College tuition increases about 8 percent annually or doubles about every nine years, according to FinAid.org. This mean college tuition outpaces both inflation and even college costs. College tuition increases due to a variety of situations that might impact the educational institutions ability to operate on sound financial principles, while providing a quality education to the student body. The pressures range from a downward spiral in subsidies to external organizations applying pressure on colleges to spend more money than is necessary on a range of educational mediums.
Lack of Subsidies
U.S. News reports that one of the main causes for tuition increases in colleges is the downward trend of state taxpayer monies going to fund higher education. The main cuts are center on subsidies provided on a per student basis. In order for colleges to make up for these lacks of funds, they will normally need to increase tuition rates. According to research available to U.S. News, the amount of subsidies available seems to dwindle almost annually, forcing annual tuition increases.
Increased Administration Costs
The college system in the United States is highly competitive. Colleges are expected to have the best programs, best research facilities, and the best college professors in order to produce the brightest students with the best education. Going after the best usually results in bidding wars with other colleges and universities to attract the best talent. This process creates an over extended budget and to meet that budget, colleges have to increase tuition. This doesn’t even take into account normal increase as well such a market forces and inflation that automatically increase administration costs.
The Educational Process
When William Bowmen was president of the Andrew W. Mellon Foundation, he articulated that the main cause of tuition increases is tied to the nature of the education process that prevents academia from sharing in the gains of productivity that leads to gains enjoyed by the rest of society. The problem with governance is that the trustees responsible for controlling budgets often take direction from the presidents at universities with the result of tuition increases, rather than budget constraints to control cost issues. Furthermore, government policies for financial aid often dictate to colleges to provide such aid to the most needy. For those who don’t qualify for aid, but still can’t afford the tuition, colleges must rely on expensive merit aid, scholarships and other expensive financial packages. This leads to higher tuition costs.
Other External Factors
Other external factors also work to increase college tuition to include local governments, alumni, environmentalists, and historical preservationist. Often any expansion at a college will involve substantial negotiations with the local government due to the college’s tax-exempt status, while local governments look for means to pull in revenue from such expansions. This leads to higher costs added the process of expansion. Alumni will also exert cost pressures, warning universities not to make cuts or they will pull contributions. Projects often are slow down once started by environmentalist and historical preservationists, increasing the costs of the project. Most colleges answer these cost increases with tuition increases to keep everyone else satisfied.