Today’s aspiring college students and their parents face a labyrinth of programs and procedures when it comes to applying for financial aid, an issue explored in the November 2009 Congressional Digest.
What’s driving up the cost of a college education?
Today’s aspiring college students and their parents face a labyrinth of programs and procedures when it comes to applying for financial aid, an issue explored in the November 2009 Congressional Digest [link].
While many families piece together a combination of loans, scholarships, and out-of-pocket payments to get a higher education, fewer students from low- and middle-income families are applying to college in this economy, finding that it’s just too expensive. With a new student aid bill, Congress is poised to help, but what’s going on here?
For earlier generations, higher education didn’t consume as much of the family budget as it does today. A new report from the College Board, Trends in College Pricing 2009, found that the average annual net cost at a four-year public college in 2009–10 is $7,020 ? 6.5 percent higher than in 2008–09. That’s almost a 500 percent increase over what college cost 40 years ago, adjusting for inflation. No wonder people need help!
A second College Board report, Trends in Student Aid 2009, found that although grants distributed to students increased significantly in 2008–09, student borrowing also grew, along with the gap between available money and college costs.
So, shouldn’t consumers be outraged, as they are when gas and food prices go up?
Perhaps, but the university system’s complexities may be tamping down outrage. “As long as lengthy lines of highly qualified applicants keep knocking at its door, no institution has a strong incentive to unilaterally end the spending race,” writes Cornell University economist Ron Ehrenberg in his book, Tuition Rising: Why College Costs So Much. Competition among the nation’s top schools — for the most modern facilities, the most prestigious faculty, and the most successful sports teams — is ratcheting up the cost even more, as institutions work to impress alumni donors and to achieve high rankings in U.S. News & World Report and other college rating systems.
Another strong force is demographics: There’s a bigger pool of qualified applicants than in the past. The number of college-age Americans is expected to reach 21.2 million in 2010 ? up from 17.5 million in 1997. And as fewer decent jobs remain for those with only a high school education, the percentage of that group attending college is bound to increase further.
So how can you figure out a way to pay for college? The Washington Post reporter Michelle Singletary recently suggested ways to bring down costs, but only if students are willing rethink the whole college experience and consider making some major changes, like (God forbid!) living at home while attending school.
Others even argue that college is still a pretty good deal. Incomes for college graduates are about 60 percent higher than those with only a high school degree. On average, that translates into $1 million more in lifetime income.
That’s still not very reassuring for a family trying to save for a college education that’s projected to cost almost as much — or more — than its house. Given the current recession, Congress may decide to dig deeper into the reasons for the tuition spikes, which may prompt universities to consider changing their profligate ways.
Here’s a site to help you figure out student aid and a humorous video about the dreaded FAFSA.
And watch comedian Stephen Colbert, of “The Colbert Report,” play basketball with Arne Duncan, U.S. Secretary of Education — the man in charge of federal financial aid for students, among other programs. [see how to embed this video here: http://www.colbertnation.com/the-colbert-report-videos/251047/october-05-2009/arne-duncan]
