Getting your Masters degree takes good financial planning and making the most of all available sources of funding. Many people take out student loans or depend on scholarships and savings to finance their graduate studies. So, how is inflation affecting higher education and what does that mean for students now in 2022 and in 2023?
Are tuition fees rising?
This summer, university vice-chancellors in England and Wales called for tuition fee increases of up to 40% to GBP 13,000 per year. The current tuition fee cap in England of GBP 9,250 has been in place since 2017 and the government intends to keep it in place until 2025. Universities, however, warn that the number of places available to foreign students (whose fees are not capped) will increase causing home student cutbacks as they try to close the funding gap.
According to U.S. News & World Report, the average cost of tuition and fees for private and public National Universities in the US has risen significantly over the last 20 years for both in-state and out-of-state students. However, the latest trends shows that tuition rates at private National Universities increased by slightly more than 1% between the 2021-2022 school year and the 2022-2023 academic year. In-state and out-of-state tuition and fees at public National Universities, on the other hand, decreased by about 1% and nearly 3%, respectively, from the previous year.
The changing cost of living
Inflation primarily cuts the purchasing power by raising the prices of everyday necessities such as food, rent and transportation. Rising rents, high gas prices and higher grocery bills are forcing off-campus students to consider dorm life, rather than renting a flat of their own. This not only reduces living costs but, in some cases, where the dorms are close to the university, it also reduces transportation expenses.
According to Bureau of Labor Statistics data released in mid-September, food prices in the US have risen 11.4% in the last year, the largest annual increase since May 1979. During that time, grocery prices increased 13.5% and restaurant menu prices increased 8%. In August 2022, the European Union's inflation rate for food and non-alcoholic beverages reached 15.4%, while the Eurozone's inflation rate was 13.8%. This month, the EU's overall inflation rate was 10.9%, the highest rate of inflation reported in this period, according to Statista.
Consider currency/spending power
With currency exchange rates fluctuating significantly over the last year, you might be able to make a smart choice for a study destination based on your spending power. This will be an excellent real-life exercise for all students considering business or finance Masters studies in particular.
Many international students are currently getting a lesson in currency movements, whether they want it or not. For instance, the dollar’s relentless rise continues to boost the spending power of Americans abroad, including students. The euro, Japanese yen and British pound have recently fallen to lows against the dollar not seen for decades. This means that American students abroad enjoy bigger spending power simply because their dollars are going further.
Sadly, not everyone is that fortunate. For Europeans and Japanese students in the US, tuition and housing costs are higher because of the depreciating euro and yen, respectively. It’s worth taking these dynamics in mind when planning your budget. “We do know that the price of study is a major factor that people consider when they are thinking about the countries they want to go to or the institutions where they want to study. Substantial currency fluctuations can have a really big impact on price,” Madeleine Sumption, the director of the Migration Observatory at the University of Oxford, told the New York Times.
Will the return on investment be worth it?
For many students, the decision to attend graduate school or not boils down to simple math — the degree's potential earning power vs. the cost of attendance and loans. When selecting a Masters degree, students are paying much closer attention to their return on investment. So, is it worth it?
The short answer is “yes”. Despite the fact that some students believe that the current cost of university is high, earning a Masters degree is still highly beneficial. By the age of 29, degree-holders earn 8% more than those who haven’t attended university and women earn 28% more, according to a report by the Institute for Fiscal Studies. Of course, it depends on the career field you are aiming for but a graduate degree will help you stand out in a competitive job market and land a higher-paying job.
While it appears that inflation is making it more difficult to attend university, it is worth it, you just need to make a well-informed decision. Higher education is still valuable, especially business education. There are also ways for students to save money and look into financial aid options.