College Tuition Costs – Is College Worth It?
College Tuition Costs – Is College Worth It?
By: Peter Frerichs
November 20, 2024
Insight Highlights
- Who’s to Blame for Rising Tuition Costs
- Online Education Options
- Coding Bootcamps and Tech Careers
- A Vocational Career Renaissance
- A Payment Plan Gaining Traction
If you’re the parent of a student in college or will be soon, you are painfully aware that college tuition costs are unbelievably high. The percentage changes in average earnings of 22 to 27-year-olds compared to average college costs over the past 40 years is absolutely striking.
This is certainly not a new phenomenon, but rising college tuition costs are pushing many parents and young people to consider alternatives to traditional college. Twenty years ago, that consideration would have been fanciful. Today, it’s a legitimate conversation with some interesting avenues to explore.
Who’s to Blame for College Tuition Costs?
One of the primary reasons college tuition costs continue to rise is universities cannot take advantage of productivity advances like other sectors. Artificial intelligence and robotics, for example, have reduced labor expenses in most industries, but robots cannot teach a class. Universities pay human beings, lots of them - and as a percentage of their annual budgets, that cost has only increased.
Second, former Secretary of Education William Bennett made a bold statement back in 1987:
“Federal student aid policies do not cause college price inflation, but there is little doubt that they help make it possible.”1
Taken at face value, the more money available to pay for something, the more a supplier can charge. There is an abundance of literature on the effects of easy federal student aid and the rise in college tuition costs. Some researchers ascribe all the fault to government loans, while others attribute to them just a fraction of the problem. Needless to say, easy money has likely not helped.
Lastly, flagship schools know the value of their credentials. They also understand the capacity of wealthy US families and those from abroad to pay. International student representation continues to grow on US college campuses, and most of those students are paying full tuition.
A Shift Online to Bypass Inflated College Tuition Costs
Fifteen years ago, the notion of attending school online was something out of a science fiction novel. The pandemic pushed the world into virtual learning hubs, and while most people likely prefer in-person learning, online platforms proved their worth.
Source: Holon IQ. March 3, 2021. “Global Online Degree and Micro-Credential Market to reach $117B by 2025.”
A July 2023 survey found that 72% of respondents felt an online degree was more reputable than five years prior.2 The biggest perceptual shift was among Generation Z participants, a data point that was somewhat surprising. Online degree growth typically came from working students or non-traditional students who had taken time off and returned to school. Yet, the fact that a younger cohort was now coming around to pursue a higher degree online was completely new.
Online degrees can capture more of the technological advances than brick-and-mortar university campuses. That said, universities have become more flexible, adding hybrid options that mix in-person and online options.
Coding Continues to Grow
Coding Bootcamps is a growing industry where students acquire the skills they need for a tech career in a fraction of the time a four-year degree would take. Bootcamps are available online and in-person, and typically last anywhere from 10 to 15 weeks.
Top bootcamps fall in the $12,000 range, and like traditional colleges, offer a wealth of payment and loan plans.3
A survey by the job site Indeed revealed 72% of employers considered bootcamp graduates to be “just as prepared and likely to be high performers” as compared to traditional computer science graduates.4 In terms of salaries, many Bootcamp graduates enter careers that in short time exceed six figures.
Source: Wells, Rachel. October 6, 2024. “7 Tech Jobs That Pay $100,000+ And Don’t Require A Degree.” Forbes.
Associate Degree Upsides
Associate degrees are not newcomers like coding or online degree options. These degrees are normally offered at community and junior colleges, but the societal push for all high-school graduates to pursue a four-year degree has marginalized the associate degree.
In the face of ever-growing college tuition costs, Generation Z is looking more favorably at job prospects that require either a high school diploma or an associate degree. The generation is colloquially referred to as the “toolbelt generation,” but there are some options that don’t even require the belt.5
| Five Vocational Jobs Paying $80,000 + Annually | ||
|---|---|---|
| Profession | Median Annual Salary | Education Requirements |
| Air Traffic Controller | $132,250 | Associate degree plus training program |
| Nuclear Technician | $100,420 | Associate degree |
| Elevator and Escalator Mechanic | $99,000 | High school diploma or equivalent |
| Radiation Therapist | $89,530 | Associate degree |
| Dental Hygienist | $81,400 | Associate degree |
Source: Franke-Folstad, Kim. March 27, 2024. “22 High-Paying Trade Vocational Jobs in 2024.” SoFi Learn.
The Parent Corner - Save Thousands with the Private College 529 Plan
If a four-year degree is still the preferred route, a little-known college tuition cost savings plan receiving more attention is the Private College 529 Plan. Launched in 2003 to make private schools more affordable, the plan allows parents to contribute a set amount during any given year, and they are then issued a tuition certificate.6
For example, if a parent contributes $50,000 during Year X and the average annual college tuition costs in the plan’s member schools are also $50,000, the parent locks in one year’s worth of tuition, regardless of future tuition hikes.
Source: Private College 529 Plan.
If the child attends college ten years later, facing a likely tuition hike to $67,063, the certificate is still valid for one year’s tuition. The student’s parents registered $17,063 in tax-free growth in this scenario.
Conclusion
The Internet has opened virtual campuses for young people at a fraction of the cost of brick-and-mortar institutions. Tech jobs continue to require specialized skills that can be acquired quickly and cheaply, and many vocational jobs are being re-discovered by a generation that has not been programmed to value the traditional four-year degree above everything.
While four-year degrees will still hold sway in the labor market, there comes a time when a cost-benefit analysis warrants closer attention. Now is that time.
Sources:
- McArdle, Megan. June 20, 2023. “Generous student loan programs make school more expensive.” The Washington Post.
- Coffey, Lauren. November 13, 2023. “Public Perception of Online Education Improved Sharply Post-Pandemic.” Inside Higher Ed.
- Missman, Kayla, and Beagle, Veronica. August 5, 2024. “Best Coding Bootcamps Online Of 2024.” Forbes Advisor.
- Delesline III, Nate. April 18, 2023. “Are Coding Bootcamp Grads More Employable Than College Grads?” Best Colleges.
- Johnston, Windsor. April 22, 2024. “Many in Gen Z ditch colleges for trade schools. Meet the ‘toolbelt generation.’ NPR
- Ebeling, Ashlea. June 23, 2023. “The Little-Known Way Parents Are Beating College Tuition Hikes.” The Wall Street Journal.
