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California College Price Hikes Far Outpace Inflation, Private Tuition

Piggy bank standing on college textbooks
With each passing school year, more and more California students, parents and media outlets cry foul that the cost of higher education is rising. But as the Golden State sinks further into debt, its education budget continues to suffer, and colleges are seeing a reduced flow of state-backed funds. To compensate, they’re raising prices—but at a much more alarming rate than most of us might expect.

“Soaring tuition and shrinking incomes are making college less and less affordable,” said Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor and Pensions Committee, in an email to Bloomberg. “For millions of young people, rising college costs are putting the American dream on hold, or out of reach.”

But just how out of reach is that dream?

For Californians, some might say it’s nowhere in sight. Smart Money recently reported that in the past year alone, average fees for in-state residents rose 16 to 20 percent in four different states, one of which was California. To make matters worse, some predict that California is on the brink of seeing yet another double-digit increase by early 2013.

“The potential for this to get worse is very real,” said Rich Williams, the Higher Education Advocate for the U.S. Public interest Group.

When taking a step back and looking at those rate increases over time, the rising trajectory is even more astonishing.

By compiling undergraduate data from the Postsecondary Education Commission, we found that over the past 30 years, the price of Cal State colleges has increased by almost 2,000 percent, UC colleges have increased by just over 1,200 percent, and California Community Colleges have increased by nearly 1,000 percent.

Compare California’s rate of tuition increases with the rate at which tuition at Harvard University, one of the most prestigious colleges in the world, has increased, and we see an even more disappointing trend: The average tuition increase between 1981 and 2012 at California public colleges was 2.7 times the average tuition increase at one of the most prominent education institutions in the world.

Data on Harvard’s prices gathered from Harvard’s Financial Administration and Harvard’s Office of the Provost.

This trajectory is not to be confused with actual price. Harvard students currently pay more than $36,000 a year, whereas those attending UC colleges (California’s most expensive public school system) typically take out student loans for just over $13,000 a year. But the rate at which the California-based college prices have been climbing is what’s measured here.

Aside from the major discrepancy between California-based institutions and Harvard, it’s immediately apparent that California’s rate of increase is nowhere near as consistent as Harvard’s. The Ivy League’s rate is clearly very steady and lacks the sharp spikes that all three of its shown competitors boast. Over the past decade alone, Harvard’s year-to-year increases have ranged between 2.5 and 5.83 percent, whereas California’s UC system has seen increases between 0.73 and 37.66 percent.

Those sharp spikes become even more confusing when we overlay the rate at which the dollar has increased from 1981's levels. Over the last 30 years, the value of the dollar has only increased by 147 percent. Harvard’s trajectory of increase somewhat resembles the rate of inflation, but California’s price increases are simply unreasonable when compared to the dollar’s value over time.

 

The worst part about these surreal price trajectories is that the bulk of the price hikes have occurred in the last five years.

Between 2007—when the Great Recession hit the country—and today, the costs of California colleges have nearly doubled.

This is particularly true when looking at the Cal State system. If a student could attend a Cal State college for four years, each at 2007’s average price, he or she would graduate with a student loan principal of approximately $14,084. But if that same student received a four-year degree by paying 2011’s average prices for each year, his or her student loans would have a principal of $25,688. That’s an 82 percent increase.

For reference, the value of the dollar has only increased 0.15 percent between 2007 and 2011.

While California’s college prices have spiked enormously in the past five years, an analysis of all of the price spikes reveals an even more disheartening trend. If we look at all of the major recessions our state and country have endured over the last 30 years, we see California’s response almost always includes raising prices for students. Price hikes during times of recession lead directly to higher-priced student loans and an increase in overall student loan debt.

 

To add insult to injury, a growing number of California’s community colleges are forfeiting their participation in the federal student loan program, effectively making it even more difficult for prospective students to attend California’s cheapest form of higher education.

According to California Watch, a child project of the Center for Investigative Reporting, 16 California community colleges now prohibit federal student loans out of fear that rising default rates may lead to sanctions.

In a time when education funding is being constantly slashed, these institutions are doing what they feel is necessary to retain their yearly stipend. But by cutting off federal student loans, which are invariably the preferred method of college financing, community colleges are shifting the burden from regulators and themselves to current college-goers using student loans to finance their education.

If California’s colleges continue to increase at a rate far and above the rate of inflation, and if they continue to cut off federal student loans and shepherd students into more expensive alternatives, the high level of default we see today may be just the beginning.

Raw data used in graphs and study:

Year

Harvard

%change

CCC

%change

CSU

%change

UC

%change

Inflation

%change

1981

 $    6,000

0%

$0

0%

$319

0%

$997

0%

$1,000

0%

1982

 $    6,930

16%

$0

0%

$505

58%

$1,300

30%

$1,061

6%

1983

 $    8,195

37%

$0

0%

$692

117%

$1,387

39%

$1,095

10%

1984

 $    9,035

51%

$0

0%

$658

106%

$1,324

33%

$1,143

14%

1985

 $    9,800

63%

$100

0%

$666

109%

$1,326

33%

$1,183

18%

1986

 $  10,590

77%

$100

0%

$680

113%

$1,345

35%

$1,205

21%

1987

 $  11,390

90%

$100

0%

$754

136%

$1,492

50%

$1,249

25%

1988

 $  12,015

100%

$100

0%

$815

155%

$1,554

56%

$1,301

30%

1989

 $  12,715

112%

$100

0%

$839

163%

$1,634

64%

$1,364

36%

1990

 $  13,545

126%

$100

0%

$920

188%

$1,820

83%

$1,437

44%

1991

 $  14,450

141%

$120

20%

$1,080

239%

$2,486

149%

$1,498

50%

1992

 $  15,410

157%

$210

110%

$1,460

358%

$3,044

205%

$1,543

54%

1993

 $  16,454

174%

$390

290%

$1,604

403%

$3,727

274%

$1,589

59%

1994

 $  17,470

191%

$390

290%

$1,853

481%

$4,111

312%

$1,630

63%

1995

 $  18,485

208%

$390

290%

$1,891

493%

$4,139

315%

$1,676

68%

1996

 $  19,472

225%

$390

290%

$1,935

507%

$4,166

318%

$1,726

73%

1997

 $  20,424

240%

$390

290%

$1,946

510%

$4,212

322%

$1,765

77%

1998

 $  21,266

254%

$360

260%

$1,871

487%

$4,037

305%

$1,793

79%

1999

 $  22,028

267%

$330

230%

$1,830

474%

$3,903

291%

$1,832

83%

2000

 $  22,765

279%

$330

230%

$1,839

476%

$3,964

298%

$1,894

89%

2001

 $  23,439

291%

$330

230%

$1,876

488%

$3,859

287%

$1,948

95%

2002

 $  24,630

311%

$330

230%

$2,005

529%

$4,017

303%

$1,979

98%

2003

 $  26,066

334%

$540

440%

$2,572

706%

$5,530

455%

$2,024

102%

2004

 $  27,448

357%

$780

680%

$2,916

814%

$6,312

533%

$2,078

108%

2005

 $  28,752

379%

$780

680%

$3,164

892%

$6,802

582%

$2,148

115%

2006

 $  30,275

405%

$690

590%

$3,199

903%

$6,852

587%

$2,217

122%

2007

 $  31,456

424%

$600

500%

$3,521

1004%

$7,517

654%

$2,280

128%

2008

 $  32,557

443%

$600

500%

$3,849

1107%

$8,027

705%

$2,368

137%

2009

 $  33,696

462%

$780

680%

$4,893

1434%

$9,311

834%

$2,360

136%

2010

 $  34,976

483%

$780

680%

$5,390

1590%

$11,279

1031%

$2,398

140%

2011

 $  36,305

505%

$1,080

980%

$6,422

1913%

$13,218

1226%

$2,474

147%

 

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