Paying For College
Tuition keeps rising: Will new efforts by schools ease the burden?
Right about now, the only thing that many high school seniors are focused on is whether the admissions letters popping up in their mailboxes say yes or no. But the harsh realities of paying for college can quickly supersede the excitement of getting in. And the reality is that the cost of attending a four-year institution skyrocketed some 38 percent between the 1992-1993 and 2002-2003 school years, while the median family income rose just 10 percent. This academic year alone, tuition and fees have jumped an additional 6 percent at private schools and a record 14.1 percent at public institutions, to a mean of $19,710 and $4,694, respectively.
Sticker shock is keeping many lower-income students away from even seemingly affordable state universities and forcing others to drop out as each year brings new, ever higher tuition bills. Meanwhile, middle-class families, who often make too much money to qualify for financial aid but not enough to cover tuition hikes, are wondering whether they should tap into their home equity or even their retirement savings to keep up with the college bills.
With the Higher Education Act, the law governing federal funding of financial aid, due for reauthorization this year, policy-makers have a chance to address the persistent issues of aid and access for all. Changes under consideration include increasing the maximum Pell Grant award, getting rid of origination fees (an upfront tax on borrowers), and improving loan repayment options. In addition, the Bush administration has proposed overhauling how government aid is doled out to universities, with an emphasis on redistributing monies from rich schools to those with more low-income students.
Shortfall. But don't get your hopes up yet, cautions Terry Hartle, senior vice president of the American Council on Education, which represents 1,800 colleges and universities: "The very real bipartisan desire to help is going to run smack into the federal budget deficit. Whether or not the government will find any money at all by the time the next school year starts is very much an open question." Case in point: The House is discussing whether to end student loan consolidation, which allows recent graduates to lock into a fixed interest rate. Students save a lot over the long run, but it can wind up costing the government big bucks.
Still, a growing number of individual institutions are taking steps to ease the financial burden of a college education. Princeton led the way in 2001 by eliminating all need-based loans in favor of grants for those on financial aid. The University of Virginia is set to follow suit in September, with a $16 million initiative that will replace loans with scholarships for poor students and cap total debt from loans at a year's worth of in-state tuition--currently $14,520--for everyone else. At the University of North Carolina-Chapel Hill, undergrads from low-income families who complete 10 to 12 hours a week of work on campus will receive a full-tuition grant. Harvard, meanwhile, will do away with any expected parental contributions from those making less than $40,000 a year and significantly decrease the amount expected from those who earn under $60,000.
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