Tuition and Student Financial Aid Debt Might be Leveling Off!

Dear Commons Community,

After years of steady increases in college tuition and student debt, the costs of college and student borrowing may be leveling off, according to several recent studies.  As reported by the New York Times:

“At four-year state colleges, declining state aid contributed to tuition doubling between 2001 and 2013, to an average approaching $9,000 for in-state students. But those schools have come under tremendous political pressure to limit price increases, leading to tuition freezes in places like the University of California and the University of Texas, and states have restored some of the support they cut during the severe recession that began at the end of 2008.

As a result, public colleges’ average published prices rose just 1 percent, after inflation, in each of the last two years, according to a report from the College Board based on surveys of colleges. Those “sticker prices” tend to dominate perceptions and the debate over college costs, but they do not reflect factors like the discounts colleges give, in the form of financial aid.

Average net prices — what people really pay, after accounting for grants from colleges and the government — at four-year public colleges actually dropped in 2013-14, the College Board found, and are expected to rise slightly this year. The report projects net tuition and fees of about $3,000 this year, down about 4 percent, after inflation, from two years ago; with room and board, the average net price is expected to top $12,800, up just 1 percent from two years ago.

Community college net prices have been dropping for several years. At private nonprofit colleges, despite fast-rising sticker prices, average net prices, adjusted for inflation, have held relatively steady for a dozen years. This year, they are projected at more than $12,000 for tuition and fees, and more than $23,000 with room and board.

“It’s significant that for a couple of years now, we’re more or less flat, but we should not breathe too big a sigh of relief,” said Sandy Baum, a co-author of the report, a senior fellow at the Urban Institute and a research professor at the George Washington University Graduate School of Human Development. “The next time the economy crashes, we may see another decline in state support for public institutions, and rising net prices.”

The picture on student debt is less clear because of gaps in the available information, but after climbing sharply over a decade, both the percentage of students borrowing to pay for college, and the amount they borrowed, seem to have reached a plateau, according to two new studies, from the Institute for College Access and Success, a nonprofit advocacy group, and the College Board. Both groups analyzed a survey of colleges, and the institute, known as Ticas, combined that with the results of a separate survey of graduates; they reached similar conclusions about students who earned bachelor’s degrees in 2013.

The institute reported that 69 percent of those graduates had student debt, compared with 68 percent the year before, while the College Board reported that the figure was static, at 60 percent. The institute put the average debt for those borrowers at $28,400, all but unchanged after inflation, and the College Board estimated it at $27,300, up about 1 percent, inflation-adjusted.

The estimates give an incomplete picture, because for-profit colleges, where students borrow more, often do not participate in the surveys, and the figures exclude dropouts. “There’s a lot we don’t know about what’s driving it, and we really need better data,” said Lauren Asher, president of Ticas. “It may be that families have more resources than they did a couple of years ago, so some of them are borrowing less,” adding, “Affordability is no less a concern now than it was last year or the year before.”

Analyzing data from lenders, primarily the federal government, the College Board reported that the amount borrowed each year by the average student had dropped slightly since 2011. Total undergraduate borrowing, the board concluded, was $71.4 billion last year, down 14 percent, after inflation, over three years. The decline was driven partly by falling enrollment, especially at for-profit colleges.”

This is good news and hopefully a trend that will continue.

Tony

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