The financial trauma created by the elevated inflation rate has permeated the nation”™s college campuses, and new data highlights the sacrifices that many students are being forced to undertake in this period of rising costs.
Increased costs in higher education have been percolating for decades. According to a Georgetown University analysis of data from the U.S. Department of Education, the average cost of an undergraduate degree, including room and board and fees, skyrocketed from $9,307 in 1980 to $25,004 in 2019, a 169% leap. Between the 2008-2009 and 2018-2019 academic years, tuition alone soared from an average of $17,045 to $24,623.
More recently, four-year public universities have raised their tuition on average of 1.6% during the 2021-2022 academic year, but many schools hiked their tuition by as much as 5% for the upcoming academic year. Intelligent.com recently conducted a nationwide survey of 1,000 college students to determine how a 5% tuition increase for the upcoming school year would impact their education.
When asked about the results of a 5% tuition increase to their finances in general, a total of 91% of respondents stated that it would somewhat (49%) or greatly (42%) affect them, while 9% stated that an increase would not affect them.
In order to compensate for a 5% increase in tuition, respondents said they would seek longer hours for their existing job (59%), get an additional job (47%), reduce spending on leisure activities (46%) and reduce spending on food (35%). Among the more extreme responses, the students said they would take out more loans (24%), drop some of their classes (17%) and even drop out of school entirely (5.6%).
“Since studies show that the majority of college dropouts don”™t end up returning to school, the students who do drop out due to inflation-based tuition increases will enter the workforce already having student debt but without the degree to accompany it,” said the Intelligent.com report.
And speaking of student debt, a recent study by Bankrate found there is currently more than $1.7 trillion in outstanding student loan debt, with more than 43 million Americans currently holding federal student loans.
The average undergraduate borrower has $28,400 in student loan debt, with 92.3% of this debt owed on federal loans and 7.61% owed to private sources. Student loans are the second-largest type of consumer debt, according to Bankrate, falling behind mortgage debt.
The student loan debt issue went on pause during the pandemic when the Coronavirus Aid, Relief, and Economic Security Act ”” also known as the CARES Act ”” sought to ease the financial pain created by the crisis through a temporary halt on federal student loan payments and collections activities. However, that is scheduled to expire on Aug. 31.
According to the U.S. Office of Federal Student Aid, nearly 25 million direct loan borrowers are in forbearance status, with more than 99% of those balances in the CARES Act forbearance.
As of Dec. 31, 2021, Connecticut had $17.5 million in federal student loan debt that is carried by 497,700 borrowers with an average of $35,162 debt per borrower. Across the border in New York, $92.7 million in federal student loan debt is carried by 2.4 million borrowers with an average of $37,678 debt per borrower.
“Paying for college isn”™t getting easier, and student debt can impede borrowers”™ ability to buy homes, get married or expand families,” said Hannah Bareham, author of the Bankrate data study. “Student loan debt can have a significant impact on a borrower”™s mental health. Feelings of anxiety and stress may coincide with any long-term debt, especially if the debt impedes the ability to meet important financial milestones, like saving for a house or buying a car.”
