Hi everyone,
In ten years, I’ll be doing this all over again with D3. I’ve been tormenting myself by running some college calculators. They seem to all assume that costs will continue to grow at 5% per year. That seems really unsustainable to me, especially since inflation is running at so much less than that. What do you all think? Do you think prices will keep exploding at this rate or will they eventually level off?
Well…in my experience, they will continue to grow. When my first kid graduated from his very expensive private in 2007, it cost $44,000 a year. Now it’s over $70,000 a year.
I think costs will continue to grow, but we may also see a lot of smaller, less well-endowed schools close. As long as there is a market willing to ‘buy’ whatever the cost becomes (and it looks like there is), the market will stay open.
And, to give another data point on cost, when I graduated from my very expensive private in the 90s, it cost $32,000 a year. Now it is right around $72,000 per year. Compounding is very much not your friend when it comes paying out.
I was just thinking about this too; we have our youngest starting HS next year. What will prices be down the line? And I was thinking how the small colleges remind me some of the small independent stores who are closing and shrinking.
I keep thinking that there’s no way that the costs can keep going up, yet they do! Your guess is as good as ours. I cannot believe that full pay at the high end colleges is $70,000 yr. I really think the price increases have got to end soon, but they haven’t yet.
At some point, even rich people, will refuse to pay the cost. As the Top 25 schools continue to be more competitive, the marginally wealthy will have a lot of trouble paying 80K+ per year for 20-50. The full pay CC crowd mostly believes that the Top 25 is ‘worth it’ but not sure about the next tier. Especially LACs below to 20. My guess is that discounting (merit) will be picked up again by some schools that stopped offering it (For example, I noticed Holy Cross giving 10K per year discounts/merit last year to incite the semi-wealthy to attend. They don’t advertise it on their website though, which is interesting).
I feel like the admissions scandal is shining a light on the cost. Not sure if the discussion will trigger a change in the model. Certainly many many colleges will (and should) close. Limits on student loan borrowing will also force colleges to change their model. Something has to give- hopefully it does soon!
IMO, list price will keep going up at about 4% a year.
In a decade:
4-years full-pay at a top private will be about half a million.
Households with less than a half a million in income will qualify for fin aid at most of the Ivies/equivalents, however.
And nearly all privates under that tier will offer merit scholarships as well. Discounting will be especially prevalent amongst LACs, especially less elite ones in rural areas.
25 years ago when I graduated if you would have asked me to predict current prices I would have missed by a lot. There is no real reason to think current trends won’t continue.
If you plan for current rate of increase and it comes is less then you will be happy. Not so much the other way around.
At my DD’s private high school the local flagships are getting about 8 of the top 10 students over the past few years. These are families that can pay and kids that have choices and Big Ten universities that are good options, so I think some are already reacting to the insane costs.
^We can pay - but won’t - don’t think its worth (and the kids don’t either). We know some that can and are happy to, even though they previously thought they would never full pay sticker. They drank the kool-aid 
I agree, but planning for the current rate seems impossible and depressing. I also don’t want to count on D3 getting merit at the same rate as her sisters. She is only 7 so who knows where she will be at age 17.
Probably true, but those schools are pretty much out of reach anyway.
The percentage of families who are full pay at private colleges is small, except at the universities that cater to the 1% (HYPSM etc.). This is particularly true if you exclude full pay international students.
A family member had one night in a local hospital recently. Ate nothing (was pre-op). Drank nothing. Was moved to a different surgical facility early in the morning by another family member (so no transport required). The only “medical” care given was an IV and a BP check at midnight.
Was billed $35K for one night. This was NOT the surgical bill, and was NOT for anesthesia, and was not for post-op care. This was for one night in a hospital room, and the itemized items were a few bags of IV saline and one dose of an anti-anxiety medication (which I know I can buy at CVS for $9-- for a week’s prescription- since it’s a generic).
Why do I tell you this? Because I remember “back in the day” when I was having babies being outraged at a $3500 per night hospital stay. And EVERYONE saying “there’s no way prices can continue to go up, we’ve hit the max, this is the end of the road”. Both were teaching hospitals btw, not-for-profits, and having looked at the 990’s, neither are places with their CEO’s making several million dollars a year (like at some for-profit medical facilities).
So I have no idea what a year at Duke or Vanderbilt or Northwestern or JHU is going to cost in ten years. But other than eyeing the list of small, poorly endowed institutions and wondering which are the next to raise the white flag in defeat, I would not count on tuition leveling off. There are thousands of kids in Dubai and Qatar and Singapore and Shanghai with wealthy parents who would be thrilled to be full payers at a US university, even if that means paying 30X what it would cost to educate their kid at the elite university close to home.
I wonder if this will have any effect on applications to the service academies and ROTC programs. A few years in the military may seem to be reasonable payback for a solid undergraduate education for some who wouldn’t consider it currently. Applicants have to show a commitment to officership, but that commitment may appear more palatable in the face of stratospheric civilian college costs.
Was this a nominal list price for the purpose of insurance negotiations, or what was actually paid (by the insurance company and/or patient)?
If/when the next economic downturn occurs, expect states to have budget problems, resulting in cuts to state subsidies of state universities, resulting in increased tuition.
That will be more painful to more students than the increase in list price of a few private universities where many students pay list price.
State universities are already out of reach in many places. We are lucky in NY, but in places like PA its crushing.
On the other hand, I do see more states making CC free (at least while they have the money).
4-year publics are already taking more and more from CC.
2 years of CC followed by 2 years studying your major will be the college experience for many.
CA leads the way again.
We’ll be doing this again in 15 years (surprise!) Her two big siblings are at schools that meet full need which is how they can attend LAC’s on our state school budget. Who knows what will be available our how impossible those schools will be to get into then.
We will save what we can but as we get closer to retirement age, we will not have nearly enough… especially since we are paying for other kids college until she’s 6. we will be planting seeds of community college or trying to normalize the idea of living at home and going to a local university. I suspect if the costs continue to increase, that will be more normal in our particular community than it is now so perhaps not as hard a sell.
Nominal list price at the hospital. Just like the stated price at a large number of colleges which give merit aid to a high percentage of the student body is nominal list price!
To the service academy question (great question)- that’s a complicated issue. I don’t know anything about the aggregate stats of the academies, but I’ve seen several recent studies about the 17-20 cohort for companies which hire a lot of entry level employees (think Home Depot, Laidlaw, companies like that.)
They require drug tests (which you would assume, for someone driving a forklift or a school bus) which knocks out a high percentage of their applicants. For Home Depot, UPS, etc. you need some level of fitness (lifting 50 lbs at a time, for example). It is becoming increasingly difficult to fill open slots one you layer physical skill over a clean drug test.
So my guess is that there are a lot of HS kids who might be credible applicants to their state flagship (no drug test required) who could NOT take advantage of the academy offerings.
Just my guess. Maybe some of the military parents can weigh in???