A surprising turnabout for college tuition

A surprising turnabout for college tuition


(CBS News)
College isn't what it used to be, at least when it comes to tuition. 
Tuition hikes have slowed considerably in the last year and are now matching the rate of inflation, according to new data from the Labor Department. That's a welcome relief for families and students who have struggled with decades of tuition increases that far outpaced inflation and meant that earning a diploma increasingly took a bigger bite out of a family's paycheck. 
A college education may be more important than ever in a job market that's rewarding workers with more education, but sharply higher costs have prompted many families and students to question the trade-off. At the same time, what colleges state as their "sticker" price and what students actually end up paying aren't the same, thanks to the increasing role of financial aid as well as smaller tuition hikes. 
The average in-state tuition and fees paid by students after financial aid and other assistance is less than $3,800 per year, according to the College Board. Yet the sticker price is more than double that, at $9,650.
Tuition rose 1.9 percent in the 12 months ending in June, according to Labor Department data. Since March, tuition increases have averaged below 2 percent, the smallest rate since at least 2007, according to agency data. 
While that's about on par with inflation, it's a far cry from the tuition hikes of the past few years. Since the 2006-2007 academic year, tuition has on average exceeded inflation by 3.5 percent at public four-year universities, the college board said. 
What's causing the slowdown in tuition hikes? For one, America's population of college-aged adults is dwindling. The number of 18- to 24-year-olds is projected to drop through 2021, which means colleges are scrambling to compete for a smaller pool of students. Enrollment at colleges has dropped in recent years, sliding 4 percent between 2010 and 2014, the College Board found. 
Not all regions and colleges are experiencing the turnabout equally, according to Ken Redd, director of research and policy analysis at the National Association of College and University Business Officers (NACUBO). Redd earlier this month noted that colleges in the Northeast and Midwest, where the decline in college-age students is most notable, will likely suffer more than in faster-growing regions such as the Sunbelt states. 
As colleges compete for a smaller pool of students, the institutions are offering bigger discounts, NACUBO found in a report published earlier this year. Its survey of 411 private nonprofit institutions found full-time freshmen are receiving a price break of 49.1 percent, compared with 38 percent in the 2005-06 academic year. 
Students aren't the only ones suffering from financial strains. Several small colleges have recently shut their doors for good after struggling with falling enrollment and the resulting money problems. Burlington College, a small liberal arts institution that's now the focus of an FBI investigation, closed after failing to triple enrollment and pay for an expensive real estate purchase. 
New Hampshire's Mount Washington College shuttered in 2016 due to declining student enrollment, while Massachusetts' Marion Court College closed in 2015 due to financial pressures. Other schools are merging or cutting back on departments and staff to save money. 
It's not entirely unexpected: In 2015, Moody's predicted the number of colleges closing due to financial struggles would triple by 2017, while smaller colleges would struggle with declining enrollment. 
Then there are the headwinds of family finances. Colleges are increasingly playing out the nation's issues with income inequality. The typical income of the wealthiest families who sent their kids to college rose 3.2 times as much as the income for the middle 20 percent in 1985, according to The College Board. 
That may be even more evident at the Ivy Leagues and other top colleges. Elite universities have more students from families who are among the nation's top 1 percent of income earners than the bottom 60 percent. By comparison, the students from lowest-earning families are more likely to skip college entirely



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