College has long been a significant cost, and is rising all the time. The sticker shock at top institutions is only going up, racing far ahead of even the recent high inflation. Now, we’re approaching a major milestone. Within the next year or two, we expect the total sticker price at some elite colleges to pass $100,000 per year.
Vanderbilt has made the news recently for surpassing the $98,000 sticker price. While some law schools have passed $100,000 per year already, it now seems like it’s only a matter of time before an undergraduate institution does so as well. In this article, we’re going to examine the broader implications of this; what colleges are in the running to break the barrier, how this sticker price will impact you, and whether or not financial aid will be able to keep up with these rising costs. Let’s jump in!
A Note on Sticker Costs
When we discuss the cost of college in this article, we are covering the full sticker price. This is not just the tuition you are charged, but housing, food, required fees, and all of the other expenses which are a mandatory part of college education even if they are not direct tuition payments.
Not all colleges make it obvious how high total costs are, focusing instead on just tuition (which is often still quite high on its own). If a college makes you live on campus for your first year, as many top schools do, then the cost of doing so is very relevant to you. We will be discussing sticker costs in this article, as these are the most accurate depiction of how much college costs.
Which Colleges Are Going to Break $100,000 First?
Vanderbilt is of course in the running, as it is their price for one student this upcoming year which has begun this whole hubbub. Many experts expect that they will solidly pass this mark next year, but they aren’t the only ones in the running. A lot of top colleges now have sticker prices in the range of $90,000, and could be the first to break the barrier. These include:
- UChicago
- USC
- Washington University in St. Louis
- Tufts
These aren’t the only schools on the list, but are representative of the broader pool. That said, nobody wants to be the first to cross this barrier. $100,000 isn’t really that much more than $98,000, but just like stores round prices down to the nearest 99 cents, there is a psychological factor at play. While $2,000 isn’t that big of a difference, that six figure number is eye popping, and will draw a lot of attention when it occurs.
While we do expect one or more of these schools to surpass it in the next year, we also wouldn’t be surprised if some of them drag their heels to prevent it, hovering instead just under the line until they deem it more acceptable, when more of their peer institutions have made the same jump.
Why Are Colleges So Expensive Now?
This is a complicated question, because it’s hard to point to a single reason. Colleges are complex systems composed of many people, and have nuanced desires and goals. We’ll cover some of the factors leading to this increase, and how each one adds to the whole.
Inflation
Things become more expensive gradually over time, as the overall money supply increases, and prices rise in accordance. While the exact causes of inflation are complex, it is a major factor in the cost increase of colleges, as everything colleges need to pay for, from instructor salaries to facilities, has grown more expensive. Note that inflation very much is not the only cause of a price increase, as the cost of college has grown far faster than the overall pace of inflation.
Loss of State Funding
Public colleges used to get the majority of their funding, or at least a plurality, from state governments. This funding was drastically reduced in the wake of the 2008 financial crisis, and a corresponding increase in tuition costs as colleges rushed to make up for lost revenue. While this does not explain the major increase in the cost of private colleges, it does provide the main impetus for the price increase in public education.
Administrative Bloat
Many colleges have greatly increased the size and scope of their administrative positions, even while often limiting the number of tenured faculty. The salaries for these positions need to come from somewhere, and as the number of administrators increases, so too do the college’s costs. This is of course not that main cause of price increases, but is another factor contributing to the rising costs borne by colleges, even as they often try to cut back elsewhere.
Student Loans
It is often argued that an increase in the availability of student loans is a primary driver of the increasing cost of college. While there is some evidence of correlation here, this appears to be a secondary effect. Namely, student loans are not driving colleges to raise their prices, but allowing students to attend even when they do. This can still be seen as a problem, as the market lacks self-correction, but should not be attributed as a cause.
How Will $100,000 Tuition Impact You?
This is the biggest concern for most students; paying for college is already a major burden for many families, and costs soaring as high as they are is only going to increase the pressure on students and parents. How this impacts you depends on a few factors.
The first is your own income. Oddly enough, the two groups who will feel this the least are the incredibly poor and the extremely rich. Those with sufficient resources to pay for college out of pocket already may not enjoy paying a few thousand more per year, but their ability to pay won’t be impacted. In the same way, students with the fewest financial resources are already offered significant need-based aid by many of these schools; the increase in tuition will mean a corresponding increase in aid. After all, it’s not like they’ll suddenly be able to afford $100,000 a year.
The students who will be hurt the most by this are those in the upper middle class. The ones who are just on the edge of financial aid cutoffs right now; families making a significant amount of money, but who would still struggle to afford the truly ridiculous bills colleges are going to be putting out.
Our hope is that as colleges increase their tuition, they also get correspondingly generous with financial aid. For example, any college with a billion dollar endowment could follow Berea College’s lead and remove their tuition entirely without any drop in revenue, surviving solely off of investment income. They won’t, but they could.
Of course, not all colleges have the financial resources to offer generous need or merit aid, especially as their tuition gets ever higher. These schools will expect students to find the funding out of pocket, or to take on ever more loans to pay for college. Smaller liberal arts colleges with smaller endowments will suffer the most from this.
More students are also likely to be looking for other sources of financial aid, to help cover the increased costs. Independent scholarships, merit aid, and other sources of financial aid dollars are all likely to see more competition. In addition, colleges with more generous need-based aid policies should be higher up on your list of schools to apply to, even if they have a higher sticker price. You will likely end up paying less at these schools due to aid, even if the theoretical price is higher.
Final Thoughts
The cost of college has been increasing by leaps and bounds for some time now, but $100,000 is a significant milestone, the cost of college finally eclipsing $400,000 over four years. This is a lot of money, and the rate of increase shows no signs of slowing. Indeed, the Covid 19 pandemic only caused it to grow faster; most experts predicted we’d break the 100k barrier in 2030; now it looks like it will come next year.
While the news in this article may not be ideal, we want you to know that there are paths to pay for college, regardless of your income level. There are scholarships you can target for any income bracket, be it merit based or need based aid.
If you want help building a college list that maximizes your chances of getting aid, ro in applying to any of these increasingly competitive institutions, schedule a free consultation today. We have a long experience helping students apply to the colleges of their dreams, and are always happy to hear from you.
