A New Look at College Education
The costs of a college education continue to rise substantially. According to Trends in College Pricing 2013 published by the College Board, “The 2.9% increase in in-state tuition and fees at public four-year institutions in 2013-14 followed increases of 4.5% in 2012-13 and 8.5% in 2011-12 and was the smallest percentage increase in over 30 years.”
Reasons for increased costs have been discussed (and disgusted) by many, and a Wall Street Journal article dated January 10, 2014 addresses a less widely known explanation. The article, “More Students Subsidize Classmates,” was authored by Douglas Belkin and can be found here: http://ow.ly/sHAXV.
In addition to financial cutbacks from states, the rise in tuition is in many instances also attributed to “tuition set-asides.” These subsidies are essentially higher costs paid by students to be redistributed by colleges to help pay the overall educational costs for poorer students, According to Mr. Belkin, these kinds of student subsidies began at private schools in the 1970s and have since become more widespread. Many readers can relate to this as the concept is not dissimilar from U.S. government taxation methods. When addressing the lack of disclosure by educational institutions, Joni Finney of the Institute for Research on Higher Education at the University of Pennsylvania states, “We barely accept the idea of redistribution of income at the government level and this is basically what we’re doing in higher education.”
For those desiring to help children and/or grandchildren earn a quality education and start an adult life without the burden of overwhelming debt, planning is paramount.
As this planning process is an important part of your life make sure you work with a knowledgeable team to ensure the ultimate desired outcome is achieved.
Posted: January 22, 2014
Authored by: Terry Prather, CFP®, ChFC®
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