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April 17, 2012 11:00 AM Tuition Increases Don’t Keep People From Going to College

By Daniel Luzer

Tuition increases are almost universally seen as somewhat unfortunate. Even most universities are reluctant to admit they’re raising tuition with anything other than regret.

According to one agency, however, tuition hikes aren’t really a problem, because people keep going to college. This is, well, an odd way to look at the problem. Reuters:

Fitch Ratings sees that the increase in cost of attendance at U.S. colleges and universities, which began during the mid-1990s and accelerated through the end of the past decade, has not yet had a meaningful impact on enrollment at most institutions. The lack of a negative enrollment trend, we believe, underscores fundamentally robust societal demand for post-secondary education and the nondiscretionary nature of a college degree. Both dynamics, in our view, need to be considered by investors in higher education bonds when analyzing the sustainability of tuition levels and annual rates of increase in student charges.
Despite these seemingly staggering increases in cost, The College Board data indicate that enrollment nationally in public and private institutions has increased sharply since 1996. The increase at public two-year institutions was 136%. Public four-year colleges and universities grew by 133%. And private four-year enrollment rose by 142%.

What Fitch is apparently uninteresting in addressing, however, is whether or not all of these new students can actually afford to attend college at these higher rates.

The debt levels that such students have now threaten to destroy their finances. The fact that they keep enrolling might show a “fundamentally robust societal demand for postsecondary education” but that’s maybe not the thing to worry about.

People keep enrolling because they can’t generally obtain professional jobs without college. But that’s doesn’t mean tuition hikes are causing no problem; they’re just causing no problem for the universities. They’re causing a great big problem for graduates.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • Crissa on April 17, 2012 12:04 PM:

    Since lenders are lending - and were paid to, and now bribed to with the no-discharge rule on student loans - of course students haven't run out of loans to pay for school.

    But they don't get to know if they can pay them back until later.

    It's not the students who will choose when to drop out by cost, but the lenders.

  • Sgt. Gym Bunny on April 17, 2012 1:13 PM:

    Hey Daniel,

    Would you happen to know of any long-term economic forecasts of how high student debt among the "millenials" is going to play out in 20-30 years? Forgive me for asking what I know is a deceptively simple question. I think we already know that people entering the job market during a recession typically earn less money over the course of their career than those who get in while the gettin' is good. But if we combine that factor with a front-load of a lot of student debt (a mini-mortgate), how is this going to play out in the long-run, especially in the housing market or in retirement savings? I imagine that without major policy interventions, we could be looking at another "lost generation". But if I'm wrong, I would like to be corrected...