Ever wondered how your college came up with the tuition and fee charges you're paying? This is easier to explain by example, so let’s take a look at the math.

Let's say "Your College" is a small, fictional, public college, which is sponsored in part (a very little part) by tax dollars. It takes $252,000,000 to operate "Your College" (all costs, including buildings, utilities, staff, faculty, and everything else they have to pay for) for one year.

The government (state and federal) has agreed to give "Your College" $3,360,000 in tax dollars this year. Alumni and other sponsors are going to give "Your College" a total of $1,680,000. Sports and other special events on campus will bring in a total of $80,000. That leaves "Your College" with a financial shortfall (a hole) of $246,880,000 that it has to fill from other funds.

Operational Budget $ 252,000,000
Less Government Funding - 3,360,000
Less Alumni/Other Gifts - 1,680,000
Less Revenues from Special Events - 80,000
Shortfall $ 246,880,000

"Your College" usually enrolls 25,000 full-time students (total) each year. "Your College" has no other outside sources of funding; and as a non-profit organization is not going to generate any additional funding internally. The only anticipated revenue "Your College" has left is tuition and fees. This means that in order for "Your College" to fill in the hole in its operating budget, each full-time student equivalent will have to pay about $9,875 per year in tuition and fees.

$246,880,000 / 25,000 = $9,875

Is that fair? It all depends on how you look at the situation. Why doesn’t the U.S. government subsidize more of the costs of higher education? Like many countries, the U.S. simply cannot afford to bear this burden. Economics are such that the government cannot afford to fully subsidize these costs for all students academically qualified to enter higher education. This means that students and parents are increasingly bearing the financial burden of higher education.

That was simple, wasn't it? Sure, I've left a few steps out. But you get the basic idea.

Until next time!

Lynn Byrne

Preparing for college admissions? Trying to find direction? Need a little help with the planning? Check out my college planning series:

• College Planning Made Easy--the planning and preparation workbook for the take charge, college-bound student,
  
• Paying for College Made Easy--a college financing guide designed to assist students and families in preparing and planning for higher education expenses; and
  
• The Great Scholarship Search--my guide for students and parents researching and applying for scholarship funding.