11/28/11

Cost of college

Tuition at U.S. colleges and universities is climbing quickly and students are struggling under unprecedented levels of debt. The notes below touch on some of what's behind these trends.

More people are attending college
According to the National Center for Education Statistics (NCES), college enrollment is at a record level and will continue to rise through 2019. Last year, 20,550,000 students were enrolled in post-secondary education (14,895,000 at pubic schools and 5,655,000 at private institutions) compared to a total of just over 12 million in 1980. (See the right-hand side of this NCES table for more detail.)

The enrollment of women and 'non-traditional' students (those older than 25) is expected to grow at a faster rate than other groups. Federal and state financial aid is often less accessible to students over 24 years old.

The growth of private for-profit colleges, such as The University of Phoenix, is also considerable. While these companies serve just 10% of the student population, those students account for 47 percent of student loan defaults, according to the Chronicle of Higher Education.

Less money coming from states
As enrollment grows, many states have trimmed funding for their 2- and 4-year institutions. These cuts are likely to be more painful as federal stimulus spending dries up. Higher ed is particularly vulnerable to cuts from legislators because lawmakers know universities can raise funds through tuition increases. By shifting the revenue-generation burden to schools, legislators insulate themselves from the direct political backlash that accompanies cutting other state programs or raising taxes.

Incomes are flat but tuition is rising
Since the 1980s, many households have seen their inflation-adjusted income remain flat. However, over the same period, the college tuition has increased at a rate much higher than the consumer price index (inflation).


The rise in tuition even outpaces the rise of medical expenses. Financial aid has increased over time, but not enough to make up the difference, according the College Board.

How do students get by?
Students borrow the money they need. In 2010, student loan debt surpassed the nation's credit card debt, but unlike credit cards or mortgages, student loans are near-impossible to escape through steps like bankruptcy. And keep in mind, any loans parents take out to cover expenses while they kids are in school are not reflected in the tally of student debt.

Most of the stats cited above are aggregate figures. To truly understand the trends, identify problems, and conceive of solutions, it would be helpful to look deeper within those figures. Are cuts to public educational occurring in some states and not others? Which demographic segments within the current pool of 20 million+ students are taking on the greatest amount of debt? Are the greater-than-inflation tuition increases happening across the board -- at private and public institutions? at for- and non-profit schools? and in all states?

What to do?
It's hard to say, but I was intrigued by a couple of ideas mentioned in this talk between Glenn Loury from Brown University and Walter Russell Mead from Bard College. Rather than calling for more funding, they touch on using technology to improve the efficiency of higher ed and changing the way credentials are earned by students, referencing France's le bac exam as a possible model.




Resources:
The press release and fact sheet for Obama Administration's "Pay as You Earn" plan for student loan relief announced on October 25, 2011.

The new Consumer Financial Protection Bureau offers this guide to addressing student loan debt.

PBS's Need to Know offers 5 things you ought to know about student debt.

The Project on Student Debt is an initiative of the Institute for College Access and Success, a nonprofit independent research and policy organization dedicated to making college more available and affordable to people of all backgrounds. The Project on Student Debt produced this video to explain for the government's Income-Based Re-payment Program.



Illinois State's Grapevine project has published annual compilations of data on state tax support for higher education since 1960, including general fund appropriations for universities, colleges, community colleges, and state higher education agencies.

For government stats on all things education, visit the National Center for Education Statistics website. If you can't find what you're looking for, write them.

2/8/12 addition from LA Times: National Association of Consumer Bankruptcy Attorneys says that more than four-fifths of bankruptcy attorneys have seen a notable jump in the number of potential clients with student loan debt.

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