Healthcare, Energy Drive up College Costs

State university tuition has leaped 40 percent in the past five years, hitting the three out of four American college students who attend public universities.

Tuition has risen 126 percent (after inflation) since 1984 and is eating up an ever-growing chunk of family incomes. In 1984, the tuition and fees at a public, four-year college was just 4.8 percent of the median family income; today it's 9.5 percent.

The heart of the problem is that states must juggle the cost of funding their education system alongside two other major funding obligations: state-funded Medicaid and the state criminal justice system.

When states are forced to make cuts in education, they typically spare K-12 education programs because they're politically sensitive, according to Michael Dannenberg, director of Education Policy Program at the non-partisan New America Foundation.

State universities, however, have a mechanism for making up their shortfalls - tuition hikes. So "beginning 2000-2001, governors whacked funding for higher ed," and the tuition went soaring, Dannenberg said.

"The percentage of revenues from the state has plummeted for public universities," said Sandy Baum, Senior Policy Analyst for the College Board. In the past five years state budgets have gotten tight as "Medicaid and the criminal justice systems have taken over" [as funding priorities], Baum explained.

"Unless you stem the tide of Medicaid costs, there's no turnaround in sight," for public university tuition hikes, Baum said.

But healthcare costs don't just pressure state tuition prices by competing for state budget dollars.

Benefit costs for universities, including the cost of employee health insurance, grew 175 percent from 1985 to 2005, while professional salaries grew only about 125 percent in the same period, according to the College Board.

And healthcare costs are not the only surging expense for universities: energy and utility costs, which had remained relatively stable from 1985 to 2000, nearly doubled in the past five years, according to the College Board.

The cost of utilities for all universities - public and private - have jumped 27.1 percent since 2005, according to the Commonfund Institute's Higher Education Price Index.

Universities are disadvantaged by the fact that students and teachers must both be present in full numbers