Skepticism over the value of higher education is at an all-time high, but tuition growth continues to outpace yearly inflation. Total U.S. student loan debt now exceeds $1.5 trillion, leaving many high school graduates searching for alternatives to the traditional college experience. Institutions struggling to understand their place in the changing education space should know the stats about tuition and the current debt landscape.
- Overall, state funding has decreased by $9 billion from pre-recession 2008 levels, with state funding per student down by an average of 16%. This is an average decrease of roughly $1,448, creating a substantial funding gap for higher education institutions.
- Published annual tuition at 4-year colleges has increased by 35% since 2008. With less state funding, public institutions are responsible for covering the post-recession funding gap.
- Colleges and universities are cutting costs through course elimination, campus closings and student services reductions. Across the board, schools are adjusting to leaner offerings to bring down costs.
- The average tuition discount for first-time, full-time freshmen in 2016-2017 was 49%. Tuition discounts are a common attempt to bring down tuition costs for students, but are generally thought to be unsustainable for long periods.
- 44% of chief business officers are not confident in their institution’s financial stability in the next 5 years. With an increasing number of Gen Z’ers avoiding higher education loan debt, colleges and universities are uncertain about their future.
- Eight in ten private college admissions directors believe a free tuition program, if passed in their
state, would threaten their institution. Even with measures to adjust, colleges and universities are struggling to balance student expectations with their financial means.
What it means for Higher Education leaders:
While the post-recession funding gap continues to expand, colleges and universities across the country are turning to other means to support their students while remaining financially viable. Tuition funding in 2018 requires an understanding of how to prioritize what students want and need with the pressures of limited finances.
Among current efforts to close the funding gap, tuition discounting has now reached an all-time high. Many institutions turned to tuition discounts as the competition for the shrinking pool of high school graduates escalated. However, long-term tuition discounts are unsustainable, with other institutions now turning to other options, including collaborative partnerships between institutions designed to decrease college costs.
Institutions will need to challenge their assumptions about tuition and implement new financial models to thrive despite increasing doubt on the value of higher education, more competition, free tuition programs and rapidly shifting enrollment patterns. Understanding the realities of tuition can better prepare colleges and universities to adjust to changing expectations from students.