tuition

How the War in Ukraine Could Impact College Tuition

Russia’s invasion of Ukraine has sent various markets into disarray, and that volatility could impact the cost of a college tuition for students in the United States.

You’re probably seeing some of the highest energy bills you’ve seen in years, and if you’re a college student, or thinking about going to college, soaring energy prices may impact you in more ways than you’d like.

In the U.S., the cost of natural gas was 24 percent higher in February 2022 than it was in February 2021. And experts predict it will increase another 25 percent by the end of the summer. In March, crude oil prices reached a 13-year high, and there’s no telling when the prices at the pump will start descending.

These energy prices aren’t just impacting homes, drivers, and businesses. The energy crisis, as experts call it, could also impact college students and the cost of higher education.

One way to understand this domino effect is by looking at natural gas, specifically.

Considering the U.S. gets most of its natural gas from itself or Canada and virtually none from Russia, one would think a ban on the fossil fuel from Russia following the country’s invasion of Ukraine wouldn’t impact Americans too much.

But while the U.S. isn’t reliant on Russia for oil and natural gas, Europe is. The continent imported 43 percent of its natural gas from Russia in 2020.

It helps to remember that natural gas is priced on a global commodity market. That means that when one source of a fossil fuel (in this case, natural gas from Russia) is reduced elsewhere in the world, it impacts supply and prices for everyone, regardless of geographical location.

Add to that supply chain bottlenecks, labor shortages, rising inflation, and the pandemic, and you have soaring energy prices across the board. The combination of those factors means that demand has outpaced supply. When the height of the pandemic slowed down business around the world, energy prices dipped to some of the lowest rates in history. As people get back to more “normal” lives, the demand for all energy sources has skyrocketed.

“It’s not just the cost of oil [that is rising], but also the cost of natural gas,” says Stewart Glickman, an energy equity and industry analyst at CFRA Research. “And both of those are up fairly significantly in the last year. Natural gas is up even more.”

 This has consequences for universities’ budgets. 

“Universities are big consumers of natural gas, so all of those costs are going to trickle down into a university’s operating budget,” Glickmain said. “If their operating budget gets stretched, they will probably push tuition prices up and that will make its way into student loans.”

Take the energy required to keep heaters on, for example.

“That's going to be more expensive for your campus. The utility is paying more for the natural gas to provide that electricity, so that's more expensive. The heat that is provided for the dorm rooms at a college campus — if that's provided by heating oil that the university has to buy in bulk towards the fall of every year, that's going to be more expensive this year.”

Could those costs be passed on to students? Universities across the country have announced tuition hikes ranging from 2.5 percent to 10 percent for the coming school year, citing a variety of reasons, inflation chief among them. But what about energy costs specifically?

After raising tuition by 2.5 percent in April, University of Massachusetts Board of Trustees chair Robert Manning said the university was facing an “endemic problem of hyper-inflation.”

“It's going to increase the cost of our debt financing,” Manning said. “It's going to increase food costs at all of our campuses. It's going to increase labor costs and energy costs, and it's really going to be another difficult period where we're going to have to be very fiscally responsible to get through this.”

Louisiana Tech University told LX News its natural gas prices for this year increased significantly, totaling to almost $4 million, compared to just over $2 million in 2020.

To cover the costs, the university says it has a $10 per-credit-hour energy surcharge that students pay. The university says it’s had that in place for decades.

Arizona State University, which also raised tuition by 2.5 percent, told LX News that “many operational factors and costs” are considered before raising tuition. “It’s not just one element,” the university said.

Meanwhile, some universities are keeping tuition the same despite changes in operating costs. The University of Maine said tuition would not increase this fall. “UMaine has long-term energy contracts and futures prices follow the market,” a spokesperson told LX News via email. “The university’s natural gas cost changes over the past year have not been passed on to students.”

Idaho State University said it would continue a pandemic-triggered tuition freeze this year, but not because money is not tight. The natural gas bill alone is increasing by $400,000 alone this year, according to Idaho Ed News. “Our costs of operation are outpacing our resources and doing so quickly,” President Kevin Satterlee told the Idaho State Board. “These budget pressures are real.”

This story is part of Connect the Dots, our series that shows how different aspects of our lives are connected to each other. Watch the video above to see what ties student loans, surfing and grocery bags together.