RADD Chart Series Wrap-Up

June 24, 2013

The short pieces below are from 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.

College Costs Rising Four Times Faster Than Income, Two and a Half Times Faster Than Pell

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. Read More>>

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).

 

Financial Pressures Drive Down College Completion - CLASP RADD Chart Series Continues

Confronted with high costs and unmet financial need, low- and modest-income students and their families face a difficult choice: work more while in college, borrow more, or do both. When students cannot afford college, it not only limits access to higher education and drives up debt, it also increases (sometimes significantly) the time it takes to earn a degree and/or ultimately complete a credential. Read More>>

Notes: Survey respondents were 22- to 30-year-old students who did not complete their postsecondary education.
Source:
CLASP, based on data from, With Their Whole Lives Ahead of Them: Myths and Realities About Why So Many Students Fail to Finish College, Johnson and Rochkind (2009).

Tax-Based Student Aid Quadrupled  – Largely Unnoticed – Over the Past Decade

From 2000 to 2010, tax-based aid grew from $7.4 billion to $32.4 billion, a more than four-fold increase. Despite making up nearly half of the nation’s investment in non-loan aid, it goes largely unnoticed both by policymakers and beneficiaries. According to Suzanne Mettler, Professor at Cornell University, almost 60 percent of individuals who claim a higher education tax credit do not realize they have received help from the government to pay for college. Read More>>

Source: CLASP, based on data from the Office of Management and Budget

Large Share of Tax-Based Student Aid Goes to Higher Income Families

To maximize the nation’s investment in student aid, we must target resources to low- and modest-income families -- those most likely to respond to incentives to enroll in and complete college. Unfortunately, tax-based student aid provides substantial support to individuals who are already highly likely to attend college and so may have little effect on access or completion for these students. In 2013, the Tax Policy Center estimates that 25 percent of the benefits of American Opportunity Tax Credit (AOTC) will go to families making more than $100,000 per year; 29 percent of the benefits of the Lifetime Learning Credit (LLC) will go to families making more than $75,000; and almost half of the benefits of the Tuition and Fees Deduction will go to households with annual incomes of $100,000 or more. Read More>>

Source: CLASP, based on data from theTax Policy Center.

Tax-Based Student Aid Accounts for Nearly Half of Non-Loan Federal Aid, Rivals Pell Grants

Tax-based student aid has grown rapidly over the past decade and now represents nearly half of our nation’s investment in non-loan federal aid. The Office of Management and Budget estimates that tax-based aid programs will cost more than $34 billion in FY12 through reduced federal revenues. Similarly, Pell Grant outlays are expected to total $35.6 billion in FY12. Read More>>

Source: CLASP, based on data from the Office of Management and Budget

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