College costs are rapidly rising across the country, making it necessary for many students to take out loans to pay for their education. But the increases are uneven across states, so some students are shouldering a bigger burden than others.
The average cost of college tuition nationwide has outpaced inflation by 3.87% in the last five years, while room-and-board costs have risen 3% more than inflation, according to Self.inc, a fintech company that looked at both public and private school costs.
Students in Montana, Alaska, and Maryland have seen the sharpest hikes, and the trend is likely to continue. Costs have increased approximately 6.08% nationwide in the past five years due to inflation.
“It’s somewhat understandable for universities to increase costs in line with inflation,” said James Garvey, CEO of Self.inc. “But the price hikes we have found in some states are double, if not triple, the rate of inflation.”
Why are costs increasing?
The increases in college costs are driven by higher tuition and room-and-board fees, which are generally tied to state budget trends, said Jonathan Fansmith, director of government relations at the American Council on Education, a nonprofit U.S. higher education association.
“Higher education is usually the one area of the budget that can provide its own additional revenue,” Fansmith said. “It's always a bust in bust years and a boom in boom years, and that's the trend.”
State funding for higher education has stabilized since the Great Recession but has only halfway recovered in the past ten years, according to SHEEO, an association of chief executives of statewide boards of postsecondary education.
Big Sky Country
College costs in Montana have increased the most among the 50 states, rising 12.93% more than inflation in the last five years, Self.inc found. Tuition has increased by 8.6% for the same period, while costs for on-campus room and board has jumped by 18.16% more than inflation.
Lower prices for oil and coal – due to waning demand – hurt the state’s overall revenue and, consequently, its budget for higher education, Fansmith said. Fiscal support for higher education has dropped 3.1% in the last two years in Montana, according to the Center for the Study of Education Policy at Illinois State University.
“You get this balancing wheel effect where you look at other areas where you can make cuts, but still generate additional revenue,” Fansmith said, “whether that's through tuition fees or accommodation.”
Other expensive states
College costs in Alaska – another state dependent on oil – have increased 9.31% versus inflation since 2015, with tuition, accommodation, and books and supplies growing at similar rates.
The Last Frontier State experienced the second-sharpest decline in state fiscal support for higher education, with funding dropping 13.9% in the last five years. That’s one of the reasons costs there have gone up, Fansmith said.
Maryland came in No. 3 with the steepest hikes in costs, even though the state has poured more money into its higher education coffers. It increased its fiscal support by 20.1% since 2014, but college costs there have still risen 7.61% more than inflation.
This is in part because Maryland had a longtime policy of not raising tuition, Fansmith said.
“The increasing cost is a response to having kept tuition fees lower over time,” he said, “and that they're addressing that now.”
Not all U.S. states have experienced rising college costs. In fact, 11 states have seen cheaper price tags versus inflation in the last five years.
Nevada leads the declines with a 5.37% decrease compared with inflation since 2015. During that same period, the Silver State boosted its fiscal support for higher education by 34.9%, the second-highest in the country.
“Nevada clearly demonstrates what we’ve known for a long time,” Fansmith said. “When states commit to funding higher education, students and families pay less to go to college.”
Denitsa is a writer for Yahoo Finance. Follow her on Twitter @denitsa_tsekova.