Category: college affordability

  • Recommendations for States to Address Postsecondary Affordability

    Recommendations for States to Address Postsecondary Affordability

    Authors: Lauren Asher, Nate Johnson, Marissa Molina, and Kristin D. Hultquist

    Source: HCM Strategists

    An October 2024 report, Beyond Sticker Prices: How States Can Make Postsecondary Education More Affordable, reviews data to evaluate affordability of postsecondary education across nine states, including Alabama, California, Indiana, Louisiana, Ohio, Oklahoma, Texas, Virginia, and Washington.

    The authors emphasize the importance of considering net price, or the full cost of attendance less total aid. Depending on the state, low-income students pay 16-27 percent of their total family income to attend community college.

    At public four-year colleges with high net prices, students with family income of $30,000-48,000 py more than half of their income (51-53 percent) for school in two of the nine states. Four-year colleges with low net prices show cost variability based on whether a student is the lowest income, earning $0-30,000, or has $30,000-48,000 in income. Students in the former group pay 21-27 percent of their family income toward education, while students in the latter group pay 40-41 percent of their income.

    The brief recommends that policymakers take the following issues into account:

    • The way states fund public institutions is critical for low-income students. Consider increasing funding for community colleges as well as evaluating how student income factors into allocation of state funds.
    • Tuition policy is integral to making decisions about postsecondary education. Public perception of college affordability is influenced by tuition costs. States have the power to set limits on how much institutions can raise or change costs, but states also must be careful not to limit institutions from charging what they require to adequately support students’ needs.
    • Transparency and consistency among financial aid programs increase their reach. States should consider making financial aid programs more readily understandable. State financial aid policies should also increase flexibility to adjust for transferring, length of time to graduate, and financial aid from other sources.
    • How states support basic needs affects students’ ability to afford attending college. Policies at the state level can offer students more options for paying for food, housing, caregiving, and more.

    To read the full report, click here.

    —Kara Seidel

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  • Families Use a Variety of Options to Keep Pace with Increasing College Tuition

    Families Use a Variety of Options to Keep Pace with Increasing College Tuition

    Title: Covering the Tuition Bill: How Do Families Pay the Rising Price of College?

    Author: Phillip Levine

    Source: The Brookings Institution

    The increasing costs of attendance at colleges and universities, especially higher “sticker prices,” have attracted attention from both families and policymakers. Although many families are not paying the full sticker prices due to financial aid, today’s families are still facing higher bills for postsecondary education.

    A new analysis from the Brookings Institution examines the different funding sources that families use to pay for four-year nonprofit colleges and how these differ depending on family income. While the findings reflect the different limitations families face based on their incomes, they also suggest that rising net prices mean all households face additional hardships when their children enroll in college.

    Key findings include:

    Middle- and higher-income parents increasingly used their own income and savings.

    • Between 1996 and 2008, payments to colleges from parents’ income and savings jumped by $1,500 to $4,600, depending on the family income and type of institution. These values likely increased again by several thousand from 2008-2020, but specific figures are not available.

    Middle- and higher-income parents have borrowed more.

    • Families with incomes below $50,000 and students attending private institutions saw the highest increases, an average of $1,200, in parents taking out loans from 2008 to 2020.
    • Families with incomes between $50,000 and $100,000 borrowed, on average, $800 more in parent loans for students attending public institutions between 2008 and 2020.
    • Parents were more likely than students to take out education loans, especially between 1996 and 2008 and among middle- and higher-income families.

    Students from lower-income backgrounds worked more.

    • Payments to colleges with funds from student earnings increased among families with incomes under $50,000 from 1996-2008. Student earnings likely also covered the bulk of net price increases for lower-income families between 2008 and 2020.
    • Students from families earning less than $50,000 enrolled at public institutions were six percentage points more likely to work in 2008 compared to in 1996.

    These findings provide reassurance that increased student borrowing is not the primary resource for students to cover increased net prices at four-year colleges. Although the student debt crisis continues to gain attention as overall student loan debt has grown broadly, that increase is largely not occurring at four-year nonprofit institutions.

    However, increased borrowing by parents, especially in middle- and higher-income families, is a trend worthy of more attention. Given that lower-income families may be unable to take on parental loans due to creditworthiness, parental borrowing can contribute to increased inequality as cost may prevent lower-income students from selecting the best school for them or from attending college at all. Middle- and higher-income families can face other significant consequences: If parents deplete their assets or save less, they may not be able to retire until they are older or have decreased retirement income.

    To read the full report, click here.

    —Austin Freeman

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