Growing Tuition Prices Could Impact Economy

College tuition prices have been climbing sharply for years, and although the rate of increase at some of the most prominent Northwest Arkansas universities falls below the national average, none are immune to the issues causing the rise.

Tuition at the University of Arkansas-Fort Smith increased 75 percent between the fall semesters of 2004 and 2014, now reaching $4,170 per year, based on data gathered from the school and the Northwest Arkansas Business Journal Book of Lists, editions 2-13.

The surge in price is the most dramatic of the schools in the area. However, the school’s continued transition, which started in 2002, from a community college to a four-year university, played a primary role in the tuition increase, according to Georgia Hale, provost and vice chancellor for academic affairs.

During the same time period, tuition at the University of Arkansas in Fayetteville increased 33 percent, now totaling $6,354.

The cost to attend John Brown University in Siloam Springs increased 31 percent, reaching $22,552, and the price at Northwest Arkansas Community College in Bentonville rose 17 percent, with annual tuition costs now sitting at $1,800.

Price increase rates are adjusted for inflation, and tuition prices do not include fees or room and board.

The national average for the rise in costs at public and private universities during the same 10-year span is 36 percent, according to data from the College Board Annual Survey of Colleges and the National Center for Education Statistics.

The problem is not a new one. Higher-education costs have been rising since the 1980s. 

Kathy Deck, director of the UA Center for Business and Economic Research, said college tuition has been a hot topic of conversation in economist circles, and it is already affecting the way this generation spends money. “The issue is, Millennials are graduating with more student loan debt, which means they are less likely to purchase a home or cars, less likely to buy other stuff because they don’t have anywhere to put it, and less likely to get married young,” Deck said. “This affects the overall economy as well as the regional economies in which they happen.”

However, not everyone agrees the cost of higher education is a problem.

 

Price Pretense

An October 2013 story in The New York Times contended that, although the published tuition cost — the “sticker price” of college — was much higher, a College Board study titled “Trends in College Pricing” showed the amount students paid for higher education had remained steady for the 10 years preceding because of an uptick in discounts, grants and tax incentives.

Don Crandall, vice president of enrollment at JBU, said the scholarships offered by the Christian university level the playing field for students.

“We try hard to increase costs modestly each year to cover unavoidable expenses like utilities increases, health insurance and other benefits, and allow for faculty salary increases, but we’ve also tried hard to raise money for endowed scholarships to help keep JBU affordable for most families,” he said.

In spite of discounts, however, students seem to have problems paying for college.

“Clearly, we see an issue with student debt,” Deck said.

Nationwide, the amount of money owed for student loans has more than tripled in the last 10 years, and is sitting at $1.2 trillion now, according to the Federal Reserve Bank of New York.

In Arkansas, 55 percent of students have student debt, and the average amount is $23,324, according to Nelnet data reported by the Institute for College Access and Success, a nonprofit research organization based in California. 

 

Funding Falling

The prime cause of the tuition surge is a lack of government funding.

“State support hasn’t kept up with the costs universities face,” Deck said. 

Schools in every state except Alaska and North Carolina experienced state funding decreases between 2008 and 2014, according to the annual Grapevine report from the Illinois State University College of Education.

The amount of state funding Arkansas lost was just under the 23-percent national average, at 22.5 percent.

Meanwhile, costs continue to rise, and most universities — citing issues like facility maintenance and faculty shortfalls — are passing the buck to students. 

 

NWACC Way

NWACC, however, has managed to keep tuition prices for its in-district students fairly steady, increasing only 2.5 percent in the last five years and staying the same from 2012 to 2014.

Steven Hinds, executive director of public relations and marketing, attributes this to a major budget-trimming initiative developed by senior administrators.

Other efforts that have collectively saved hundreds of thousands of dollars include closing the school’s café at the Center for Nonprofits in Rogers, switching to digital rather than paper for many things, cutting out unnecessary memberships and subscriptions, partnering with a local organization for free Internet access, and renegotiating its telephone service — which in itself will save $40,700 a year, Hinds said. 

 

Educated Decisions

The solution to the ever-ascending cost of college? According to Deck, it will work itself out with good, old-fashioned supply and demand.

Colleges will always need to offer competitive pricing in order to draw in students, or else people might buy into a belief that is already out there, that the debt associated with college outweighs the benefits. “But we’re not anywhere near that,” she said.

The unemployment rate for people with a bachelor’s degree or higher was 2.9 in September, while the rate for those with only a high school diploma was 5.3, according to the U.S. Bureau of Labor Statistics.

The average salary for someone with a bachelor’s degree was $1,108 a week in 2013, with those with only a high school diploma earning $651.

“Society values a college degree,” Deck said. “Is it expensive? Yes. But it’s a good investment, on average.”

Deck added that students should calculate the cost of their education and decide if their chosen field is a good return on that investment.

“We have to raise issues upfront,” Deck said. “If a student is taking classes willy-nilly with no direction, it’s maybe not worth it.”

“Not all degrees are the same,” she said. “Not to say there aren’t brilliant philosophy students that go on to make millions, but you have to look at the averages and make a decision from there. Then you can end up in the middle of the pack.”