As current and former college students continue to grapple with more than $1.4 trillion in outstanding student loan debt, they’re foregoing homeownership, marriage and buying cars.
Thanks to these stark realities and a strong job market, fewer Generation Z-ers are attending college, and they’re becoming more prudent about which schools to attend.
This has created a bright spot in an otherwise dark financial arena: The skyrocketing growth in tuition costs at universities has slowed to less than 2%, according to an article by the Wall Street Journal.
That’s down from the 6% annual growth rate in tuition prices the country experienced between 1990 and 2016. That means the price of college is finally falling back in line with inflation.
Really? So millennials can’t put down the avocado toast, but Generation Z has the fiscal discipline to compare — and even forego — college tuition costs? What’s really behind this massive shift in the trend?
Market Forces and Demographic Shifts Rein in College Tuition Costs
“The competition is bigger now than it has been, and I think we have more informed consumers,” College of Saint Mary Chief Financial Officer Sarah Kottich told the Journal.
Data from the National Center for Educational Statistics show that overall college enrollment fell 4.5% between 2010 and 2016, but the number of two- and four-year colleges has stayed roughly the same, with only a 0.3% decline.
Fewer students and the same number of universities means that these colleges have had to implement cost-cutting measures to lure potential undergraduates. The tuition discount rate, a measure of grant and financial aid, for all first-year students grew to 49.1% this school year from 48% in 2016, the WSJ reports.
But demographics are also playing a role in the tuition cost slowdown. The total amount of college-aged students isn’t growing at the rate it was in the 2000s, as the number of high-school graduates jumped 18% in the aughts, but only 2% since 2010, the Journal reports.
Will This College Tuition Trend Continue?
Even though annual college tuition cost hikes have fallen below 2%, you might want to wait before taking the GMAT to go back and get a master’s degree.
That’s because as state budgets face looming shortfalls, funding for public education is likely to be on the chopping block, according to the WSJ article.
And even though the number of colleges isn’t declining by a huge amount (0.3% since 2010), it has still been trending downward every year since 2012. If it catches up to the decline in demand for college tuition, we might see prices start creeping back up.
Until then, let’s tap a keg and celebrate the little wins we can when it comes to paying for college.
And be sure to check out The Penny Hoarder College page on Facebook for more university news.
Alex Mahadevan is a data journalist at The Penny Hoarder.
This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.
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