College prices up again nationwide as states slash budgets

Wednesday, October 26, 2011 | 8:19 a.m. CDT; updated 12:38 p.m. CDT, Wednesday, October 26, 2011

New figures painted a demoralizing picture of college costs for students and parents: Average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, compared with a year ago.

Nationally, the cost of a full course load has passed $8,000, an all-time high. Throw in room and board, and the average list price for a state school now runs more than $17,000 a year, according to a pair of annual reports on college costs and student aid published Wednesday by the College Board.

Large increases in federal support helped keep the average college costs families actually pay much lower: about $2,490, or just $170 more than five years ago. But the days of states and families relying on budget relief from Washington appear numbered, and some argue that help did little to hold down overall prices.

"For 25 years we've been putting more and more money into financial aid, and tuition keeps going up," said Patrick Callan, National Center for Public Policy and Higher Education president. "We're on a national treadmill."

Nonetheless, President Barack Obama planned to announce a series of steps to helpalleviate student debt. That total, outstanding debt passed $1 trillion this year, now exceeding credit card debt. And concerns about student loan debt have been front and center with many of the Occupy Wall Street protesters.

Obama will use executive authority for two loan-relief measure:

  • He will move up the start date — from 2014 to 2012 — of a plan Congress already passed that reduces the maximum repayment on federal student loans from 15 percent of discretionary incomes to 10 percent. The White House said about 1.6 million borrowers could be affected and that remaining debt would be forgiven after 20 years, instead of 25.
  • The administration also will allow 5.8 million borrowers with outstanding loans from two federal programs to consolidate them into a direct loan, potentially saving some borrowers hundreds of dollars per month.

In the College Board's latest price report, some of the increase was driven by huge increases at public universities in California, which enroll one of every 10 four-year college students in the country and whose 21 percent tuition increase this year was the largest of any state.

But even without California, prices would have increased 7 percent on average nationally.

"To see increases of 20 percent, as we saw in California, to see gains of 15 percent in other states, is simply unprecedented," Terry Hartle, American Council on Education senior vice president, said. "Tuition is simply being used as a revenue substitute in many states."

The College Board reports roughly 56 percent of 2009-2010 bachelor's degree recipients at public, four-year universities graduated with debt that topped an average of $20,000. At private, nonprofit universities, both figures were higher — 65 percent of students and around $28,000 in debt. These numbers are likely to rise, though private borrowing — usually more dangerous than government loans — has been falling.

Meanwhile, both community colleges and private four-year colleges reported lower tuition inflation than public universities.

At nonprofit private four-year colleges, tuition and fees were up 4.5 percent to $28,500. Factoring in aid, the average total net cost, including room and board, is lower than five years ago. At community colleges, where list prices rose 8.7 percent nationally to just under $3,000, net costs also are lower than five years ago, and aid generally covers the whole price.

These numbers don't tell the whole story though. One reason why: the aid dollars that help lower the average net price don't always go to the neediest students.

Colleges award merit scholarships. Federal Pell Grants do support the neediest, and spending on them has nearly doubled in the last two years to around $35 billion for more than 9 million students.

But the latest College Board figures highlight a rapid recent increase in indirect government support through tuition and other tax credits. Although recent changes make low-income families better able to take advantage of this support, a growing proportion of benefit goes to families earning more than $100,000.

The tax credit program, dramatically expanded in 2009, "really changes the story of how the federal government subsidizes students," said Sandy Baum, who directs the College Board's reports. She said credits aren't as much of a middle-income benefit as people normally think.

Some states are not only cutting their appropriations but not even paying what they've promised. Illinois is late on payments worth $500 million to nine campuses this year.

Hartle and others said this year's sharp increases came despite the large amounts of stimulus dollars from Washington being used to fill holes in education spending. State budgets remain strained, and there's little indication Washington will offer more help.

"I'm not exactly sure where higher education in the United States is going," Hartle said.

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Corey Parks October 26, 2011 | 5:23 p.m.

We could get rid of the Govt Student Loan programs and watch the prices go back to normal.

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