Elite Colleges Are More Unaffordable Than Ever. Experts Say It’s Going To Stay That Way
- The cost to attend an Ivy League institution has soared upward of $90,000, Bloomberg reported.
- The rising cost could be attributed to large amounts of financial aid offered to students as well as easy access to student loans, experts told the Daily Caller News Foundation.
- “I don’t think any Ivy League school at this point still has loans for undergrads, but they do have kids with Pell Grants,” Neal McCluskey, director of the Cato Institute’s Center for Educational Freedom, told the DCNF. “But those loans, in particular, enable people, students, to pay high sticker prices in part because that money doesn’t come from people voluntarily, it comes from taxpayers whether they like it or not.”
The cost to attend an Ivy League institution is unlikely to decline as prices continue to soar to record highs, experts told the Daily Caller News Foundation.
Students are paying upward of $90,000 to attend an Ivy League college or university, Bloomberg reported. Experts say resources such as student loans, financial aid and the possibility of loan forgiveness disincentivize administrators to find ways to cut costs and make the initial price tag cheaper.
Adam Kissel, visiting fellow on higher education reform at the Heritage Foundation, told the DCNF that student loans play a significant factor in prompting higher education institutions to raise tuition. Colleges raise tuition costs by 60 cents for every dollar in subsidized loans, Kissel said, citing the New York Fed.
President Joe Biden introduced a plan in August 2022 to eliminate up to $20,000 in student debt for students who received Pell Grants and $10,000 for those who did not, but economists warn that this could have an inadvertent impact on the cost of tuition.
Biden’s cancellation plan is the “most extreme intervention yet,” Defense of Freedom Institute President and Co-Founder Bob Eitel told the DCNF.
“It will give colleges a blank check to crank up tuition and other charges, because students will expect more taxpayer-funded bailouts rather than pay their student loans. Colleges will continue to hire more and more administrators who don’t make a difference for students, while taxpayers pay the price.”
Brian Riedl, a Manhattan Institute senior fellow, told Fox Business Network that plans to forgive debt would prompt more students to borrow — a decision universities could take advantage of.
“Students will likely feel liberated to borrow more money on the assumption of future loan forgiveness, and universities will take advantage of the additional borrowing by raising tuition,” he told Fox Business Network. “This is pretty similar to the fact that historically, 60% of all student aid increases have been captured with tuition hikes, and this will be treated like an increase in student aid moving forward, which suggests that 60% will be countered by tuition hikes.”
The cost of attendance at Yale University increased nearly 4%, while the costs at Dartmouth and Brown increased 5% for the 2023-2024 academic year, Bloomberg reported. About 50% of students at elite universities receive some sort of financial aid and many offer programs for families that earn up to a certain amount of money per year.
An Ivy League education will now cost you almost $90,000 a year https://t.co/Ylouq6cVVp
— Bloomberg (@business) April 1, 2023
Colleges raise tuition when loans are “made easier and more lenient,” Kissel wrote in a January article about the Department of Education’s new income-driven repayment plan. He argued that the concept is “basic economics” that if “consumers can afford to pay more,” then “producers charge more for their unique products.”
Ivy League universities also offer large amounts of financial aid to tempt students to enroll at their institution, Neal McCluskey, director of the Cato Institute’s Center for Educational Freedom, told the DCNF. He said that having a large price tag can be beneficial for universities who have moved away from offering loans in favor of aid so they can “make headlines by saying ‘we’re so generous you won’t even need a loan anymore, we will give you whatever it takes to pay our very high sticker price.’”
“I don’t think any Ivy League school at this point still has loans for undergrads, but they do have kids with Pell Grants,” he explained. “But those loans, in particular, enable people, students, to pay high sticker prices in part because that money doesn’t come from people voluntarily, it comes from taxpayers whether they like it or not.”
Many Ivy Leagues provide students with financial aid packages to help drive down the full cost, and many of these programs are geared toward low or middle income families, Bloomberg reported.
Brown University, which charges the highest cost of attendance at $84,828, covers full tuition for families who earn less than $125,000 per year and full expenses for families who earn less than $60,000, according to Bloomberg. Princeton, which can total up to $76,040, provides a grant for families that earn less than $100,000 to cover tuition, room, board and personal expenses.
Universities may also charge high prices for attendance because it makes their education appear “extremely valuable,” McCluskey told the DCNF. When universities “charge tuition that’s very high, even by college standards, it makes them seem more valuable and more elite.”
An Ivy League education may still be worth the investment as graduates are more likely to make “around a million dollars more than if they had not gone to college,” Kissel told the DCNF. While it may appear to be more expensive for some prospective applicants, he argued that “there’s always someone to take that place instead, so Ivy League institutions will always be full up to very high amounts of tuition.”
Colleges could find ways to freeze tuition costs by finding ways to cut costs and be responsible with students’ money, Kissel argued. He cited former Purdue University President Mitch Daniels, who “kept tuition flat for many years.”
Brown, Yale, Dartmouth, Princeton and the Manhattan Institute did not immediately respond to the DCNF’s request for comment.
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Of course, elite colleges are getting more expensive. It’s simply a matter of supply and demand. Prospective students and their parents choose colleges based on what they learn about them through the grape vine, and based on the costs of becoming a student there. As long as these schools are successful recruiting the students they need, and they continue to provide credible services to the student body, they will always exist. They will never be motivated to be more affordable, if enrollment remains high. There is just no incentive to reduce their tuition and enrollment costs if more students apply for entrance than they can accommodate by law.
Families need to start looking at the value of trade and technical schools, particularly if their children show aptitude and enthusiasm for non-traditional, non-academic curricula…There are plenty of young people who are technical geniuses and highly motivated to study the ins and outs of computer-based or other high trech career fields, including repair and technical diagnoses of sophisticated electronic or mechanical systems. In some families, there is a social stigma to overcome if their sons and daughters choose not to matriculate at traditional colleges and universities. Somehow this needs to be confronted and dealt with at the family level with the help of appropriate counselors.