CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

University revenues slow as students spend less on college

08/30/2012

The Strategic Sourceror - August 28, 2012

Sallie Mae recently released a survey of college students that revealed universities may see a decline in revenue from student tuition. Due to a struggling economy and the rising cost of college, students and their families are spending less on higher education.

The report noted that spending on college dropped 13 percent over the past two years. This large decrease signals that students are saving money by taking steps such as choosing public or two-year institutions over private colleges and living at home rather than in dormitories.

Most families are not foregoing college completely, despite the cost. The survey revealed that many families still see college as an investment and most agree that a degree is needed more than ever to pursue a career.

Community college attendance is up, as students take advantage of low tuition costs before transferring to another school. While 23 percent of students attended two-year colleges two years ago, 29 percent of students do so now. While many of these students may have attended four-year universities from the start several years ago, families are beginning to make more cautious financial decisions. A community college offers a more affordable alternative as tuition rates at four-year public or private schools become increasingly expensive.

The way students are paying for school is also changing. Public universities are seeing an increase in students paying their way with grants and federal student loans. Less of the tuition they charge is coming from parents. This only increases concerns about student loan debt, which have recently surpassed $1 trillion nationwide.

This decrease in tuition dollars will greatly affect universities that depend on the revenue to balance their budgets. As university funding also declines, it is more difficult for some colleges to make ends meet without raising tuition. States have limited the amount they are giving to state schools, and private institutions have found that it is increasingly difficult to fundraise in the current economic environment.

Because colleges have received less funding, many are raising tuition to make their budgets viable. Even though these schools may still attract some students, more pupils and families are increasingly concerned about the cost of school. Sixty nine percent of families eliminated certain colleges because the costs were too high. In order to attract more students and increase the tuition dollars they receive, some universities are keeping tuition rates steady to attract prospective students.