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College Tuition Continues to Rise in U.S.

It can be very expensive to go to college in the United States. And it keeps getting more expensive. Although tuition increases were lower this year than they have been in the past, the cost of going to college is still rising much faster than inflation or Americans' household income.

The increases have captured the attention of parents across the United States - including U.S. Secretary of Education Margaret Spellings, who recently sent her daughter off to college for the first time. The Department of Education has put together a commission to take a look at the future of higher education in the United States, and at the inaugural meeting, Ms. Spellings asked participants to make the issue of cost a priority.

"Please address such questions as how accessible is higher education, and who will be the college student of tomorrow?" she told the crowd of college administrators who had gathered for the meeting. "Why is the cost of college rising so rapidly, and how can we make it more affordable?"

The average cost of one year at a private U.S. college or university is now $21,235. That is up from about $15,000 five years ago. To put the 40% increase in perspective, household income in the United States during this same period rose just 4%.

Tuition at less expensive, state-run universities is increasing even more rapidly. According to Patrick Callen, president of the National Center for Public Policy and Higher Education, that is because states are feeling the effects of a sluggish economy. "Public institutions have had their budgets cut by states, and they've been raising tuition to replace public money that's been taken out of their budgets," he says.

But budget cuts are just part of the reason tuition rates have been increasing so rapidly. Mr. Callen points out that more and more American high school students are going to college, because nowadays, it is nearly impossible to earn a middle-class income without a college degree. This has created what he calls a "sellers' market"-and schools are taking advantage of it.

"There's increased demand, and not increased supply, so they're able to raise prices," Patrick Callen says. "They can raise tuition, without having to worry about losing enrollments."

Add to that the myth that cost equates to quality, he says, and you have a situation where universities have no incentive to keep tuition down.

The result is that students today are graduating with nearly twice as much education-related debt as graduates had ten years ago. A study conducted by the Public Interest Research Group found that nearly 40% of student borrowers leave school with what are considered to be "unmanageable" debt levels. Their payments, in other words, amount to more than 8% of their monthly incomes.

Patrick Callen says if something isn't done about the cost of a college education, it's going to have an impact on America's future. "It influences students' choices, like whether to go to graduate school, and can you afford to go get a graduate degree, if you already owe a chunk of money, in a field that isn't going to have big economic returns - you know, teaching, social work, etc."

The debt may also force people in their 20s to delay getting married and starting a family - a factor that could be behind the rising age of first-time marriage that the United States has experienced in recent years.

Of course, there is financial aid available for students, but Patrick Callen says increases in grant and scholarship money have not kept up with the increases in tuition. And he says universities have not always distributed that money wisely, because they are competing with one another for smart, accomplished students.

"A larger and larger percentage of the aid that's there is not going to the students for whom it might make a difference in whether they go to college or not," says Mr. Callen. "It's going to be used as an enticement in this competition for students that will raise your prestige by getting students with the highest SAT scores (i.e. national exam scores) and the highest grade points out of high school."

Patrick Callen says schools could do a lot to make a college education more affordable if they just restructured their aid formulas. And undoubtedly that is one issue the Department of Education's Commission on Higher Education will be looking at.

But unless more universities crop up in the United States, it will remain a sellers' market - until the cost gets so high, that is, that students simply cannot go, regardless of how much debt they are willing to assume.