College Tuition: Students May Be in Debt for Life

To see the current college tuition crisis happening right before your eyes, all you have to do is look around. Colleges, universities, trade schools, community colleges, and even private schools are beginning to feel the economic pinch. When schools are pressed for additional money necessary for operating costs, there's really only one place to go - the "tuition bank." Rising costs and a poor economy mean that schools need to find more money from their primary income source.

In the UK, parliamentary debate has been going on for nearly a month. Students in London and other major cities have massed by the hundreds in the streets to protest. The cost of higher education is on the way up and some folks believe the college tuition bubble is about to burst like the stock market and housing markets in recent years. That means more students are likely to borrow more money to pay for college. With federal and private loans becoming non-dischargeable in recent years, bankruptcy will no longer provide a way out for graduates looking to find financial relief. Graduates will likely be paying for college through most of their working lifetime.

Economic Conditions Driving College Tuition Increase

Obviously, the economy is driving this current tuition rate increase. In Texas, enrollment in two-year community colleges is growing at three times the growth rate at traditional four-year universities. The bigger state colleges are fearing, and already feeling the funding cuts from the state. Tuition rates are likely to increase as a direct result of state budget cuts. A state budget shortfall of $20 billion could force many state agencies, including colleges and universities, to plan for future budget cuts of 10 percent or more. With state budget shortfalls across the nation, this trend to cut funding is likely to affect all states.

Some colleges rely on more than three-quarters of their revenues to come from federal taxpayer funds. The government allows colleges and universities to receive up to 90 percent of revenues from federal funds. Despite the tuition increases, colleges know that students will be drawn to the more costlier colleges and borrow the money to get there. The federal government has made it way too easy to get money for college. Some colleges are using this easy access to student loans to lure homeless people to apply and enroll in their school.

Tuition Rates Rising at Three Times the Rate of Inflation

College tuition has been on the increase at about eight-percent every year. That means college tuition basically doubles every nine years. Colleges and universities know students will simply borrow more money if they hike tuition fees, and that is precisely what they have done. If tuition rates continue to rise steadily, a college education may cost more than a home.

As the economy tightens and tuition rates continue to increase exponentially, colleges and universities are paying their presidents more than ever. USA Today reported that more than 23 presidents of private colleges had salaries in excess of one million dollars in 2008. Just six years earlier, there were no million-dollar college presidents. It's apparent that these colleges and universities have no plans to let a downturn in the economy affect them at all.

The College Tuition Bubble is About to Burst

Some say it's just a matter of time before all this borrowing catches up to the colleges and students. Just like the stock market and housing market bubbles, the college tuition bubble is likely to burst soon. Tuition rates cannot continue on this path much longer. Easily attainable credit led to unsustainable prices in the housing market and the bubble ultimately burst. Massive foreclosure rates soon followed and many people lost their home. Bankruptcy gave folks who lost their home a second chance. With college tuition, that option is no longer available and students may find themselves paying off school loans for many, many years.

Sources:

8 Reasons College Tuition is the Next Bubble to Burst

Texas community college enrollment goes up 12 percent

A 24 percent tuition increase?

UK: begins debate on increasing college tuition rate

Survey: More college presidents make millions