If your family has welcomed a bundle of joy this year, you better start aggressively saving for her college now.

One year of schooling at a good private college is more than $60,000 per year with costs increasing by about four percent each year. As a Forbes contributor explains, if you do the math, projected costs per year for a college-bound student in the first year will be $121, 549 and will rise to $136,726 by her senior year. That’s $521,153, or more than half of a million dollars!

Too many parents cling to the belief that the investment is worth it, because a college degree will provide a job after graduation paying enough to repay those loans and start out on life. That’s not entirely untrue, but it also denies certain unpleasant facts. One third of young people have had to move back home to live with their parents after college. With more than $1 trillion dollars, we are straddled – even strangled – with student loan debt.

The $500k question is why is college so expensive? And for another half-a-million, what can we do to slow the rising costs of college?

Don’t be surprised that government takes a good deal of blame according to those on the right and on the left.

At state schools, the cost are rising more rapidly – 50 percent faster – than for private schools. 

On the left, education experts from the Center for Budget and Policy Priority attribute low funding for state colleges to driving up the cost of tuition at state schools. Higher education joins a growing list of big ticket spending items that states are not investing in including infrastructure and K-12 education. They fault states for lowering taxes of taxpayers rather than funneling more tax dollars to these priorities.

Revenue for state schools is falling, but there’s no evidence that costs wouldn’t continue to rise even if state revenue held steady. Some might even argue that, if state revenue increased, so would tuition as educators would know that there is more government money in the pipeline.

CNBC reports:

Dramatic reductions in state's college funding have not only led to higher public tuition, but reductions in areas that help students succeed, said Michael Mitchell, a policy analyst at the Center on Budget and Policy Priorities.

 

"When a four-year college doesn't have the resources on hand to provide for all of the necessary courses or needs to shut down a class, that has an impact on the students and that has an impact on the quality of education they're going to receive," he told "Squawk Box."

 

College is also contending with other underfunded initiatives, Mitchell said, including K-12 education and infrastructure and transportation projects. In the wake of the financial crisis, states have a number of priorities they need to reinvest in after seeing huge declines in their resources, resulting in large budget cuts, he noted.

 

Contrary to what our frenemies at CBPP contend, more public dollars are not the best solution. In fact, they are driving the colleges to charge more. Rather than focusing on how government pads the budget of state schools, we can focus on the “open spigot” that is federal financial aid. 

 

The federal government increasingly provides more aid to students through loans. Colleges know that parents and students can always qualify for more funding so they have no incentive to rein in costs. It’s a vicious cycle.

Heritage’s higher ed policy expert Lindsay Burkes explains:

Increases in tuition and fees over the past 30 years suggest that growth in federal subsidies such as loans and grants has done little to mitigate the college cost problem. And all of this spending and debt is not producing adequate outcomes:

…

 

Why is college so expensive?…

 

The most likely culprit, however, is the open spigot of federal student aid that has enabled such profligacy. According to a new report from the Center for College Affordability and Productivity, federal student aid “contributes to skyrocketing costs, finances a wasteful academic arms race, weakens academic standards, lowers educational opportunity, and worsens the underemployment/overinvestment problem.”

 

Congress has long tried to help students afford a college education. It has cut interest rates on federal student loans, vastly expanded federal lending and lifted caps on borrowing. In the 1980s, it even let parents borrow directly from the feds — through the Parent PLUS program — to pay for their children’s college. Each effort has only enabled universities to continue to raise tuition.

 

It’s time to close the spigot of federal aid and hold colleges and universities accountable for controlling their costs and outcomes. Keeping students in school longer than they should is not acceptable. We also need an education model that keeps up with the skills needed for the locations and industries they serve as well as the innovation in how students learn beyond the traditional lecture model. We need real reform for higher education and more dollars is not the answer.