Rising College Costs Can Be Deferred With $$$ Aid
From The Associated Press
Except for buying a home, financing a child’s education may be the largest expense most families will ever face. For many college-bound students, the anticipation of higher education and a pathway to a better life is overshadowed by financial dilemmas.
And this expense continues to rise: The average annual cost at a four-year public college has increased more than 14 percent over the past year.
College costs and student aid funding are documented in the College Board’s Trends in College Pricing 2003 and Trends in Student Aid 2003. The publications are issued each October by the College Board, a not-for-profit association of more than 4,500 educational institutions.
With college tuition and fees in-creasing at an average of $579 for a four-year public college and $231 for a two-year public college for the 2003-04 school year, families must often seek financial assistance for fund-ing a college education. Trends at four- year private schools are similar with a $1,114 increase over that same period.
Now, for the good news. Though costs continue to rise, the amount of money distributed in student financial aid also continues to grow. In 2002-03, $105 billion was distributed in such aid - a record amount - and $13 billion more than was distributed the previous year. Total aid per student averages about $9,100, with $3,600 of that amount in the form of grants.
College Board President Gaston Caperton stresses the importance of higher education even as he notes that rising costs are an issue for many families. Median annual earnings for full-time workers with bachelor’s de-grees are about 60 percent higher than earnings for those with a high school diploma.
The value of a college education over a lifetime is substantial and is encouraging for those planning for a college education. A college graduate with a bachelor’s degree or higher will earn over $1 million more than a high school graduate, he noted.
Tuition and fee increases at public institutions are often the result of shrink-ing state appropriations. The College Board reports that while increases in tuition and fees at public and private institutions may be up over previous years, growth has been higher in previous decades.
When evaluated in constant 2003 dollars, the average increase in tuition and fees rose 47 percent or $1,506 at four-year public colleges, which was lower than the previous decade at 54 percent. At four-year private colleges, the trend is similar with a 42 percent increase or $5,866 compared to 50 percent the previous decade. The Col-lege Board findings are based over the 10-year period ending in 2003-04.
As for student aid, the total for college aid in 2002-03, including most grants, loans, work-study and federal education tax credits, was over $105 billion. This was a 15 percent increase over the previous year (12 percent when adjusted for inflation.) While the total represents the majority of aid students received, it does not include all the subsidies from income tax provisions and some private sources of grant aid.
Grant aid is received by approximately half of the students attending college, varying the average price that a student actually pays. Of the $42 billion in grant aid distributed in 2002-03, most students received aid from more than one grant source.
For four-year colleges, grants were approximately $2,400 for students at public colleges and $7,300 for students at private institutions. Students at two-year public colleges received an average of $2,000 in grant aid.
Grant aid grew by 10 percent in real terms in 2002-03, but the continuing gap between costs and students’ ability to pay was shown by the fact that education loan volume grew at a faster rate.
Saving for a college education and securing grants and loans while in college has become a family affair. Section 529 college savings plans have become popular with assets of more than $35 billion and an average value of $6,573 per account.
Those who oversee America’s colleges and universities believe their importance to continued economic health is undeniable. In a large part, they are correct, Caperton said. But, he added, everyone needs to also focus on the mounting and troubling hardships of financing an education.