Why Does College Cost So Much ... and What Can You Do About It?
On The Washington Post's Wonkblog, Dylan Matthews' series "The Tuition Is Too Damn High" has unpacked several of the details of the tuition battle, looking at both why college is so expensive and why it is still the best investment you can make. The series is required reading for anyone interested in the college funding debate.
Here are some of Matthews' most interesting takeaways:
- While the cost of college has risen far out of pace with the rest of the economy, your "investment" in tuition has an average annual return of between 15 percent and 17 percent. This far outpaces stocks, bonds, gold and real estate, and makes higher education one of the best investments you can make.
- A large fraction of the increase in tuition comes from a drop in state funding for higher education. With the exception of Wyoming and North Dakota, every state is now spending less money per student, and public colleges and universities are making up the difference by passing the bill along to students. Between 2000 and 2012, the share of universities' revenue that came from tuition went up by over 35 percent.
- States aren't the only ones to blame: At many colleges, use-it-or-lose-it funding rules discourage them from saving money. More importantly, colleges are in a crowded marketplace, where extravagant facilities can make a major difference in prestige and enrollment. In other words, colleges have every reason spend money that requires them to raise tuition, even if doing so doesn't improve educational outcomes for students.
Second, when you're choosing a major, give a little thought to the return on your investment. In the past, I've written about the value of choosing the right major and determining the most profitable grad school investment. Recently, Bankrate.com put the cost/profit ratio into even starker terms with an analysis of how long it will take for your degree to pay for itself.
Third, while the time you spend at a four-year college is certainly valuable, you may want to wait a while before going there. Community colleges, on average, cost 32 percent less a year than public four-year institutions. Many state universities will allow students to transfer over their first 60 college credits -- a factor that could save you many thousands of dollars. And even if you decide to go straight to a four-year school, you can still save a lot of money by taking summer school classes at your local community college, and graduating earlier.
Fourth: Speaking of spending time outside the university, you also might want to spend some time outside the classroom. Despite all the recent scandals involving companies that take advantage of interns, it's still clear that an internship can make a huge difference when it comes to getting a job. A recent survey by the National Association of Colleges and Employers found that students who completed at least one paid internship received job offers 60 percent of the time.
Ultimately, the lesson is clear: College is pricey, and is likely to get even more so. But it remains the best investment you can make. What's more, with research, careful planning, and internships, you can make it turn a profit sooner -- and remain profitable longer.
Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at firstname.lastname@example.org, or follow him on Twitter at @bruce1971.