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When Ronald Regan was governor of California, he slashed funding for the University of California system, a harbinger of a decline in state funding for higher education. Above, Royce Hall at the University of California, Los Angeles. Robyn Beck/AFP via Getty Images
I've Always Wondered ...

Why does college tuition have so many extra fees?

Janet Nguyen Jun 9, 2023
When Ronald Regan was governor of California, he slashed funding for the University of California system, a harbinger of a decline in state funding for higher education. Above, Royce Hall at the University of California, Los Angeles. Robyn Beck/AFP via Getty Images

This is just one of the stories from our “I’ve Always Wondered” series, where we tackle all of your questions about the world of business, no matter how big or small. Ever wondered if recycling is worth it? Or how store brands stack up against name brands? Check out more from the series here.

Listener and reader Carolyn D. from San Jose, California, asks: 

What is with all these fees tacked on to college tuition? Our son is going to geology field camp this summer, and I could not be more excited for him. He is quite engaged in his chosen field of study, and I think he has a meaningful future ahead of him. I know that he will learn a lot at this required field camp. However, when I downloaded his summer tuition bills, there were some surprises on top of the 6-credit, 6-week summer course. 

Recreation center fee: $150. Health services fee: $37. Student service fee: $107. Academic construction building fee: $104. Intermodal transportation fee: $10. Athletics fee: $59. 

The bill went on, charging for services and amenities that Carolyn couldn’t see had any connection to geology field work. In total, these additional fees amounted to more than $500 on top of the tuition for the program, bringing the bill up to more than $8,800. Luckily for Carolyn, the additional fees were waived because her son filed a form stating he would not be studying on campus during the course.

Carolyn’s son also received a $2,000 scholarship, lowering the final price tag to roughly $6,300. But the process still confused Carolyn, and she wondered why these fees were included as part of the bill in the first place. 

“I feel among the fortunate. There are parents who don’t even have the time to deal with this stuff,” Carolyn said. 

Why there are so many additional college fees 

Carolyn noted that fees like these are also part of her son’s tuition during the regular school year, when he also lives off campus. Parents and students at universities and colleges — particularly public ones — across the country can relate to the surprise fees that leave them frustrated and confused.

The proliferation of college fees is rooted in the changing economics of higher education and a shift in philosophy about who should bear the burden of the costs.

“Tuition comes with fees because colleges are often restricted in how much they can increase tuition,” explained Robert Kelchen, head of the department of educational leadership and policy studies at the University of Tennessee, Knoxville. “And also, there can be rules in place that certain services have to fund themselves.” These fees have become more widespread since the Great Recession, he added.

“That’s when states often limited how much tuition could be increased. In order to get money to fund services or activities — or even instruction in some cases — colleges had to resort to fees,” Kelchen said.

In many states, there’s either political pressure to keep tuition low or flat, or there are mandates, said Nick Hillman, a professor at the University of Wisconsin-Madison’s School of Education. For example, he said Wisconsin temporarily kept tuition frozen for nearly a decade.

Institutions have been providing more services to students compared to the 1980s and 1990s, but there’s been a broad, fundamental shift in higher education funding that goes back decades, said Casey George, an associate professor of higher education administration at the University of Louisville. 

The onus for payments shifted from the public sector to the private sector, she said. 

“Institutions, especially public institutions, have declining sources of support from their state, and so institutions are looking for additional revenue streams,” George explained. 

As states considered where to invest their money, George said, they saw their higher education institutions as an area that could generate income from other sources — like the students themselves.

States might see other areas as higher priorities, like infrastructure or K-12 education, Hillman noted. 

In 1980, students’ net tuition provided about 21% of the revenue for public colleges and universities, according to data from the State Higher Education Executive Officers Association. By 2018, that percentage ballooned to about 47%. The share is still high compared to past decades, but it has declined in recent years, with net tuition making up roughly 42% of total education revenue. 

As California governor in the late 1960s and 1970s, Ronald Reagan cut funding from the University of California system. Conservatives argued that college education should be seen as a “private endeavor” rather than “a public good,” The Washington Post reported. While Reagan was president in the 1980s, he worked with Republican lawmakers and conservative Democrats to ax federal student aid. 

There is some good news for families with college students: Higher education finance experts note that tuition has declined after adjusting for inflation, while state funding has increased in recent years. 

For example, the average tuition and fees at a public four-year, in-state college were $10,940 in the 2022-23 school year, which is $190 or 1.8% higher than in 2021-22. But after adjusting for inflation, tuition actually declined, according to a report from the College Board. The report states that there were “historically low increases in published tuition and fees” in 2022-23. 

There was also a 6.6% increase in initial state support for higher education for the 2023 fiscal year, according to survey data from the State Higher Education Executive Officers Association and the Center for the Study of Education Policy at Illinois State University.

But funding will most likely go down if and when there’s another recession, Kelchen said. 

“States have to balance their budgets, and they have lots of other competing priorities,” he said. 

What institutions could do to improve transparency 

Carolyn said she considers her family middle class and emphasized that they’re “fortunate.”

She said her father died in 2014, leaving his family some land, which she and her siblings sold. She and her husband put her share of the money in a 529 plan, a tax-advantaged account for education savings. This money has helped both her and her siblings pay for their children's college tuition. 

“I think my dad, who did not have a college education, would be pretty tickled to know that he probably paid for somewhere between three and five degrees for his grandchildren,” Carolyn said. 

She added that she’s thrilled her son is going to attend field camp. “It's a huge part of his education,” she said. 

But even though Carolyn’s field camp bill was reduced and she had some of the 529 account funds to help, it wasn’t easy paying the rest of it off. Carolyn and her husband, who recently got a new job after being unemployed for a couple of years, paid out of pocket for the summer program. Consequently, to help pay for the rest of their household bills, they ended up taking out loans. 

Carolyn used vacation time from her regular job to take off the month of December, and then took a job during that time as a UPS driver to earn extra money.

If they hadn’t known about that waiver form for off-campus students, they would’ve had to pay hundreds more. 

George of the University of Louisville said that students who are lower-income or the first in their families to attend college, or those from other marginalized groups, are affected the most by any price changes. Even a $100 increase in the price of attendance can be out of reach for some families. 

George said institutions could be clearer in communicating what fees will be included in the total cost of college. 

It’s hard to find tuition rates on an institution’s website, she explained. The rates that are posted are difficult to understand, and there are often hidden fees that are not disclosed on a school’s website. 

“With that lack of transparency, it's very hard for families to understand what the potential cost is, even before they apply for financial aid,” George said. 

George said that there should be standardized language around certain fees so that it makes it easier to compare them across institutions, and that there should be standards around how much information each institution is required to display.

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