The Rising Cost of Higher Education and Its Impact on Students’ Financial Well-being

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In recent years, the costs of education in the United States and globally have skyrocketed. The reality is that while sticker prices have gone up 20 percent since 2007 (adjusting for inflation), the actual cost to attend for the two-thirds of students receiving grant aid or scholarships has risen 4 percent, or 0.4 percent a year. A report produced by CNBC showed that by the end of 2019 costs of putting a student through college had risen by an average of 25% over 10 years. This issue is critical because it affects every corner of society. It affects the dreams of countless aspiring students and their families.

Many students aspire to attain a college degree. But with the rising cost of higher education comes a barrier to entry for potential scholars, a source of stress for current students, and a long-term financial burden for graduates. If the cost continues to rise, I am afraid the pursuit of knowledge will no longer be a noble and accessible goal. Take for instance students that seek additional academic assistance from Home page, it will be hard for them to hire tutors and get help online. These students will be forced to weigh the value of education against the possibility of debt that may follow them for years.

Causes of Rising Cost of Higher Education

The causes of the rising cost of higher education are multifaceted and complex. They stem from internal and external factors that have evolved over decades. The main cause of this issue is the significant reduction in government funding for public colleges and universities. Historically, state governments provided a significant portion of the budget for these institutions. But over the years, this support has dwindled. As a result, colleges and universities have been compelled to shift the financial burden onto students and their families, leading to higher tuition fees. This decline in public investment makes higher education less accessible. Besides, it strains the quality of education and resources available to students.

Another reason for the rising cost of higher education is the overall economic climate. Following the recession, states suffered financially. Mandatory spending programs, such as Medicaid, consume a significant portion of available funds. This reduced public funding forces institutions to rely on tuition as a major revenue source. Moreover, although undergraduate programs are typically referred to as “four-year” degrees, many students take longer than the designated timeframe to complete their studies. For instance, by the time an accounting student sits their final accounting exam, they may have probably stayed in college for about 5 years. Such factors as changing majors, transferring credits, or balancing work and family responsibilities contribute to the extended duration of degree programs. Logically, the additional time spent in college translates into increased credit hours and higher costs for students.

But can competition amongst institutions of higher learning contribute to the increasing costs? Well, competition drives up spending on campus facilities, technology, administrative salaries, and other non-academic amenities. We know that such investments aim to improve the student experience and institutional prestige. But the consequence is that it increases operational costs that are passed on to students through higher tuition and fees. Simply put, the pressure to maintain a competitive edge means that institutions must constantly upgrade their offerings.

Impact on Students’ Financial Well-being

In 1978-79, it cost $17,680 per year to attend the average private college and $8,250 per year to attend the average public college, after factoring in inflation. Today, those respective costs increased to $48,510 and $21,370. So, what are the consequences of this increasing cost of higher education? Definitely, there are profound implications for students’ financial well-being.

1. Increased borrowing and debt accumulation: students and their families become increasingly reliant on loans to finance their education as the cost of tuition, fees, and living expenses outpaces grants and scholarships. CNBC reports that by 2020 student debts had doubled in 10 years and collectively Americans owed $1.7 trillion in student debts. This reliance on borrowed funds means that many graduates start their professional lives burdened with substantial debt.
2. Limited career choices: The burden of student debt often influences career choices. It pushes graduates toward higher-paying jobs that may not align with their passions or intended career paths. This economic pressure can stifle innovation and deter talented individuals from entering lower-paying, but socially valuable, fields such as education, social work, and the arts.
3. Increased financial vulnerability: Graduate grapple with substantial debt, which makes them more susceptible to economic downturns and personal financial crises. The combination of high debt payments and potentially limited savings makes it more challenging to deal with unforeseen financial hardships, such as job loss or medical emergencies.
4. Deferred life decisions: The financial strain forces many graduates to postpone major life decisions. You read that right. The need to prioritize debt repayment can lead to delays in milestones such as marrying, starting a family, or entrepreneurship.

Thus far, we know what causes the rising cost of higher education and the resultant impacts on student’s financial well-being. That said, it is important for policymakers, educational institutions, students, and the community to address the escalating costs of higher education. Let’s be honest, the pursuit of knowledge should not come at the expense of financial well-being. It is as simple as that.