Finding Solutions for the Growing Student Housing Crisis

The current uncertainties within the higher education industry have been well-documented by contributors in Present Value. These range from existential, long-run issues—like the enrollment cliff—to the immediate concerns, including rising costs. Of the immediate problems facing higher education, affordable student housing is one of the most pressing.??

It is well-established that the overall cost of higher education has increased significantly over the past two decades. Historically, the increases have landed similarly in both tuition and room and board. More recently though, the cost of room and board has risen at a higher percentage rate than tuition. Since 2014, the cost of tuition has fallen by 3.5 percent, while room and board has increased by 2.5 percent.?

National Yearly Average Cost of Tuition vs. Room and Board, 4-Year Public Institutions ($2023)

During the same period, the cost of housing within the rental market has significantly increased across the country. This has been especially true in college towns with significant student populations—such as Ithaca, NY, Davis, CA, and Athens, GA.

Average Monthly Rental Value for Housing in Select College Towns ($2023), 2018-2023

Comparing the inflation-adjusted monthly cost of room and board for public four-year institutions against the inflation-adjusted median gross rent in the United States, the gap between the cost of the renting off-campus and room and board is now approximately $240 monthly – or approximately $11,500 over four years. The combined trend has led to an acute housing crunch on campuses across the country—where on-campus housing is a limited resource and increasingly represents a relatively affordable housing option for students looking to access higher education and potentially save on cost-of-living.

National Average Monthly Cost for Room and Board vs. Rent ($2023), 2014-2023

This is an important issue for the higher education industry to grapple with. Housing security is closely linked to the success of students. Very generally, housing insecurity is a cost burden on students, in terms of both available time and finances. Disproportionately, this impacts lower income students with limited financial resources, and can lead students to dropout. Further, addressing the housing issue and supporting more student housing can have other operational spill-over effects. As the market continues to struggle with meeting the demand for affordable housing options, increasing on- or near-campus student housing can be an attractive amenity and marketable edge for universities looking to maintain or increase enrollment.

Ultimately, financing and development costs remain the largest hurdle in addressing this issue for many institutions. Public funding for universities has fallen in many states over the past several decades—limiting many institutions' ability to take on additional debt for capital improvements. During the same period, the cost of residential construction has risen significantly. The combined effect leads to a challenging development environment for higher education institutions, absent outside equity or public subsidy. For those college officials looking to ensure an affordable and inclusive education, the housing issue must continue to be addressed.

Landing on Possible Solutions

Connect Students to Available Resources

Given available resources and the overall impact that secure housing has on successful undergraduate outcomes, colleges and universities should work to ensure that students have access to available public and private resources that can support their housing needs. Below are some examples of how higher education institutions have worked to connect students to these resources:

• Portland State University established a centralized resource hub where students can get emergency grants, food assistance, and short- and long-term housing services.
• North Carolina State University has partnered with a local homelessness nonprofit to launch a student-dedicated housing program that connects students to Raleigh-area shared living opportunities.

Think Creatively and Support Local Efforts to Increase Housing Supply

A vital part of the community in which they reside, colleges and universities should take an active role in supporting efforts to boost local affordable housing supply. As the housing shortage crisis has become more severe across the country, efforts in locales that have addressed the issue stand out as examples:

• Middlebury College in Middlebury, VT is providing a stipend, or financial incentive of $10,000, to take a half-year leave of absence to upper classmen to accommodate housing for incoming students.
• In Knoxville, TN, the University of Tennessee has rented out local Knoxville hotels to accommodate incoming students.
• Virginia State University, in Petersburg, VA built on-campus modular developments to house incoming students.

As colleges and universities plan for future generations of students, it is critical to understand their local housing market and how their costs compare against the market. The gap between room and board and the local market rent can mean the difference of thousands of dollars annually for a student. While there is no one-size-fits-all solution to the housing crisis, there are many options institutions can consider to better aid current students and proactively address the issue.