College students across the country will see higher prices when they return to campuses in the coming weeks, the latest hit on families’ finances caused by inflation.
The rise in tuition and fees may come as a surprise to families after many colleges kept tuition flat for the past couple years, helped in part by a government infusion of money during the pandemic. But now, with inflation at a 40-year high, families are caught in a perfect storm of increasing college costs just when they don’t have the means to cover them, thanks to higher consumer prices and decreased buying power.
The latest tuition increase comes from Iowa, where regents for the state's three public universities voted Wednesday to pass a 4.25% tuition hike, an increase of $331 to $355 for the year, depending on the university. That vote comes days after Penn State trustees approved a 5% tuition increase for in-state students at its University Park campus this fall.
Earlier this year, Boston University pointed to inflation as the reason for a 4.25% tuition hike, its largest in 14 years. The University of Southern California raised its tuition by 5% to about $63,468, while Syracuse University in New York voted in a 4.5% tuition increase.
“When you’ve gotten used to stable costs, a 3% to 5% jump all of a sudden feels really big,” says Shannon Vasconcelos, director of college finance at Bright Horizons College Coach. “A 5% increase on a $5 gallon of milk is one thing. A 5% increase on a $50,000 tuition is something else altogether.”
Colleges are caught in the same bind as families, experts say: They, too, are managing increased operating costs — such as food and utilities, amid a 9.1% consumer inflation rate — along with increased healthcare and payroll costs. Some colleges froze or even reduced employee salaries for years to combat rising labor costs, and during the pandemic, they resorted to furloughs, reduced benefits and other moves to manage costs, says Marjorie Hass, president of The Council of Independent Colleges, an association of more than 700 private colleges and universities.
Not only are operating costs up, but enrollment at some colleges is down, creating an overlap of difficult trends, says Sarah Pingel, a senior researcher on higher education finance and affordability with Ithaka S+R. Community colleges have been hit the hardest and that, in turn, affects the transfer rate to 4-year institutions.
Because some states limit how much their public universities can raise tuition for in-state undergraduates, students this year may see steeper price hikes in other areas.
“In some states where universities are subject to a tuition cap, student fees have gone up quite a bit," Pingel says. "And they’re fees that aren’t necessarily linked to a specific thing. They might just be listed as a 'student service fee,'” she adds.
At Western Washington University, for example, trustees approved the state’s maximum tuition increase of 2.4%, plus a 3.5% increase in room and board rates, a 17.9% increase in the Student Health Services Fee and 4% increases in two other mandatory fees.
Some universities also get around in-state tuition caps by increasing tuition for out-of-state, international and graduate students.
At the same time, institutions, particularly public institutions, “are very aware of affordability challenges,” says Sophia Laderman, associate vice president at the State Higher Education Executive Officers Association, a higher education public policy organization. “They don’t make decisions to increase tuition lightly.”
Indeed, some universities are maintaining their tuition freezes for now. Purdue University is continuing a decade-long tuition freeze, while in Virginia, the governor asked public colleges not to raise tuition. At least 10 of them plan to comply, including William & Mary, according to a university spokesperson. Holding tuition flat for a fifth year in a row, William & Mary cites expected increases in higher education funding and budget adjustments as two ways the school plans to manage inflation without adding costs to student bills. (The University of Virginia, though, had already passed a 4.7% increase when the governor asked colleges to hold costs steady.)
Does Rising Tuition Mean Your Out-of-Pocket Costs Will Increase?
These tuition and fee increases apply to a college’s sticker price, so that means not every family’s out-of-pocket costs will rise the same amount if they qualify for financial aid. State or institutional financial aid for eligible students may help offset the increase in the form of "tuition discounting," Laderman says. That’s the merit scholarships and need aid a college offers an eligible student.
Private colleges, in particular, are known for hefty tuition discounts. According to Hass, with The Council of Independent Colleges, as the listed tuition price goes up, tuition discounting goes up in step.
“What has happened is institutions have given out more and more institutional financial aid to close the gap between what a family can afford to pay and the real cost of their education,” she says.
Data backs that up: A 2021 NACUBO study found that tuition discounting is at an all-time high, with an average 54% discount rate at private colleges. That’s essentially a 50% off sale for eligible students.
Public universities, too, are offering more institutional scholarships these days, and state legislatures have been increasing their state aid in recent years, Laderman says.
Of course, not everyone qualifies for beefy discounts and many colleges don’t meet families' full financial need. Even if a college was generous with its financial aid award to your student, that award might not cover the 2022-23 increase, so families still may face bills that feel unaffordable.
What Can Families Do to Afford Tuition Increases?
College experts recommend the following steps:
Make sure you’ve filed the FAFSA. Institutional financial aid for this fall is likely depleted, but you may still be eligible for state or federal government aid. You'll need to fill out a 2022-23 Free Application for Federal Student Aid. Most state deadlines have passed, but the FAFSA is still worth filing. The deadline for federal aid is June 30, 2023.
Talk to the financial aid office. If your finances have changed since you filed your FAFSA, ask the financial aid office about filing a change-of-circumstance appeal so they can reconsider your aid package with your current financial situation. Even if your situation hasn't changed, you can ask if there are any other forms of available support, Hass says. That could be applying for a new scholarship, grant or work-study.
Search for private or university scholarships. Typically, local community scholarships are the best resource, but you also can search on national websites like scholarships.com and goingmerry.com, as well as professional associations’ sites, Vasconcelos says. Vasconcelos also recommends checking your university’s scholarship website, as well as asking your academic department about any department-specific awards. You’ve probably missed fall 2022 deadlines, but you can prepare for next semester and year.
Consider student loans if you haven’t already. If you haven't borrowed money for college yet, weigh your options for student loans. Because they have lower interest rates and more generous terms, it’s best to max out federal student loans before turning to federal parent PLUS loans or private loans.