A 2009 report by the Atlantic Monthly Group detailed that education costs increased at a faster rate than healthcare in 27 of the 30 years it studied. A more recent study by the National Inflation Association (NIA) estimated that the inflation rate has increased just over 107% since 1986 while college tuition increased nearly 467% over the same period. Today, the average annual cost of attending an undergraduate program is in excess of $20,000. There is a big difference between public institutions that cost around $15,000 annually and private colleges that can charge closer to $30,000 for a year of school. (For some ways to help you budget for college, check out Pay For College Without Selling A Kidney.)
TUTORIAL: Student Loans
The NIA went so far as to release a documentary entitled "College Conspiracy," which "exposes the facts and truth about America's college education system," including a view that college consists of "studying useless information" that can leave students in certain degrees ill-prepared and too indebted when entering the working world. Despite the NIA's more cynical stance that "colleges are deceiving prospective students", its study does highlight that education costs have increased significantly and if they continue to increase at their current pace, higher education will soon be out of reach for many aspiring students.
Despite the rampant educational cost inflation in recent decades, there are a number of strategies that individual parents or students can employ to control costs. Here are five specific ways to combat rising college costs.
1. Advanced Placement Exams
The College Board is probably best known for offering the SAT tests that high school students take as part of the process for enrolling in an undergraduate program, but it also offers Advanced Placement (AP) tests to high school students that can be used for college credit. AP classes are billed as college-level courses and an exam that 90% of four-year colleges in the U.S. allow to count for college credit.
The AP website states this allows students to "have the time to move into upper level courses, pursue a double-major or study abroad," but can also be used to graduate early and save a semester or more of classes. And less classes means less paid in tuition, room and board while in college.
2. Go International
Studying abroad is an educational option that many U.S. students take advantage of, but it is usually meant as a semester away to experience a different culture and return home to finish out one's education at the original undergraduate institution. However, a recent article in "SmartMoney" magazine detailed that going abroad for the full education "can be cheaper and faster," both of which can lower overall tuition.
It estimated that the average annual cost of a university in England at between $13,000 and $20,000 for international students, or well below the average $22,200 for attending a university in the United States. As with investing, foreign exchange fluctuations can have a big impact on overseas costs, but in general there are ways to save by heading overseas for an undergraduate education. (For more on an international education, check out You CAN Afford To Study Abroad.)
3. Stay Close to Home
Heading overseas can lower college costs, but so can staying closer to home. Attending an in-state public college can also keep costs low compared to a private college. Public universities receive state funding to make college more affordable for state residents, and states also want to encourage students to stay in state when graduating and seeking employment. Grants and scholarships are also more likely to be awarded to residents, adding yet another reason that staying within one's state of residency can help keep college costs low.
4. Stay Even Closer to Home
If staying in state isn't close enough, attending a local junior college is another great way to keep education costs at a minimum. Most undergraduate degrees require the completion of prerequisite classes before a student can enter a primary major, so why not take care of them at the lowest cost possible? Junior colleges offer classes that can run well below $10,000 a year, and students could even consider living at home to keep room and board costs at a minimum. The option makes even more sense for students that have yet to decide on a major and allow more time to choose a four-year university that ranks highly in the field of choice. (To assist you on reducing your cost, read 4 Tips For Cutting Your College Costs.)
5. Invest Wisely
Saving for college via tax-advantaged 529 college saving plans can help stretch educational dollars farther. The Securities and Exchange Commission (SEC) defines 529 plans as "qualified tuition plans" that work much like qualified retirement accounts that are not subject to federal or state income taxes. Many related rules and regulations must be followed to ensure tax-advantaged status, but generally covered are qualified higher education costs such as tuition, room and board, textbook and computer costs, and other related educational fees.
The Bottom Line
There isn't much that parents or students can do to fight overall education inflation, but there are many individual strategies, including those above, that they can use to their advantage and keep education costs as reasonable as possible. (For more on saving, read Last-Minute Strategies To Help Pay For College.)