Why College Tuition Costs What It Does

cost-of-collegeTuition is the set amount of money a student must pay in order to take classes at a college or university and gain some sort of credit for taking those classes. There are other costs associated with higher education, of course, including books and housing and lab fees. All of those costs must also be covered in order for a student to truly pay for school. But tuition can reasonably be considered the starting place for students, as they simply must pay these fees in order to attend any kind of class at all.

While it’s easy enough to understand what tuition is and why it’s important for students to plan for and pay their tuition bills, it can be slightly harder for students to understand how tuition rates are set, and why they might vary from year to year or school to school. The answers are individualized, of course, but these are a few notes that might make the process a bit less opaque.

Bills Covered by Tuition

The amount of money students pay in tuition covers several obvious bills administrators might be required to pay, including costs associated with:

  • Teacher salaries
  • Insurance for school employees
  • Support staff salaries
  • Building maintenance

  • Utilities
  • Advertising
  • Recruitment

But there are other costs that are absolutely vital to the health and vitality of a school that students might not see or experience. For example, many institutions consider their research to be an important part of the mission of everyone who holds a job at the institution. These schools might invest huge amounts of money into research, and that might be covered by tuition.

Similarly, schools might also be so successful that they outgrow the spaces they use for classrooms and arenas. Institutions like this might be required to buy more land, and pay taxes on that land, and that might also be a bill tuition helps to pay.

Since there are so many different costs administrators must cover, it might not be surprising to learn that most schools have entire committees devoted to setting tuition costs and spending those fees appropriately. The University of Texas at Austin, for example, has a Tuition Policy Advisory Committee made up of nine voting members and four advisory members, and together, they come up with a budget and a tuition recommendation on a yearly basis. It’s reasonable to suggest that other schools follow a procedure much like this in order to set their tuition rates.

Discounts and More

save moneyIt’s also important to remember that the tuition rate a school sets might not be the rate that an individual student is asked to pay. Institutions tend to provide students with a variety of discounts they can use in order to cover their costs, including grants, scholarships and work-study programs. These packages allow students to gain assistance with the cost of tuition, so they’ll be able to make their education fit within any budget restrictions their families might have.

These programs might sound small and quaint, but the results can be very real. For example, in 2012, the average discount rate for full-time students of private schools reached an all-time high of 45 percent, according to an analysis in Inside Higher Ed. This means that these institutions had a published tuition rate, but that students were asked to pay just about half of that rate, once all of their discount packages were put into play. That’s a remarkable savings.

Numbers like this demonstrate why it’s so very important for students to contact and work with the schools they’re considering before they write off these institutions due to their high published tuition costs. Discounts could make an expensive school look like a great value, while a school that once looked inexpensive might seem a little less of a bargain if no discounts are in play.

While we encourage all students to talk with financial aid officers of the schools they’re considering, we do have some tools that can help with back-of-the-envelope calculations. Our “Scholarship Center,” for example, can provide you with information about the different scholarships you can apply for in the schools you’re considering, and that could allow you to compare and contrast the aid you might get from a number of different schools. Feel free to experiment and play, and you just might find the schools that are right for you.

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