Improving Access to College Education

College in this country is notoriously expensive: the average four-year cost of attending a nonprofit public college has increased by more than 150% since 2000, according to the College Board. Many students and families have little choice but to take out loans to finance their education. Unfortunately, the total amount of outstanding student loan debt in the U.S. now exceeds $1.4 trillion and the average student loan debt per borrower exceeds $34,000—levels that scare many fiscally-minded young people away from college education entirely. But why is this the case, and what can we do as individuals and as a country to improve access to higher education?

How Did We Get Here?

College tuition in the US is considered to be among the most expensive in the world. Part of this is simply prestige: most US colleges and universities are ranked among the top institutions globally. They are also highly selective, admitting only the top 10% of applicants, at best. The difference in quality between the top 10% and the 90% is what makes the cost so high. But that’s not the only factor: the cost of education has risen much faster in the US than the inflation rate. According to the US Census Bureau, the national inflation rate in the US is 2.2% for the year 2018. But the inflation rate for college tuition and fees is 6.1% for the same year.

Partly, these costs are driven by constraints on supply. According to the National Center for Education Statistics, there are about 4000 degree-granting colleges and universities in the US. This means that the competition for students is fierce. To attract students, colleges and universities need to invest in new facilities, programs, and faculty. The end result is a hike in the cost of education.

The other factor, of course, is the cost of living in major US cities. Education hubs such as Boston and New York City have some of the highest housing costs in the world. Other large cities in the US, like San Francisco, Washington D.C., Los Angeles, and San Diego, are also among the most expensive places in the country—and this cost is ultimately borne by students if they wish to live in the area.

This, coupled with the high cost of education, makes it difficult to live on a student’s paycheck. As a result, many students are forced to take out expensive loans to finance their college education.

Across the Sea

In the U.S., it’s fair to say that, like most things, the university education sector is market-driven. In other words, its price is driven by supply and demand. By comparison, many European countries have a large degree of public funding for universities. As a result, the price of education is much lower.

For example, Scotland has a policy of free tuition for Scottish resident full-time degree students. Sweden provides tuition-fee-waivers for the poorest students, and the government also pays part of the tuition fees for the rest. Norway and Finland, meanwhile, have a policy of free education.

In contrast, the US government provides comparatively little direct funding for higher education. In 2019, PEW estimated the figure to be around 34 per cent of total revenues.

Zoom Zoom

The most obvious way to reduce the cost of college education is to cut the cost of tuition. This is something that technology is already allowing us to do. This year, of course, colleges around the world have been forced to invest in technology for distributing classes online. While studies into the efficacy of online learning are a mixed bag, the consensus on the economics are pretty clear: it’s much cheaper to deliver.

What does this mean for students? For starters, it means that there is a much wider range of courses available to them. An online class can be scheduled to run from anywhere. And classes can be delivered to students in the middle of nowhere, with a minimal amount of infrastructure. But analysts are also predicting flow-on effects for the cost of education. In theory, if you can package up a course and deliver it online, the cost of delivering the course should fall and therefore fees should be lower. In practice, it’s not that simple – but signs are there that the trend towards online learning will put downward pressure on tuition fees in the long run.

Practical Solutions

As a student, what does all of this mean for you? Firstly, it’s worth noting that any decision to go to college—whether it’s public or private—will unfortunately be a financial one to some extent. If you’re paying the out-of-state tuition rate rather than the in-state rate, you should expect to have to pay more. And if you’re considering a private college, you should expect to pay a significant premium for the privilege.

As a result, it’s worth considering the following:

Start saving early. It’s never too early to start thinking about how to pay for college. The sooner you start saving, the easier it will be to pay for college without taking out loans.

Keep your eye out for scholarships. These are not just reserved for elites going to Ivy League schools. Think outside the box – there are many sporting scholarships, art scholarships, and increasingly private companies are offering help as well. A small mover scholarship may prove the difference between attending an out-of-state school and not. And applying for a furniture shipping scholarship like this does not preclude you from taking funding from other sources—so you lose nothing by applying.

Consider attending public schools. If you live in a state with a low cost of living and a high quality of public education, you might find that you’re better off attending a state school in-state. This is something you’ll need to research closely, but it’s worth thinking about.

The Bottom Line

Going to college and getting a degree is still one of the best investments you can make in your future. But the cost of college education in the US is becoming prohibitively expensive for many families. As a result, more and more students are taking on high-interest loans to finance their education. It’s a bad situation for students and a bad situation for the US economy as a whole.

The good news is that technology has enabled us to deliver high quality education more efficiently. The future of education is online – and that could be a boon for consumers. But until this transformation fully takes place, it’s up to you to think of innovative ways to fund your education—so start planning early, think outside the box, and don’t be afraid to change your plans to match the current economic climate.