It’s no secret. College is expensive. Whether a student attends a private college or a public university, chances are they’ve taken out a loan or two to cover the cost. As of October 2018, total student loan debt in the United States reaches a staggering $1.5 trillion.
There are more than 44 million borrowers with an average of $37,172 of debt according to Make Lemonade, a personal finance website that helps students with loan refinancing and banking.
The enormous behemoth that is American student debt looms over graduates for years and has been blamed for the decrease in home-ownership and the lack of average savings. The price of a college education continues to rise while an undergraduate degree is more and more necessary to secure a decent job.
Hendrix students are no strangers to rising costs of attendance. Since 2000, the total cost of attending Hendrix has risen more than 234 percent. Over the past seven years, students have been hit with an increase of approximately $2,000 per year.
According to College Data, it costs about $62,174 to attend Hendrix today. That’s just shy of $3,000 less than the cost of attending Vanderbilt. While Hendrix College is a highly rated institution, it does not compare to Vanderbilt on the national stage and lacks the brand recognition that could secure jobs for graduates.
Consider the cost of attendance in context of the economic status of residents in each state: USA Data shows the poverty level in Arkansas at 17.2 percent and Tennessee’s at 15.8 percent. The median household income in Tennessee sits $4,223 above the median in Arkansas.
This presents Hendrix with a problem, one faced by hundreds of private colleges across the country. Given the drop in attendance, the rising costs, and increasing revenue shortfalls, how does the school attract students?
Colleges like Hendrix continue to raise costs while simultaneously increasing scholarship and financial aid awards in an attempt to keep students and families interested. But several private colleges have resorted to what collegiate financiers call a “tuition reset.” A tuition reset means that an institution lowers its “sticker price,” or the cost of attendance, before scholarships and financial aid are applied. This decrease is normally of a large amount, $10,000 or $15,000. When a college cuts its sticker price, it also drastically cuts its financial awards.
Some economists call tuition resets “gimmicks.” A reset has the potential to negatively impact poorer students more than wealthier ones. For those who pay most of their tuition, a reset could mean savings. For students from less wealthy families who rely on scholarships and financial aid, a reset could mean no change—or at worst, an increase—in costs.
And so goes the rat race of college pricing. More and more, tuition pricing seems like a psychological game rather than an indication of true cost. Nothing yet indicates that Hendrix will opt for a tuition reset, but one thing is certain: the college is not alone in its troubles, and something has to change.