The economic principle of supply and demand is at least partly in play with regard to tuition hikes. The increased demand for a college education results in higher tuition with little negative repercussions to institutions. According to the Bureau of Labor Statistics, more than 65 percent of 2012 high school graduates were enrolled in college in the fall of 2012. And this demand for a college education remains well justified. The PEW Research Center says that college graduates earn about $650,000 more than their high school-educated peers over a 40-year career.
The 2008 reauthorization of the Higher Education Act of 1965 may have exacerbated tuition hikes because the government keeps supplying funds to colleges. According to a policy analysis conducted by economist Gary Wolfram, colleges have no real incentive to lower tuition. In fact, Wolfram suggests that as educational demand increases and funds are made available, colleges may have good incentive to raise tuition, as “some portion of the federal assistance ends up being captured by state governments and by the colleges and universities.”
Everything costs more. That is true of tuition and of the costs of running a college. Particularly in a global economy, colleges find they have to pay competitively to attract the talent to their campuses that lures a desirable student body. Beyond salaries, there are the ever-increasing costs of health care, construction and facility management. In their effort to remain relevant in the 21st century, colleges spend much to keep up with other schools' offerings -- and they pass on those costs to students.
As costs skyrocket, some students are denied postsecondary educational access simply because they cannot afford it. While Hispanic college enrollment edged out its white counterpart in the fall of 2012, according to PEW research, Hispanic students often do not attend college full time, nor do they complete their degrees in equal measure to white students. The widening economic gap that was reported on in depth during the recession that began in 2007 may grow further still, as students on the lower socioeconomic rungs can’t find the means to keep up -- including paying for college.
The most pronounced impact of stratospheric college tuition is its long-term effects on the future financial well-being of grads. According to the Project on Student Debt, students have never before been saddled with so much debt. Stories abound of students owing six-digit figures in student loans. While not quite that dire for many, average student debt reached nearly $27,000 in 2012. College debt can have far-reaching consequences for plans of marriage, home ownership and future employment.