Why are college costs going up?

It's no secret to anyone struggling to pay a college tuition bill: The cost of higher education is going up. The question is why.

"The most obvious reason why the tuition level at public colleges and universities is rising more rapidly is tight state budgets and declining appropriations," says Sandy Baum, senior policy analyst for the College Board.

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Simultaneously, the need to survive in a competitive economy is pushing record numbers of students into colleges and universities, says Joni Finney, vice president of the National Center for Public Policy and Higher Education.

"Part of the reason is that the economy now requires more and more Americans to have some education beyond high school, and we've never accommodated the numbers we have now and the numbers we'll have in the future," says Finney.

This year, tuition at private colleges rose 6 percent, says Tony Pals, director of public information for the National Association of Independent Colleges and Universities. "Public universities rose 10.5 percent."

That's the latest in a string of increases. The full cost of a year at a public four-year school has jumped an average of 83 percent in the past 12 years, according to figures from the College Board. At a four-year private school, the price climbed an average of 74 percent.

Inflation, federal spending priorities, the cost of living and even the cost of health insurance are all having a significant impact on the cost of education. And as more students apply to colleges, federal student loan dollars are spread more thinly. In addition, many states are cutting support to public colleges and universities, while private colleges are suffering shrinking donations and reduced investment returns from endowments. End result: Students and their families pick up the slack and the cost of higher education climbs higher than ever.

Public colleges receive "about one-third of their revenues from state appropriations," says Baum. "So when state appropriations decline -- as they have in the past couple of years -- or even rise slowly, tuition levels tend to increase more rapidly."

Some educators also worry that colleges are spreading themselves too thin financially in an effort to draw prospective students. "We are concerned that a lot of colleges and universities are increasing the amenities that they offer to students in order to attract students," says John Curtis, director of research for the American Association of University Professors. "It's a competitive market for students and that is probably out of proportion to the spending on instruction, which should be at the core."

He also worries that growing executive salaries are a drain. "Presidents are being paid in line with corporate CEO salaries," Curtis says.

Finney agrees. "Executive compensation is out of control," she says. "It's going to ratchet the whole system up, and that's really a very dangerous trend."

Think private schools might have it easier with finances? Not by a long shot.