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October 19, 2004

Study: College Costs Rise, But By Less Than Last Year

FROM THE COLLEGE BOARD comes a wealth of data from new reports detailing tuition costs and student aid.

The Clips Professional Reading Committee has dutifully sifted through all the obligatory charts, tables, bullet points, asterisks, footnotes, adjustments for inflation, regressions and correlations to arrive at the quick-read synopsis below.

The overall news is that the tuition “sticker” price of attending college increased last year by 10% for 4-year public schools, by 6% at 4-year private colleges and by 9% at 2-year colleges. Meanwhile, inflation was about 2.5% last year.

Primary causes of the college cost increases include shrinking endowments, large increases in health insurance costs for campus employees and decreased spending on higher education by states (for example, California cut spending for state schools by half a billion dollars).


Average tuition and fees ’04-05 vs. ’03-04:

• 4-year public schools: $5132 vs. $4645, a 10.5% increase

• 2-year public schools: $2076 vs. $1909, an 8.7% increase

• 4-year private schools: $20,082 vs. $18,950, a 6% increase


When room and board are factored in: average total charges tuition and fees plus room and board ’04-05 vs. ’03-04:

• 4-year public schools: $11,354 vs. $10,530, a 7.8% increase

• 4-year private schools: $27,516 vs. $26,057, a 5.6% increase


Fortunately, student aid increased, seemingly enough to keep up with rising costs. In 2003-04, student aid reached more than $122 billion, an increase of 11% over the preceding year after adjusting for inflation. Full-time students received an average of $10,472 in aid, including $3986 in grants, $540 in education tax benefits, and $5840 in loans.

However, students are relying more heavily on private loans—the fastest growing component of funds used to finance college. Last academic year, loans constituted 56% of aid, grants 38%, work 1%, and education tax benefits 5%. Grant aid grew by 6% in 2003-04. The volume of federal education loans rose by 13% and borrowing through alternative private loan programs increased by about 43% percent between 2002-03 and 2003-04.

“Alternative private loan programs?” That sounds eerie.

The Pell Grant program--considered the cornerstone of aid for low-income students--totaled $12.7 in 2003-04. Pell Grants funded 5.1 million students with average grants of $2466.

The purchasing power of the Pell Grant has been fairly stable over the past decade, but has declined considerably over the long-term. In 2003-04, the average Pell Grant covered 23% of the total charges at the average 4-year public institution, but in 1980-81, it covered 35% of total charges in that sector.

Adventurous souls desiring a deep dive into the stats can find the two cited studies--Trends in College Pricing 2004 and Trends in Student Aid 2004—on the College Board website at www.collegeboard.com

Parents pursuing procurement of funds enough to cover college costs should do so with reputable financial institutions. Particular care should be devoted to funding solicitations from some of the aforementioned “alternative private loan programs.”

Borrowers beware.

.


(this 436 word condensation—with attendant commentary and lame attempts at humor—was sourced from a press release on the collegeboard.com site on 10-20-04, as well as supporting comments from 10-20-04 articles from The Chronicle of Higher Education and the New York Times)