College Costs Rising Four Times Faster Than Income, Two and a Half Times Faster Than Pell
February 20, 2013
This short piece is first in a five-part series highlighting work from CLASP’s recent publication, Reforming Student Aid: How to Simplify Tax Aid and Use Performance Metrics to Improve College Choices and Completion. The paper was written as part of the Bill & Melinda Gates Foundation project Reimagining Aid Design and Delivery.
Over the last three decades, college costs have soared, rising nearly four times faster than median family income and two and a half times faster than the maximum Pell Grant. Financial aid has not filled the growing gap, and “unmet financial need”—the share of college costs not covered by financial aid or what the family is expected to contribute—has risen sharply. According to data from the National Center for Education Statistics, half of community college students had unmet financial need in 2007- 08, averaging $4,500 annually, as did 43 percent of students at public four-year colleges, with their unmet need averaging $6,400 per year.
As a result, students work more and borrow more, with two-thirds of young community college students working more than 20 hours a week and debt now averaging more than $26,000 for recent four-year college graduates. Rising costs and rising debt make college a riskier investment for students and families, who lack the information they need to shop around for colleges and programs of study that represent the best value in terms of cost, completion rates, and prospects for employment after graduation.
We can start to address these issues by protecting Pell Grants, simplifying and better targeting the $34 billion+ we spend annually on tax-based student aid, and giving students and parents the facts about college outcomes. Read our report for policy recommendations to help address the affordability gap.
Source:Darcie Harvey (National Center for Public Policy and Higher Education) and CLASP analysis based on data from the Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers. Median family income is from U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements and the American Community Survey. Maximum Pell Grant from Department of Education, Pell Grant End-of-Year Report (2010-2011). Adapted from figure in Lifting the Fog on Inequitable Financial Aid Policies, Lynch, Engle, and Cruz (2011).