Attention Arizona: Tuition continues its climb upward

We recently completed a study projecting estimated in-state tuition costs for four groups of students: Those graduating high school in 2015, 2019, 2023 and 2027. 

A fair way to project tuition expenses into the future is to average the annual increases over the past five year period, and look forward.  The numbers are stifling.  The average annual tuition increase in Arizona was 13.52%.  From the school year 2009-2010 to 2010-2011 the tuition increased 20.7% alone.  The low was the increase of 5.1% from 2006-2007 to 2007-2008.  So the smallest increase occurred during great economic growth, and under a recession the tuition increases were the most extreme.

As we worked the average in-state tuition increase of 13.52% forward, here is what we estimated.  The high school graduating class of 2015, only four years away from college, will pay an estimated $14,507 in tuition alone their first year and over $70,894 for four years of college.  That's just for one student; one child in one family.  On the extreme end, if the average annual 13.52% tuition increase were to continue, a student graduating high school in 2027 will pay over $320,000 in tuition alone over four years.  That is not affordable.

So, we then took the lowest in-state annual increase in tuition over the past five years (5.1%) and estimated it out over the four future high school graduating classes in our research.  The four-year tuition expense for the high school class of 2015 is nearly $43,000, for the class of 2019 it is about $52,000, for the class of 2023 it is over $63,000, and for the class of 2027 it exceeds $77,000.  Once you combine estimated tuition, room/board, books and living expenses, at this low rate, the class of 2027 will still be required to pay nearly a quarter million dollars to attend college for four years.  Again, this is just for one child.

What stands out?

13.52% - the average annual tuition increase as shown over the previous five academic years.

$222,970 - the four-year cost of attendance estimate for a student graduating in 2027 @ 5.1% annual tuition increases.

20.7% - the tuition jump from the 2009-2010 school year to 2010-2011.  The average home price in the western United States fell 4% in the past 12 months.

$42,597 vs. $70,891 - the difference between an annual 5.1% increase vs. 13.52% for the graduating class of 2015 for four years of in-state tuition.

$50,000/$28,315 - average U.S. household income in 2009 vs. estimated 1st year expenses for the graduating class of 2015.

$280/month – the estimated monthly payment for a graduating college senior this year who took out student loans to cover tuition for four years.

$815/month – the estimated monthly payment for a student graduating high school four years from now who takes out student loans to cover tuition for four years.  

Tuition per/year	2010-2011	2009-2010	2008-2009	2007-2008	2006-2007
ASU	$7,793.00	$6,159.00	$5,409.00	$4,822.00	$4,686.00
UofA	$8,238.00	$6,842.00	$5,531.00	$5,037.00	$4,754.00
NAU	$7,053.00	$6,122.00	$5,217.00	$4,841.00	$4,546.00

HOW MUCH WILL COLLEGE COST?

I recently asked my ten-year-old niece, “How much does college cost?”  Her answer was, "I don't know.  Like...$5 million?"

I have asked friends who have two-year olds, “How much do you think college will cost when these kids finish high school?”  Their reply, “I don’t want to think about it.” 

Parents of high school students can think back to a time when a semester’s tuition set them back about $700. 

 

So then, how much will college cost?

We recently completed a study projecting estimated tuition costs for four groups of students: Those graduating high school in 2015, 2019, 2023 and 2027.  We included five different college options: In-state, west coast public, east coast public, private and Ivy League.  We focused our research on the tuition expense alone because room and board and other extra expenses are more variable. 

If current tuition rates continue to climb at their recent averages, all five options will demand $300,000+ in just tuition over four years for the high school class of 2027.  Many families start saving for college late; too late.  Some don’t save at all.  With current tuition trends a family with a two-year-old who wishes to start saving for college will have to part with and invest $1,000 a month for the next sixteen years to meet the cost of attendance for a moderately priced in-state university.  A family with 10-year-old twins would need to invest nearly $6,000 a month to pay for private college tuitions in eight years. 

For years staying close to home to study at an in-state university was relatively affordable, but now with a slow-to-recover local economy, hiking in-state tuition numbers put higher education out of reach for many bright students.  

What happens next?  Many colleges, when asked, will say that many of their students do not pay full tuition, and are supplemented with scholarships, grants and other financial aid.  But there are no such promises in the world of financial aid.  Ask someone who graduated college in 2005 if their college campus "looks the same." Most will proudly boast, "No, you should see it now!"  Many colleges, to entice more students to apply, built fancy workout centers, high rise dorms with suites, giant lab complexes and professional grade athletic facilities.  The ability for these institutions to continue to raise money to support these recent additions has faded.  So, the remaining revenue source that schools can control is tuition and student fees.  My belief is that the education and experience the colleges provide is very valuable.  Certain on-campus expenses, such as athletic budgets and construction costs, must be reigned in to manage costs so that the tuition number doesn't scare prospective students and their parents away from the onset of their college search.  Kind of like the airline industry, the colleges tend to move their pricing alongside their competitors.  Now the competition may no longer be the college down the road, but the eyes of a father and son, or mother and daughter, nervously calculating forward that five-figure number listed under tuition in the guidebooks.

Today I wrote my 10-year-old niece a check for $12 for Girl Scout Cookies.  When she heads off to college in eight years that should cover four minutes of her economics class. 

4-year Tuition Projected	HS Class 2015	HS Class 2019	HS Class 2023	HS Class 2027
In-State Public	$70,891.00	$117,729.00	$195,512.00	$324,685.00
Out of State Public East	$157,783.00	$200,705.00	$255,303.00	$324,753.00
Out of State Public West	$154,571.00	$202,422.00	$265,086.00	$347,150.00
Ivy League	$207,645.00	$244,318.00	$287,470.00	$338,244.00
Private	$208,298.00	$248,399.00	$296,221.00	$353,249.00