleges is down nearly 5% over the decade. At public two-year institutions the cost trend is also clearly downward, dipping nearly 5% since 2008.

The cost story for public, four-year colleges is more complicated, where, overall, costs have grown more noticeably – up nearly 35% over the decade. Even so, more than half of that jump took place in one year – 2011/12 – when real costs surged almost 40%. But remove that single increase from the decade’s numbers and the trend line is flat – up less than 1% overall across the remaining nine years.

And while it’s not unanimous, the consensus is that the big jump in public four-year tuition in 2011/12 was the result of intentional policy choices by state governments trying to close budget gaps triggered by the economic contractions of 2008/09. According to research reported by the New York Times and others, state appropriations for colleges dropped by 7.6% in 2011/12, a deeper cut than any time in the previous 50 years. Those cuts were, in almost every case, passed on to students and their families in higher tuition.

The College Board research is important because it calculates what people really pay for college instead of the publicly advertised price. It is true that the advertised prices for higher education are up over the last decade – up 32% at public two-year schools, 37% at the public four-years and 26% at private four-year schools. But very few students pay the advertised rates. Instead, they get discounts and grants and tuition aid which adjust the actual costs considerably. Over the past decade, college sticker prices have escalated, but so have offsetting discounts and aid packages.

Despite the data, many people still believe college costs are increasing dramatically. That may be because, according to Nick Ducoff, Founder and CEO of Edmit and a former Vice President at Northeastern University, “Main street media outlets have published headline after headline on runaway college costs and ballooning student debt so people think that is happening.”

Ducoff also says people may have a false impression of what college costs because college services are largely immune to technology-driven efficiencies which have reduced the cost of many consumer goods, making college feel more expensive by comparison. He also notes that parents tend to compare the cost of college to what they paid and to what their state’s flagship public university is charging. If that school’s sticker price is higher, as it probably is, they assume college costs are up everywhere.

If you happened to be paying tuition at public four-year school during the spikes of 2011-13, the idea that college costs are exploding probably feels very real. Otherwise, though, it’s more of a feeling than reality.

Misinformation about college costs have, unfortunately, led to some inaccurate assumptions including that college leaders have been recklessly spending on indulgences such as bloated administrations and fancy student perks. If it was true that the real cost of college was skyrocketing due to out of control spending, the cost of private school tuition would have increased along with public schools. But it didn’t. In real terms, it went down.

More troubling, incorrect assumptions about the costs of college are clouding debates about its value and fueling conversations about alternatives. And while it’s always beneficial to explore other education pathways and options, doing so on the premise that traditional colleges are pricing themselves out of the conversation is, at best, misleading. It is unwise and unhelpful, for example, to promote smaller education units such as “credentials,” or other college alternatives, on the basis that college costs are out of control.

A college degree remains among the single best predictors of both employment and high earnings and it costs, in many cases, less than it did ten years ago. No other investment opportunity offers such predictable lifetime rewards at such stable costs.

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