10 Higher Ed Money Trends Students Should Know About Heading Into 2013


So the world didn’t end on December 21st. Hopefully you weren’t banking on that happening and haven’t given away all your money and possessions. If you have, you’re probably more concerned with where your next meal is going to come from than what’s going to happen to Stafford loans next year. For everybody else, we’ve pinpointed a few patterns, innovations, and upcoming issues that will feature prominently in the higher ed world in 2013.

  1. Tution rising faster than inflation:

    Benjamin Franklin said the only certain things in life are death and taxes, but then again, Ben never had to pay for college. To say college tuition rising faster than the rate of inflation is a trend is putting it mildly; it’s been going on for decades. And unfortunately, the streak is almost guaranteed to continue in 2013, short of a monumental shift in higher education. Even with the Fed putting less emphasis on a target of 2% max inflation next year, college tuition would have to increase by half as much as it did in 2011-2012 (4.8%) to even be close.

  2. Professors setting their own price schedules for online classes:

    Here’s something students and college profs alike will want to keep an eye on. 2012 was without question the year of the MOOC (massive open online course, for those who missed 2012), but 2013 could be the year of the MOCC: mid-sized online closed courses. These would be smaller, paid courses, as opposed to the, well, massive class sizes that gratis courses pull in. Already education provider StraighterLine has set up Professor Direct, where college profs can set their own prices for online courses they teach. The monetary advantage to teachers is obvious, but students would benefit by getting more face-time with an instructor than MOOCs allow, while still paying less than at a traditional school.

  3. More financial aid transparency:

    One of the results of the housing bubble that caused the recession was a national demand for banks to be more transparent when making mortgage transactions. Perhaps 2013 will show whether a similar call for student loan transparency will prevent what many predict will be the next bubble to burst. There is reason to hope: In June 2012, 10 colleges promised Vice President Joe Biden that they would make sure students know how much a year of college with them will cost, how they can find help paying for some of that cost, how much they can expect to pay in student loans once they graduate, and more. Now that the ball is rolling, more colleges should follow suit (or else risk looking shadowy by comparison).

  4. Education budget cuts :

    How are we so sure tuition is not going to come down any time soon? Because public college tuition levels are closely tied to state education budgets, and those continue to be hammered. From Texas and Louisiana to California and Colorado, 26 states have cut spending already and the effects will be noticeable in 2013 and beyond. And the federal government may not be much help. At the time of this writing, Congress is still wrangling over how not to tumble head-first off the “fiscal cliff” and higher ed is in line to get a painful budget slash on the first day of the new year if a deal is not made.

  5. More performance-based college funding:

    With such monetary dilemmas front and center, many states are beginning to take a different approach to how much funds they allot specific public universities. With the full support of major education players like Bill and Melinda Gates and President Obama, states like Ohio have begun to move toward rewarding public money to public universities based on the success with which they retain and graduate out their students. Unlike the performance funding of the past few decades, PF 2.0 (as U.S. News & World Report put it) may see states basing their judgments on factors like critical thinking, graduates’ ability to get a job, and student progression over their college career.

  6. Changes to federal higher ed funds:

    Although Congress managed to avoid letting the interest rate on federal student loans double overnight in June 2012, the deal that kept it at 3.4% was only for a year. That means that come summer 2013, it will be right back in the crosshairs again, only this time, it’s personal. By that we mean, students should brace for the worst. But it’s not all bad news. The American Opportunity higher ed tax credit, the higher ed tuition reduction, and the student loan interest reduction will all be up for review in 2013, and they’re all predicted to turn out favorably for students.

  7. Cheaper textbooks:

    With any luck, textbooks’ long reign of terror may soon be over, banished to the history section of the bookstore. On one hand you have developments like Washington State creating an e-library of free textbooks for 40-plus community college courses. Then there’s groups like Rice University’s OpenStax College, which thinks it can save students a collective $95 million in five years with its free e-textbooks. Finally, textbook rental companies are hitting their stride, as well. After all, you know it’s a big deal when Amazon gets into the game. Between the influence that online retailer wields and the increasing amount of heat longtime industry company Chegg seems to have now, textbook rental is poised to go gangbusters in 2013.

  8. Nonprofit online colleges challenging for-profits:

    For-profit online universities had a rough 2012, losing students and landing on the receiving end of some tough love from the federal government and some downright brutal press coverage. Meanwhile, nonprofit schools began to gain ground. A report by consulting firm The Parthenon Group entitled “Are the Sleeping Giants Awake? Non-Profit Universities Enter Online Education at Scale” stated, “The race is on to scale as quickly as possible.” While they still have quite a way to go to catch up, all signs point to nonprofits continuing to increase in popularity in 2013, while the for-profit market contracts.

  9. Student loan repayment will become much less painful:

    Just as the way students get college money will be shaken up next year, the way they give it back will be in flux, as well. On July 1, 2013, President Obama’s pet project Pay As You Earn is set to take effect, capping monthly payment of federal student loans at 10% of monthly discretionary income. There is also talk of doing away with the debt collectors and middle-men that currently add up to an additional 25% of what a student already owes by stacking their fees on top. Instead, payment would be automatically deducted from graduate’s paychecks at a set percentage, as is done in the U.K. Even the ban on students declaring bankruptcy is in question, a very promising development for debt-riddled college grads.

  10. Student lawsuits against their alma maters:

    An ugly trend cropped up in 2012 of college graduates suing their alma maters alleging the schools misrepresented students’ chances of finding a job after college (that’s where the “money” part comes in). Actually this started happening in the second half of 2011, picking up steam in December with 11 class action lawsuits against law schools, then barreling into early 2012 with at least 20 more. It will be interesting to see in 2013 if some of these are settled, in which case we will undoubtedly be seeing more of them.

Posted on 01/07/13 | by Staff Writers | in Resources | No Comments »

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