Hearing your parents talk about how they paid for their college tuition with a part-time job can be frustrating. Though these stories are true, the tuition structure has completely changed over the past 30 years.
The cost of going to school has skyrocketed, putting more of a burden on you as a student, causing you to rely even more on student loans.
But according to new data from the Labor Department, college tuition hikes are finally slowing down. While higher education is still prohibitively expensive for some, the trend of sky-high increases is finally coming to an end.
What the data found about college tuition
In 1984, the total cost of attendance for private and public schools was $10,210, on average, according to the National Center for Education Statistics. As of 2015, that number skyrocketed by 366 percent to an average price of $37,424. In the past decade, college costs increased by as much as 6.7 percent per year, adding thousands to the price of getting a degree.
That growth far outpaces the rate of inflation, making it impossible for students to pay for college with just a part-time job. Since annual pay only increased by the rate of inflation and college costs exploded, paying for school became more difficult.
However, those high hikes have come to an end. In the past 12 months, tuition rose by just 1.9 percent. That’s the lowest rate since before 2007 and is consistent with today’s rate of inflation.
What this news means for colleges
The latest data shows a big shift for colleges and universities nationwide. The lower price hikes are partially due to increased competition for incoming students. Although record numbers of students went to college in the past decade, concerns over college costs and a degree’s return on investment have hurt enrollment.
Enrollment in colleges fell in 2016 by 1.4 percent, according to the Lumina Foundation, signaling a shift in how people view higher education.
As the economy improves, lucrative trades like electrical work and welding are more appealing. Those jobs allow people to make a solid income without a degree; the certifications required for those positions cost a small fraction of the price of a bachelor’s degree.
Also, although tuition rates have grown rapidly over the past few years, the amount of federal student loans individuals can take out has remained the same. Congress hasn’t updated the borrowing limit since 2008.
With fewer incoming students and federal loans available, the competition for students and dollars has ramped up. Schools are now competing for new students, which means they have to limit tuition increases.
How lower tuition hikes affect you
Although the slowing of tuition hikes sounds promising, it doesn’t help you cover the thousands of dollars you’ll spend right now on the total cost of attendance.
However, the increased competition can help if you’re starting your college search in the fall. Because federal loans are limited, many colleges are offering larger financial aid packages with scholarships or grants to attract new students. Those scholarships and other programs can dramatically reduce how much debt you need to borrow over four years.
5 ways to lower your college costs
If going to school is too expensive, even with a financial package, there are other things you can do to offset the cost of going to college.
- Go to community college first: By going to a community college for two years and then transferring to a four-year school, you can significantly cut your education expenses. Two years at a community college costs $10,153 on average. That approach is much cheaper than going right to a four-year university.
- Attend a public, in-state university: Public state schools are much cheaper than private colleges and can be a smart way to save money. However, the price can skyrocket if you’re an out-of-state student. For example, a year at Penn State would cost $18,436 if you were a Pennsylvania resident. But if you lived in Delaware and went to Penn State, you’d pay $33,664, nearly double the cost.
- Choose a local school: Going away to school might sound more glamorous, but going to a local school and living at home can save you thousands. At Penn State, living on campus costs over $13,000 on top of tuition and fees. Over four years, living in the dorms can add $52,000 to your education costs.
- Search for other scholarships: If you don’t get a scholarship from your chosen college, there are scholarships from independent organizations you can pursue. FastWeb has a searchable database of both grants and scholarships.
- Refinance your loans: Another option once you graduate is to refinance your student loans. You’ll work with a private company to take out a new loan for some or all of your old ones. The new loan will have different terms, such as a lower interest rate which means you’ll pay less in interest — and will pay off your principal faster.
Paying for college
Sure, going to school is still expensive. But increased competition and federal loan limits have caused college tuition hikes to finally slow down. If you’re prepared and know your options, you can decrease your college expenses and reduce the amount of student loans you need to borrow.
For more ideas on saving money on school, here’s how to reduce your college expenses.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|