Why Costs for College are Rising

Rohan Gupta

The most obvious answer to this question seems to be the failing economy, but what specific events concerning the current economic downturn have triggered this massive explosion in college tuition? Before we can begin looking for answers, we must address the two different "categories" of higher education and

find from where each institution receives its funding. The two categories are plainly public and private. Public institutions are funded mainly by state subsidies based on taxes. States collect taxes and redistribute funds based on priorities. On the other hand, Private institutions receive majority of their funding from endowments from private contributors. I will focus mainly on state institutions since we all attend Georgia Tech and it is a state university.

Frighteningly, tuition costs have been increasing faster at public institutions which are known for their low tuition costs. What is causing this rise for public institutions is the passing of the college financial problems to the students in the form of higher tuition. This passing of the financial problem is occurring because of state budget cuts and increased furlough days. Similarly for private institutions, cutbacks on endowments have caused the institutions to raise tuition costs as well. The Center on Budget and Policy Priorities has observed by March of 2009 that 28 states, including Georgia, have implemented faculty and staff cuts and tuition increases from five to fifteen percent. Because this study was conducted during the early part of 2009, we can expect an even greater number of states to resort to these measures.

One source of aid for both private and public institutions is the Pell Grant. The Pell Grant has historically covered seventy-seven percent of college costs. Now the Pell Grant only covers a third of the costs. President Obama's 2010 Federal Budget plans to increase the Pell Grant and "replace the bank-subsidizing Federal Family Education Loan Program with the more efficient Federal Direct Lending Program." Hopefully these measures will lessen the financial burden for current and future college students.