Higher tuition rates lead to student debt

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Over the past three decades, college tuition has increased at a rapid rate, exceeding the inflation rates of housing, energy and health care. Based on consumer price index data, the cost of tuition and fees has more than doubled since 2000, which does not exclude UT.

“Logically, when the state decreases funding to the University, it is highly likely that tuition will increase,” said marketing junior Kristopher Wilkins. “In order to maintain the same standard of excellence, the University must bring in more money.”

This issue is currently the focus of the McCombs College Tuition and Budget Advisory Committee’s work, according to business senior and McCombs CTBAC co-chair Michael Daehne.

“No one at UT — student, faculty or administrator — wants the cost to go up,” Daehne said. “The simple fact of the matter is that our university is being asked to do more with less — the revenue pie is shrinking, but the expense pie isn’t.”

Moody’s Analytics: Student Lending’s Failing Grade” is a report that analyzes the inflation of college tuition. The main points of the report, according to Moody’s director of Consumer Credit Analytics Cristian de Ritis, are that student debt levels are rising because of the increasing number of students seeking higher education and because of increasing educational expenses over time; that student debt levels could prove unsustainable if the labor market for new graduates does not improve appreciably.

“I do not truly believe that rising costs will negatively affect students’ desire to continue their education,” Wilkins said. “If anything, it may encourage students to take on heavier course loads so that they can complete their education in less time.”

According to the report, financial aid policies at universities and other schools play a large role in determining how much students will actually have to borrow.

“When you look at the various other sources of funding, tuition is really the only place where UT can increase revenue and have an immediate impact,” Daehne said.

According to the report, during much of the last decade, colleges steered students to even larger loans given declines in the value of their endowments and the abundance of relatively cheap credit provided by government and private sources.

“The rapid increase in tuition is certainly a cause of concern for all UT students, myself included,” Daehne said. “I think there’s a very real risk that the rapid growth of tuition and fees at the University could have a damaging effect on our state if it deters students from pursuing higher education.”

Being that the college tuition growth rate is the biggest bubble over all, this may cause speculation that it will soon burst, according to “Moody’s Analytics.”

“Asset bubbles are notoriously difficult to identify until after they burst — if they burst,” de Ritis said. “Despite the rapid rise in tuition and fees over time, demand for education services remains strong. My hypothesis is that the tuition growth rate will moderate over time rather than suddenly collapse.” 

Printed on Tuesday, October 4, 2011 as: College tuition increases along with student debt