“Inflation vs. College Students: Why Is Tuition Rising ?”
By Hayvyn Smith
Inflation this year around the world has risen to some of it’s highest levels since the early eighties.
This has not only affected our currency and market economy but, also has put a toll on our purchasing power.
Now you may be wondering, how does this directly affect me?
Well, we may tend to be in our own little world as college students but, we are not immune to the affects of a world wide issue such as this.
Inflation dictates that the U.S. dollar was worth way more ten years prior to the dollar we have today, Therefore having inflation reduces the value of a students dollar when paying for college expenses.
Students will likely see their tuition prices continue to rise, which is students biggest expense.
Due to inflation, a lot of college students in the average college demographic have been experiencing challenges and feeling the effects of inflation with many losing the opportunity to continue furthering their education due to rises in tuition.
Students are experiencing higher prices on school supplies, necessities, and the college tuition itself but, what’s the reason why were seeing this increase in pricing?
When making tuition prices for a college, that establishment will take the price of these expenses into account when they assess their school’s cost of attendance.
According to Meagan Landress, a certified Student Loan Professional, “Colleges factor these expenses into their cost of attendance, which dictates aid/loans awarded and available to students annually. But if inflation impacts these things after COA/loan money has been approved and awarded for the year, this can make those dollars’ purchasing power go down vs. what was intended” (OnlineU).
For students who are relying heavily on the cost their college calculates for their education, the effects of inflation will hit them depends on time.
People who have been attending college since the Fall will see their tuition continually rising, and many schools won’t plan on increasing grant/scholarship budgets as they continue to increase the cost of attending their college.
Which will lead to an even bigger possible threat, Inevitable debt from loans.
Shadi Bushra from Online U says, “The interest rate on a federal undergraduate loan in the 2022-2023 school year has now risen 4.99%, up from a 3.73% last school year”, and Students having to deal with the overall higher cost of attending school will become more inclined to take out more loans.
The real kicker is, these loans will be at an even higher interest rate today than it would have let’s say two or three years ago if you’re just now needing to take a loan out.
According to the CNET, “The Fed’s rate increases won’t impact any fixed-rate student loans you currently hold, such as federal loans. But private loans with adjustable rates (interest rates that can rise and fall along with the economy) may see their rates increase, making them more expensive for borrowers to repay.” (cnet.com)
Getting one of these loans now will come to you at higher rates than past years due to a Federal rate hike, and problems such as these will take that thin budget you already have and then spread it even thinner.
Student loan rates are set in May every year, meaning that loans taken out now and way more expensive than before one’s taken out July 202.
It’s important to know that federal loans are a fixed rate for their entirety depending on the year you take them out.
So if you take them out at this increased rate right now, you will have to work with that fixed rate for the entirety of you paying it off.
Rates are most likely to keep growing this year, and this trend Amy continue into following years after that.
So if your like most average working Americans, Melanie Hudson, editor-in-chief of EDI Refinance says, “The amount that they borrowed and the interest rates they’re paying are usually fixed, meaning that the more that money gets devalued, the less they’ll have to pay in real terms on their loans”. (Online U).
Sadly, it is hard to predict how long inflation and its effects will last due to many crucial factors, but knowing and being more aware of how this affect as your future and current life is always good to stay up to date on.
Inflation is no joke, and preparations now can possibly set you up for a more secure future!