Tuition is Recession Proof!

With many colleges and universities raising tuition by as much as 30 percent this year, how does this play in with the “recession” that you and I are facing today? Also, if you remember, back in February $17 billion was appropriated to federal student aid, yet in light of this, why is my fee bill from this year significantly higher than that of last years?

Recent studies have come to the conclusion that increase in federal financial aid actually causes an inevitable increase in tuition, so in a sense, colleges are raising the cost of tuition in an effort to compete with the “charitable” efforts of government. The government actually subsidized these tuition hikes, after all a college is not different from any other business that wants to maximize its profits. For example, if the government guaranteed that anyone who wants to buy plasma televisions from Best Buy would get aid from the government, you can bet that Best Buy would raise the price of plasma televisions, in order to make as much money as possible.

“The $17 billion that will be appropriated to federal student aid will continue to fuel skyrocketing college tuitions. Federal financial aid has created a catch-22 for those trying to help students and their families pay their way through college. The goal of federal aid is to reduce the cost that students have to pay to attend college, but the irony is that more federal aid leads to an increase in tuition.
The reason this happens is supply and demand. More aid means more demand. Higher demand leads to a higher price.  Suddenly students that might not have been able to afford college can suddenly afford to pay. Colleges can raise tuition because they know that the government will give more aid if tuition becomes more expensive.”

To back up these claims, I went to the actual College Board website to do some research….of course I had to do some snooping around to find the two different pages that deal with increasing tuition and increasing aid…funny they don’t put them on the same page. They say that “both total grant aid per undergraduate and total federal loans per undergraduate increased by about 5.5% in 2007-08, after adjusting for inflation,” however, just a few clicks over, they also say, “private four-year [tuition is] $25,143 (up 5.9 percent from last year) [and] public four-year [tuition is]$6,585 (up 6.4 percent from last year).”

And so with all this going on, I have made it my duty to bring such news to the average college student….and not just bad news, but good news as well from smart ways to make money to smart ways to save money.

“Waste neither time nor money, but make the best use of both. Without industry and frugality, nothing will do, and with them everything.” Benjamin Franklin

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One CommentLeave a comment

  1. great first post!


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