<p>AP education reporter Justin Pope has another significant story: </p>
<p>News</a> from The Associated Press </p>
<p>"Amid the economic turmoil, students and their families are getting little relief from rising college costs, which jumped 6.4 percent at state universities this fall, according to new figures out Wednesday."</p>
<p>I'm not surprised. There is quite a bit of leeway between in state schools and private school costs still, but with the economy the way it is, the in state schools are going to be options that more families are going to consider and probably take.</p>
<p>But then the state schools are in such a financial bind, relying on strained state budgets for a significant part of their financing. Especially here in California, costs are going up and more kids are taking longer to graduate.</p>
<p>We get our news a day late here in NC. (I had to search for this thread since I knew it would be here)</p>
<p>This reminds me of government. If revenues are down because people are hurting, unemployed, facing foreclosure... just raise taxes! Don't worry about cutting costs.</p>
<p>I am really looking forward to the day (and demographics support this) when colleges will be forced to lower tuition to attract students. Once this starts, tuition will spiral downward as colleges charge well below cost simply to fill their seats and cover some of their huge fixed costs. This is why some of the 2nd tier college presidents are so loudly opposed to merit aid. They see where this will eventually go. Graduating seniors might want to take a double gap year and see where things are in 2 years. Oh, you say the current trend will continue and college will cost 12% more in 2 years? The trend of higher college cost will continue forever? Why does this sound so familiar? College costs: The next bubble!</p>
<p>^ NJres,</p>
<p>The day when colleges compete on price has long since arrived. They do it not by cutting tuition ("sticker price") but with competing financial aid packages. Only a fraction of students pay full sticker price at most colleges. What really matters is the discounted price students actually pay after both need-based and merit-based aid are figured in to the mix. The real cost-of-attendance (after financial aid) is actually declining pretty dramatically for many students at the best-endowed schools, while increasing pretty rapidly for those from the most affluent families, making the net cost of higher education steeply progressive at schools that offer generous need-based financial aid and no merit aid. </p>
<p>Merit aid tends to skew things in the other direction. It reduces the net cost-of-attendance for the students with the highest HS GPAs and test scores, but since merit-based aid is often most attractive to those who don't qualify for need-based aid, it tends to produce a regressive redistribution of costs, favoring the very-bright-and-well-off, often at the expense of those with demonstrated financial need (since many schools offering merit aid do not pledge to meet 100% of need). Look at it this way: if your family income is $20K and you get into Harvard, it doesn't matter that Harvard doesn't offer merit aid because under their need-based formula your EFC will be zero. But if your family income is $250K and you get into Harvard, you'll pay full sticker price; in that case, a big merit award from another (possibly less prestigious) school may look awfully attractive. In effect, the less prestigious school is competing for your business by offering you a discount that Harvard refuses to offer. For the kid with the $20K family income, however, the merit aid package at the less prestigious school is no more attractive than the need-based aid package at Harvard.</p>
<p>As for the relation between operating costs and tuition revenue, just about every college will tell you--correctly, I believe---that tuition revenue doesn't come close to covering their operating costs. At public institutions, the gap is made up partially by public subsidies, partially by endowment revenue (small at most publics), and partially by research grants and contracts which cross-subsidize personnel and some administrative costs. At private institutions which generally don't qualify for direct public subsidies, endowments must pick up a larger share of these costs.</p>