Aid Not Keeping Pace With Rising Tuition, Report Says

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Increases in grant aid did not keep pace with the rising cost of education for students at two- and four-year colleges during the 1990s, leaving those undergraduates with a larger financial burden, a federal report shows.

A study released last week by the National Center for Education Statistics says the average net price at public two-year colleges—after accounting for state, federal and institutional grants—rose by 15 percent, from $6,700 a year to $7,500, from 1990 to 2000. Average annual costs of public four-year schools climbed by 18 percent, from $8,900 to $10,500 over that time period, according to the report, "Paying for College." Those figures include tuition, fees, and room and board.

For some categories of undergraduates, however, such as those from low-income families who attended public two-year colleges, the net price increase after grants was small enough to be statistically insignificant, the report concludes.

When both grants and loans to students were taken into account, the effect on undergraduates was more mixed, the study shows. At public two-year colleges in 2000, the net price after grants and loans was $7,000, compared with $6,500 in 1990. For students at public four-year schools, the net price remained at $8,000 per year from 1990 to 2000. All figures were adjusted for inflation.

More Borrowing

While the relative stability of college costs after grants and loans are taken into account might seem encouraging, Susan P. Choy, the report’s author, cautioned that students’ ability to pay off debts varied greatly. Borrowers’ burdens were influenced by such diverse factors as interest rates and their ability to find good-paying jobs after graduation.

"Borrowing allows some people to afford college, but there’s always the danger that it will be difficult for them to pay [loans] back," Ms. Choy said. Loans, considered independently of other factors, "are neither good nor bad," she added.

Ms. Choy is the vice president of MPR Associates, a research firm based in Washington and Berkeley, Calif., that conducted the study. The higher education analysis was included as part of the U.S. Department of Education’s release of its annual "Condition of Education" report, which studies trends in schools and colleges.

The Condition of Education study also included a second report on college costs that found 65 percent of bachelor’s degree recipients borrowed to pay for college in the 1999-2000 academic year, compared with 49 percent in 1992-93. The average amount borrowed over that time increased from $12,300 to $19,300.

But the median "debt burden"—how much borrowers have to pay, after accounting for monthly debts and income—remained roughly the same in both academic years, the report found. Those estimates, Ms. Choy noted, include only bachelor’s-degree recipients, not those who had quit early or received associate’s degrees.

Vol. 23, Issue 39, Page 17

Published in Print: June 9, 2004, as Aid Not Keeping Pace With Rising Tuition, Report Says
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