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The true cost of college and reasons for it

A general view during the college commencement ceremony for Westminister College on June 1, 2013 in Salt Lake City, Utah.

President Obama is on a bus tour today in New York. One goal of the trip is to spread the word about his new plan for lowering the cost of higher education. He wants to tie federal aid to a new ratings system. Instead of basing aid on the number of students enrolled, it would take into account data on graduation rates, tuition costs, student loan debt and even how much money graduates make after they leave school.

 But let’s start with this basic question: Has federal aid money made college tuition more expensive? “Virtually all of the research that has been done suggests it has not,” says David A. Longanecker, president of the Western Interstate Commission for Higher Education. One exception: "Particularly at the for-profit institutions,” Longanecker says.

The list price at both private and public universities has risen much faster than median income, according to higher education economist Robert B. Archibald. But “net price, when you factor in financial aid, has not gone up nearly as much, though I think still faster than median income,” he says.

It’s important to point out that 75 percent of students attend public universities and colleges, where financially pressed states have been raising tuition faster than private universities.

“If the federal government really wanted to directly affect the problem of state finance for higher education, the single most effective thing they could do is to get the cost of state Medicaid programs down,” says Jane Wellman, executive director of the Delta Project on Postsecondary Costs.

She says public college tuition is going up because rising health care costs from Medicaid are consuming state dollars that used to go to education. This is an issue that the president’s new plan doesn’t address. 

About the author

David Weinberg is a general assignment reporter at Marketplace.
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Wow, they could lower tuition if the state could bring down Medicaid costs at the same time the ACA is expanding Medicaid costs.

Yup. Looks like tuition will be going up more.

I don't care who is to blame for the rising cost of college tuition. Just make it go down! When my eldest daughter started at UCSB, the tuition was about $2,770 per quarter. By the time she graduated in 2012, it had ballooned to $4,625 per quarter. My youngest daughter started last year at UCD and I guess I can be thankful that it stayed about $4,625 per quarter. But I have a special circumstance... I've been laid off 4 times (reduction in force from four different companies) in the past four years. I'd like you to factor that in with the rising cost of college education and why it should go down NOT up. Oh, and I'm not the only one. I've many friends in similar unemployment circumstances.

For-profit institutions must comply with the 90/10 regulation (nonprofit institutions are exempt from this rule) which limits the amount of Title IV aid paying for tuition and fees to 90%. Exceeding this threshold can cause the loss of T4 funds. Thus this rule can potentially cause for-profit institutions to raise tuition to create a 'cash gap' in order to comply with this regulation. This certainly isn't the sole reason for tuition increases at for-profit institutions but it is one noneducational metric which effects tuition levels.

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