Rankings of tertiary institutions

Universities 21 ranked the country as having the best higher education system in the world in 2012. Cost was not considered in the rankings.

Numerous organizations produce rankings of universities in the United States each year. A 2010 University of Michigan study has confirmed that the rankings in the United States have significantly affected colleges' applications and admissions. Referred to as the "granddaddy of the college rankings", America's best–known American college and university rankings have been compiled since 1983 by U.S. News & World Report and are widely regarded as the most influential of all college rankings.

2007 movement

On 19 June 2007, during the annual meeting of the Annapolis Group, members discussed the letter to college presidents asking them not to participate in the "reputation survey" section of the U.S. News & World Report survey (this section comprises 25% of the ranking). As a result, "a majority of the approximately 80 presidents at the meeting said that they did not intend to participate in the U.S. News reputational rankings in the future." However, the decision to fill out the reputational survey or not will be left up to each individual college as: "the Annapolis Group is not a legislative body and any decision about participating in the US News rankings rests with the individual institutions." The statement also said that its members "have agreed to participate in the development of an alternative common format that presents information about their colleges for students and their families to use in the college search process." This database will be web-based and developed in conjunction with higher education organizations including the National Association of Independent Colleges and Universities and the Council of Independent Colleges.

On 22 June 2007, U.S. News and World Report editor Robert Morse issued a response in which he argued, "in terms of the peer assessment survey, we at U.S. News firmly believe the survey has significant value because it allows us to measure the "intangibles" of a college that we can't measure through statistical data. Plus, the reputation of a school can help get that all-important first job and plays a key part in which grad school someone will be able to get into. The peer survey is by nature subjective, but the technique of asking industry leaders to rate their competitors is a commonly accepted practice. The results from the peer survey also can act to level the playing field between private and public colleges." In reference to the alternative database discussed by the Annapolis Group, Morse also argued, "It's important to point out that the Annapolis Group's stated goal of presenting college data in a common format has been tried before [...] U.S. News has been supplying this exact college information for many years already. And it appears that NAICU will be doing it with significantly less comparability and functionality. U.S. News first collects all these data (using an agreed-upon set of definitions from the Common Data Set). Then we post the data on our website in easily accessible, comparable tables. In other words, the Annapolis Group and the others in the NAICU initiative actually are following the lead of U.S. News. "

Financial value of degrees

Studies have looked at the financial payoff to the large investment in time, tuition, student loans, and lost earnings that is typically required to receive an academic degree. People with higher education have always tended to have higher salaries and less unemployment than people with less education. However, the payoff for different majors varies greatly. In 2010–2011, the median earnings of bachelor's degree holders over the age of 29 years ranged from $44,000 for educators to $83,000 for engineers. The earnings of master's degree holders over the age of 29 years ranged from $57,000 for educators to $101,000 for engineers.

Some fields of study produce many more graduates than the professions can take in. Due to the resulting higher education bubble, these graduates often have to consider jobs for which they are overqualified, or that have no academic requirements.

Although an associate degree is, on average, less financially lucrative in the long term than a bachelor's degree, it can still provide a respectable income with much less student debt. In fact, new research into earnings shows that recent community-college graduates in certain specialties can make more than recent university graduates with a bachelor's degree. In spite of persistently high unemployment, there is still a demand for some skilled trades that often only require an associate’s degree or vocational training, such as technicians, draftsmen, radiation therapists, paralegals, and machinists.

Socioeconomic status

Socioeconomic status can play a part in one's chances of taking advantage of higher education. A 2011 national study found that college students with a high socioeconomic status persisted in college 25 percent more than students with a low socioeconomic status. In fact, students with a high socioeconomic status are 1.55 times more likely to persist in college than students with a low socioeconomic status. Attaining even higher degrees than a bachelor's degree can also be affected by socioeconomic status. A 2008 study reports that 11 percent of students with low socioeconomic status report earning a master's, medical, or law degree compared to 42 percent of high socioeconomic students. A 2007 study found that 52 percent of low-income students who qualified for college enrolled within 2 years of graduation compared to 83 percent of high-income students. The National Center for Education Statistics reports that in 2009 high school graduates from low-income families enrolled in college immediately at a rate of 55 percent. In comparison, 84 percent of high school graduates from high-income families enrolled immediately into college. Middle-class families also saw lower rates with 67 percent enrolling in college immediately. It also found that a high percentage of students who delayed enrollment in college attended high schools that had a high level of participation in the free and reduced lunch program. Students who work long hours in high school are less likely to pursue post-secondary education. Students who had access to financial aid contacts were more likely to enroll in higher education than students who did not have these contacts.

Socioeconomic status can also influence performance rates once at a university. According to a 2008 study, students with a low socioeconomic status study less, work more hours, have less interaction with faculty, and are less likely to join extra-curricular activities. 42 percent of students with low socioeconomic status indicated that they worked more than 16 hours a week during school, with a high percentage working up to 40 hours a week. Students with low income may not apply for higher education. These students are often racial minorities. This is also evidence of a positive relation between socioeconomic status and social integration at university. In other words, middle-class students take part in more formal and informal social activities and have a greater sense of belonging to their universities than do working-class students.

Race

Race can play a part in which students enroll in college. A 2007 study found that African Americans are more likely to delay enrolling in college. The National Center for Education Statistics reports that between 2003 and 2009 rates of immediate college enrollment increased for Asian Americans and whites, but not for African Americans The 2011 Condition of Education study found that in 2008, 63 percent of college students were white, while 14 percent were African American and 12 percent were Hispanic. Race can play a part in a student's persistence rate in college: Dropout rates are highest with the Native American and African American population, both greater than 50 percent. Caucasians and Asian Americans had the lowest dropout rates.

Gender

In discussing student's access to education in the United States, one area of concentration that current research has focused on in the last half century is the differences that exist between students entry and completion rates based on gender. In a study done by Bailey & Dynarski (2011) it was observed that the increase in inequality that has been observed in the last 40+ years has been predominantly driven by women.

Within higher-income families that are sending more children to universities and colleges, women make up a greater percentage (15% compared to 7%) of this growth. While the largest gap of educational attainment between men and women is seen in the highest income group, women are attaining higher levels of education than men in every income group. This observation poses a unique and confusing problem: if educational attainment has a positive correlation to familial income, why are more women entering and completing college than men? Bailey and Dynarski proposed that the observed educational gap by gender may be due to differing incentives to accumulate human capital. Men and women may participate in what they term "segregated labor markets" and "asymmetric marriage markets," and perhaps, to make up for those perceived market differences, females are more motivated to obtain higher levels of education.

The gap of educational attainment between men and women is starting at a young age and affecting students’ access to higher education later on in life. There are two main explanations for the gender differences in educational attainment and inequality. First, men and women respond in different and gender-specific ways to family and/or school circumstances, and second, the differences in circumstances across men and women of the same family income and race have shaped inequality in educational attainment for some time. More specifically, the bulk of primary and secondary teachers are female and women run most single parent households. The absence of a strong male role model affects males differently from females. Studies have shown that teachers provide role models to demographically similar students, and their unintended biases affect their interactions and assessments of their students.

When comparing graduation rates between men and women, in children born after 1960, more white women were graduating from college than white men, which was a change from children born before this time.

Undocumented Students

It is estimated that 65,000 illegal immigrants graduate from high school each year. These graduates have lived in the United States for more than 5 years and most were often brought to the United States by their parents as young children. This leaves the U.S. Government with the question of what rights to give the illegal immigrants after their graduation, particularly with access to higher education. A 2010 study conducted at the University of Nevada, Las Vegas (UNLV) on illegal immigrants and higher education:

Installing pathways to higher education and in-state tuition for undocumented students in the United States presents both opportunities and constraints in developing practices that promote social justice, equity, and equality. Those who are sympathetic to the challenges facing undocumented students may support opportunities to promote the potential of those who are deserving of incorporation and membership in U.S. society. On the other hand, proponents of tighter borders and tougher immigration laws may view all undocumented people, including model, hardworking young people, as "illegals" or temporary workers and consider them to be drains on the resources of society. This puts educational administrators in precarious positions since they are professionals who are trained to promote and support students in their pursuit of knowledge and self-improvement. Therefore, many professionals are left with little choice but to search for individuals and resources already established within outlaw cultures."

Cost and finances

Critics contend that tuition increases have outpaced inflation. A member of the Commission on the Future of Higher Education, Richard Vedder, argued that third-party tuition payments from government or private sources have insulated students from bearing the full cost of their education; as a result, costs have risen more rapidly than necessary. Analyst Robert E. Wright predicted cost increases without matching increases in quality would continue until professors were encouraged to own colleges in private partnerships; he predicted that would not happen until barriers to entry are decreased and government education subsidies are paid directly to students instead of to colleges and universities. A report in The Economist criticized American universities for generally losing sight of how to contain costs. Analyst Jeffrey Selingo in the Chronicle of Higher Education blamed rising costs on unnecessary amenities such as private residence rooms, luxury dining facilities, climbing walls, and sometimes even so-called lazy rivers similar to ones found in amusement parks. The 2014 documentary Ivory Tower described colleges as participating in an "arms race" to provide the best luxury facilities, and asked whether college was worth the expense in an era of "predatory loan systems" and job scarcity and rampant inequality. One analyst argued that second-tier schools with Ivy League Envy had become "so obsessed with rising up the academic hierarchy" that they focused too heavily on research while neglecting undergraduate education, and argued that schools should embrace Internet technology and online software to streamline costs.

Many students lack the financial resources to pay tuition up front and must rely on student loans and scholarships from their university, the federal government, or a private lender. All but a few charity institutions and the United States Service academies charge students tuition, although scholarships (both merit-based and need-based) are widely available. Generally, private universities charge much higher tuition than their public counterparts, which rely on state funds to make up the difference. Because each state supports its own university system with state taxes, most public universities charge much higher rates for out-of-state students. In 2002, state governments gave their state colleges a total of $66 billion to partially subsidize student tuition. The average tuition then of a state college was $4,081 annually for a four-year college. The average cost of a private school was $18,273.

The total cost of all higher education in 2002 was $289 billion.

One theory for the continual increase in tuition is that universities prioritize endowment growth over educational interests. A possible explanation for this is that universities are concerned with intergenerational equity for the benefit of future generations of students, as well as the overall benefit to society. This means that the universities will usually seek to grow their endowments to sustain their level of activity well into the future. Arguments against this justification mainly focus on the idea that the intergenerational equity theory does not accurately reflect the behavior of institutions with large endowments. Peter Conti-Brown, for example, describes how many of the elite universities cut their budgets during the recession despite sitting atop multi-billion-dollar endowments, which were theoretically supposed to act as cushions during such economic downturns.

Still, tuition increases may not be completely the responsibility of the higher education institutions. Instead, an article written by Archibald and Feldman suggests that tuition increases simply reflect the increasing costs of producing higher education. According to the cost-disease theory, it would be difficult to achieve cuts in per-student cost without the deterioration of quality in the education. While the decision-making of college administrators does come into play, the argument is that there are more fundamental and economy-wide factors that result in cost increases. A general economic trend is that costs in service industries grow more rapidly than in manufacturing industries, and increase in higher education costs is simply a reflection of this phenomenon. Some universities describe being caught in a dilemma where they are pressured to offer broader curricula and improve facilities to attract new students on one hand, but on the other hand these universities must raise tuition to compensate for state spending cuts and rising expenses.

Annual undergraduate tuition varies widely from state to state, and many additional fees apply. Listed tuition prices generally reflect the upper bound that a student may be charged for tuition. In many cases, the "list price" of tuition – that is, the tuition rate broadcast on a particular institution's marketing platforms – may turn out to be different from the actual (or net) tuition charged per student. A student that has applied for institution-based funding will know his or her net tuition upon receipt of a financial aid package. Since tuition does not take into account other expenses such as the cost of living, books, supplies and other expenses, such additional amounts can cause the overall cost of college to exceed the tuition rate multiplied by the number of courses the student is planning to take.

In 2009, average annual tuition at a public university (for residents of the state) was $7,020. Tuition for public school students from outside the state is generally comparable to private school prices, although students can often qualify for state residency after their first year. Private schools are typically much higher, although prices vary widely from "no-frills" private schools to highly specialized technical institutes. Depending upon the type of school and program, annual graduate program tuition can vary from $15,000 to as high as $50,000. Note that these prices do not include living expenses (rent, room/board, etc.) or additional fees that schools add on such as "activities fees" or health insurance. These fees, especially room and board, can range from $6,000 to $12,000 per academic year (assuming a single student without children). Such fees are not at all government-regulated, allowing a theoretically enormous increase each year. While tuition is monitored to some degree in legislatures and is often publicly discussed, fees on the side are frequently overlooked in public opinion and regulatory policies. Although tuition costs have risen, the rising costs have had little effect on transfer rates and overall enrollment. In a study on effects of rising tuition costs, analysis revealed that the rising costs of colleges have “weak or no effects” on enrollment. Rising tuition costs have not deterred enrollment “as long as students believe the potential return of a college education is much greater than the cost”.

In addition to tuition, living expenses, books, supplies and fees, students also face a less-acknowledged opportunity cost in years of missed potential income. A high school educated person could expect to earn about $84,000 for four years of work; in choosing to attend and pay for college, an individual forgoes those earnings.

Study comparing college revenue per student by tuition and state funding in 2008 dollars.

In 2010, community colleges cost an average of $2,544 per year for tuition and fees. A private four-year college cost an average of $26,273 annually for tuition and fees.

College costs are rising while state appropriations for aid are shrinking. This has led to debate over funding at both the state and local levels. From 2002 to 2004 alone, tuition rates at public schools increased by just over 14 percent, largely due to dwindling state funding. A more moderate increase of 6 percent occurred over the same period for private schools. Between 1982 and 2007, college tuition and fees rose three times as fast as median family income, in constant dollars. In the 2012 fiscal year, state and local financing declined to $81.2 billion, a drop in funding compared to record-high funding in 2008 of $88 billion in a pre-recession economy.

To combat costs colleges have hired adjunct professors to teach. In 2008 these teachers cost about $1,800 per 3-credit class as opposed to $8,000 per class for a tenured professor. Two-thirds of college instructors were adjuncts, according to one estimate; a second estimate from NBC News in 2013 was that 76% of college professors were in "low-paying, part-time jobs or insecure, non-tenure positions," often lacking health insurance. There are differences of opinion on whether these adjuncts teach more or less effectively than regular tenured or tenure-track professors. There is some suspicion that student evaluation of adjuncts, along with doubts on the part of teachers about subsequent continued employment, can lead to grade inflation.

Additionally, schools are increasingly using price discrimination as a strategy across different programs to increase revenue (i.e., employing strategies like a for-profit business). Yet the school is still fundamentally different from a for-profit business entity in that it is restricted by its school mission. For example, a school may charge particular types of students (such as low-income or moderate-income students) less tuition in order to help them. Another example is merit-based aid, in which the school will grant high-achieving students money.

Athletics have been increasingly subsidized by tuition. One in eight of the 202 Division 1 colleges actually netted more money than they spent on athletics between the years 2005 and 2010. At the few money-making schools, football and sometimes basketball sales support the school's other athletic programs. Athletes, on average, cost six times what it cost to educate the non-athlete. Spending per student varied from $10,012 to $19,225; cost per athlete varied from $41,796 to $163,931.

Issues related to financial aid

The portion of state budget funding spent on higher education has decreased by 40 percent since 1978, while at the same time most tuition fees have significantly increased. Between 2000 and 2010, the cost of tuition and room and board at public universities increased by 37 percent. The misconception persists that there simply is less money in "the system" to help pay for college these days. Actually, the reverse is true. In 1965, $558 million was available for financial aid. In 2005 more than $129 billion was available. As college costs have risen, so has the amount of money available to finance a college education. The kernel of truth in this myth is that the proportion of gift aid and self-help funding has shifted: loans and work make up a larger percentage of aid packages than they once did. During the early 1980s, higher education funding saw a shift from reliance on state and federal government funding to a greater reliance on family contributions and student loans. Pell Grants, which were created to offset the cost of college for low-income students, started funding more middle-class students, stretching the funds thinner for everyone. During the mid-1990s 34 percent of the cost for college was covered by the maximum offered Pell Grant, compared to 84 percent during the 1970s.

During Clinton's presidency, funding for higher education was focused on creating tax benefits tied to attending college. These proposed policies put less emphasis on developing grants to allow students to attend college. Some have argued that this approach did not adequately provide aid to those students most in need of it. Furthermore, there was fear that tax deductions or credits would actually work to drive up tuition costs.

The federal government also began funding fewer grant programs and more loan programs, leaving students with higher amounts of debt. In 2003, almost 70 percent of federal student aid awarded was student loans, which was a much higher percentage than just a decade before. In fact, the National Center for Education Statistics reports that during the 2007–2008 school year, 66% of degree recipients had borrowed money to complete their degree; 36% of these graduates had to borrow from state or private sources, averaging total loan amounts of $13,900; 95% of these loans were private. On average, a student borrowed $24,700.36 during the 2007–2008 school year. One estimate of total debt of all ex-students in 2011 was $1 trillion. Furthermore, the economic troubles of the recent decade have left higher education funding shifted toward other needs because higher education institutions have the ability to gain extra funds through raising tuition and private donations.

Policy changes in higher education funding raise questions about the impact on student performance and access to higher education. Many early studies focused on social integration and a person's individual attributes as the factors for degree completion. More recent studies have begun to look at larger factors including state funding and financial support. It has been found that providing need-based aid proved to increase degree completion in 48 states. There has also been a positive correlation between providing merit-based aid and degree completion. Also, as the level to qualify for state need-based aid is lowered, the probability of persistence increases. Low-income families now have to pay more to attend college, making it harder for such populations to attain higher education. In 1980, low-income families had to use 13 percent of their income to pay for one year of college. In 2000, this proportion grew to 25 percent of their income, while high-income families use less than 5 percent of their income. Thus, fully understanding how need and merit (non-need) aid is determined is critical when looking to ensure greater access to higher education. It is clear that at both private and public colleges and universities family income has a significant impact on need-based financial aid. As colleges and universities compete for students, the demarcation between merit-based aid and need-based aid is less clear. While there has been a traditional distinction between need-based and merit-based funding, recent trends indicate that these two categories are more blurred than their labels would suggest. Specifically, research confirms that merit-based financial aid often takes into account student need and vice versa.

A 2006 report by Michael S. McPherson and Morton Owen Schapiro indicated that financial aid to students in the 1990s held the strongest correlation with student SAT scores. The report was conducted in the interest of looking directly at the relationship between financial aid grants and various factors, with specific focus on the variables of family income level and SAT scores and minor focus on personal variables, such as race and gender. The reason these factors were given greater consideration was that, according to McPherson and Schapiro, the information was readily available and it led to a more meaningful comparison across students than variables like high school GPA. The report also made clear that it ignored the distinctions that universities make between "need-based" and "merit-based" aid. McPherson and Schapiro argued, "Although it is commonplace to track the importance of merit as opposed to need-based aid based on the responses given by college and university administrators on survey forms, we have argued that the distinction between 'need-based' and 'non-need-based' student grants is a slippery one." The findings in the report indicated that "the principle of awarding financial aid strictly in relation to ability to pay is becoming an increasingly less important factor in the distribution of aid in America's private colleges and universities."

Students who do not do well in the SAT exam may have concerns, as financial aid can be based on academic merit.

Some low-income students have to work and study at the same time. This may adversely impact their performance in school.

Most discussions on how higher education funding is determined have focused on the economic and demographic influences; however, according to a 2010 study on the relationship between politics and state funding many political factors influence higher education funding. First, as the number of interest groups for higher education in a state grows, so does the amount of money given to higher education. Second, states with a more liberal political ideology give more funding to higher education. Third, governors with more control over the state budget tend to award less money to higher education. This is attributed again to the fact that higher education funding is considered to be tradable with other programs. Fourth, a more professional state legislature correlates with more funding for higher education. (Professional in here refers to a legislature that acts much as the U.S. Congress does in that members have many staff members and spend more time in session.) Fifth, the more diverse a state population becomes, the less support there will be for higher education funding.

For-profit schools

There has been rapid growth in recent years of for-profit schools, of which the University of Phoenix is the largest with an enrollment over 400,000 nationwide. Other large institutions, with numerous branch campuses and online programs include Devry and Kaplan University. Altogether, they enroll 9% of the students. They have aggressively recruited among military veterans, and in 2010 received 36% percent of all the tuition aid paid by the federal government. The University of Phoenix received 88% of its income from federal aid to students; the maximum allowed is 90%. In 2001, the University of Phoenix opened a two-year online program oriented toward lower-income students who receive federal financial aid; in 2010 it had over 200,000 students seeking two-year degrees. Critics have pointed to the heavy dependence on federal loans and grants to students, the low student completion rate, and the inability of the majority of graduates to pay their student loans because they failed to secure high-paying jobs. The University of Phoenix reports that in 2009, 23% of its students completed an associate degree within three years of enrolling, and for bachelor's degree students, its six-year completion rate was 34%.

Indebtedness

The amount of debt that students have after graduation has become an issue of concern, especially given the weak job market after 2008. Nearly all loans are financed by the federal government at an artificially low rate, but students sometimes obtain private loans (which generally have higher interest rates and start accumulating interest immediately). In 2010, the U.S. Department of Education announced stricter eligibility rules for federal financing of loans to student at for-profit schools, which were experiencing higher default rates. Student loans total $1 trillion, averaging $25,000 each for 40 million debtors. The debtor’s average age is 33. Forty percent of the debt is owed by people 40 or older. A 2013 poll by NBC News found that more than 40% of college graduates from 2011 to 2012 were underemployed, and that some were "heavily in debt because of the cost of their education."

Pedagogy

While traditional approach to pedagogy in higher education focuses on teacher's responsibility, Armstrong (2012) argues that students have "natural learning" ability. They should take responsibility for their learning. Teacher-centered approach inhibits learning.

Geographic considerations

While many private liberal arts colleges are located in the Midwest and Northeast, population growth of 18-year-olds is strongest in the South and Southwest, making it more difficult to attract potential students to "fly halfway across the country" to get a degree, according to Jeffrey Selingo of the Chronicle of Higher Education.