The Escalating Cost of Higher Education

As families grapple with the financial realities of sending children to college, tuition fees continue to climb at rates far outpacing general inflation. In the 2025-26 academic year, average tuition and fees at public four-year institutions reached $11,950 for in-state students, up 2.9 percent from the previous year before adjusting for inflation. Out-of-state students faced $31,880, a 3.4 percent increase, while private nonprofit four-year colleges averaged $45,000, rising 4.0 percent. When factoring in room, board, books, and other expenses, the total cost of attendance often exceeds $27,000 annually for public in-state programs and climbs to $58,628 at private institutions.

These figures represent more than just numbers on a balance sheet. Over the past two decades, college costs have more than doubled, with tuition inflation outstripping wage growth by over 111 percent from 2000 to 2020. Net prices after grants and scholarships have stabilized somewhat for lower-income families, but the average student borrower still graduates with around $38,375 in federal loan debt, paying approximately $2,636 in interest each year and taking about 20 years to repay. For many, this debt burden overshadows the promise of future earnings, prompting a reevaluation of whether the investment pays off.

Enrollment Cliff Hits Universities Hard

Higher education institutions are feeling the pinch through plummeting enrollment numbers. The percentage of high school graduates immediately enrolling in college has dropped from a peak of 70 percent in 2016 to 62 percent in 2022, a trend exacerbated by the so-called enrollment cliff starting around 2025. Projections indicate a 12 percentage point decline in the college-age population by 2030, forcing colleges to compete fiercely for fewer students.

Contributing factors include rising living costs, with 67 percent of recent high school graduates citing them as a barrier to enrollment, up from 51 percent the prior year. Public universities, in particular, face state funding cuts—down significantly since the 1970s—leading to closures of 16 nonprofit colleges in 2025 alone due to unsustainable finances. This demographic shift, combined with skepticism about degree utility, threatens the viability of many mid-tier institutions.

AI Reshapes the Job Market for Graduates

Artificial intelligence (AI), referring to machine learning systems capable of performing tasks like data analysis and content generation, is disrupting entry-level positions traditionally held by college graduates. Surveys show 70 percent of students view AI as a threat to their job prospects, with 42 percent expecting it to influence their career choices and 10 percent of first-year students already switching majors in response.

Recent graduates report a tight job market, with unemployment rates for the class of 2026 hitting four-year highs. Entry-level roles requiring AI skills have nearly doubled year-over-year, yet many feel unprepared—only 51 percent of graduates believe they possess sufficient AI competencies. Fields like software development, consulting, and customer support have seen 16 percent employment drops for young workers since AI proliferation. Tech executives maintain degrees hold value, but emphasize hybrid skills blending technical prowess with human elements like empathy and critical thinking.

Assessing Return on Investment in 2026

Despite the doubts, data suggests a positive financial return for most degrees. The Federal Reserve Bank of New York estimates a median 12.5 percent ROI on a college education, surpassing sound investment thresholds even after accounting for tuition and opportunity costs. Full-time workers with bachelor's degrees earn about 60 percent more than high school graduates over lifetimes, potentially $500,000 or more net gain.

However, outcomes vary by major and institution. While 94 percent of undergraduate programs yield positive ROI, certain humanities fields lag, and longer completion times—five or six years—reduce returns to 9 percent. Public perception lags reality: 63 percent of Americans deem a four-year degree not worth the cost, per recent polls, amid $1.6 trillion in national student debt.

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Voices from the Frontlines: Student Anxieties

College students express palpable fear about post-graduation realities. At Michigan State University, undergraduates like Itzel Segovia rate workforce entry worries at 8/10, citing a "really hard and scary" entry-level climate. Eastern Michigan peers echo this, with fear levels at 7 to 8.5/10, despite career fairs and internships.

Hands-on experiences provide some reassurance—Megan Davis at Eastern Michigan values experimental projects for building resilience, noting "any research is good research." Yet, broader concerns about polarization, funding shifts, and AI loom large, with students seeking programs that guarantee employability.

Universities Adapt to Survive

Leaders recognize the need for change. Michigan State University boasts 93 percent placement rates for recent graduates into jobs or grad school, bolstered by alumni input on skills and expanded internships. Eastern Michigan emphasizes economic connectivity, with low in-state tuition under $4,000 annually attracting cost-conscious students.

Broader adaptations include AI-integrated curricula, shorter three-year degrees in states like Tennessee, and experiential learning like Arizona State University's global immersion programs. Presidents stress prioritizing human skills—judgment, leadership, cross-cultural agility—over rote knowledge AI can replicate. A recent EAB survey underscores urgency, as AI fears drive opt-outs.

Alternatives Gaining Traction

Trade schools and apprenticeships emerge as compelling options. Surveys show 33 percent of high schoolers preferring trades over 28 percent for college. Programs in HVAC, plumbing, and robotics offer quick entry—often 30 weeks—with paid apprenticeships leading to six-figure salaries sans debt.

• Registered apprenticeships blend classroom and on-job training, sponsored by unions or employers.
• Online certifications from platforms like Coursera provide AI-proof skills in cybersecurity and biotech.
• Community colleges facilitate stackable credentials for flexible paths.

These pathways appeal amid college's $500,000 lifetime cost, including foregone earnings.

Expert Insights: Beyond the Hype

Experts argue inertia, not AI, poses the gravest threat. Forbes analysis highlights how outdated models erode trust—universities must foster character via real-world challenges. NVIDIA's Jensen Huang prioritizes suffering-built resilience; Monash University's Sharon Pickering sends freshmen abroad for relational skills.

Peter Berkowitz critiques curriculum orthodoxy, while Shaun Harper defends diversity's benefits. Consensus: Degrees retain signaling value, but institutions must prove ROI through outcomes transparency.

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Practical Advice for Prospective Students

Choose majors with strong ROI like engineering or nursing, targeting schools with placement rates above 90 percent. Seek internships early, build AI literacy via free tools, and consider net cost under $30,000 debt. Explore hybrids: community college transfers or accelerated programs. Families should model scenarios—lifetime earnings minus debt—using tools from the College Board.

A Pivotal Moment for Higher Education

Higher education stands at a crossroads. While AI accelerates change and costs fuel skepticism, data affirms degrees' enduring value for most. Success hinges on adaptation: affordable, skills-focused models emphasizing irreplaceable human traits. As PBS reports, universities like Michigan State are modeling civil discourse and employability. The future favors agile institutions delivering measurable impact.