Pragmatic Approach to America’s Tuition Crisis

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The best solutions to problems are the ones that address the root cause, not the ones that make the problems feel less painful. Giving higher education institutions a goal and rewarding them when they achieve it, drives the behavior we desire and begins to solve the problem.

Annual inflation in America has averaged 2.8% for the last 30 years and 2.0% in just the last 10 years. Most recently, tuition increased 8-11% among nonprofit institutions. At the state school I went to, tuition increased 400% from 1985 to 2015. It was $5,000 per year in 1985. Now it’s $25,000 per year. That’s a 5% compound annual growth rate.

So, we all know there’s a problem that needs to be solved. After all, education allows us to differentiate ourselves from others in our competitive environment. It helps us get jobs and be better at what we do. But, increasing tuition rates at higher education institutions have reached a point to where students either can’t afford to attend college or choose to be saddled by huge student loans upon graduation.

Some students turn to the various online crowdfunding campaign programs to raise money to pay for their tuition. Although these efforts are a good stopgap for the students, they don’t solve the problem. Government subsidizing tuition through tax increases is also not a solution. It would only enable institutions to continue this harmful trend. In fact, one of the reasons we got into this mess is the ease of getting students loans. Institutions feel open to raising tuition, because they know someone will pay for it. Now we have over $1.2 trillion in students loan debt with 8 million loans in default.

The solution is getting institutions to lower their tuition. But, we can’t induce price controls. We’re a capitalistic country. And, we can’t expect for it to happen immediately. After all, you have to slow down a train before you can back it up.

Tuition Heroes™ has devised a program that might influence tuition control. It can be compared to the Energy Star program for efficient appliances. It uses positive reinforcement and the nature of institutions to compete for students. We track the tuition for all institutions in America and calculate a rolling four-year tuition compound annual growth rate (CAGR). Each year we designate Tuition Heroes. These are the institutions that have a 2.5% or less CAGR. We also provide the designation to institutions that offer a fixed-rate tuition policy.

After an institution is designated a Tuition Hero™, they can get a Tuition Hero badge and display it on their websites and social media channels, and link it to their page on Tuition Heroes.