AI
Thursday, October 27, 2011 1:58:29 AM
Analysis: College costs shift to families
By Justin Pope
October 26, 2011 2:51 PM
(AP) YPSILANTI, Mich. — It was a transformation that was, by historical standards, remarkably swift: The decade of the 2000s saw a fundamental shift in how Americans answer the question "Who will pay for college?"
The bill at public universities is higher than ever, and students and their families are footing a greater share of it.
Realizing higher education would be essential to succeed in the emerging economy, Americans aspired and flocked to higher education as never before over the last 10 years. But over that same span, the 50 states did less — much less, factoring in the increased demand — and asked students and parents to do more. That was true even during the flush years in the middle of a decade bookended by two economic downturns.
The federal government, meanwhile, picked up much of the slack, with each of the last three presidents substantially increasing spending. But while the billions Washington poured into student financial aid helped many students, they did little to stem price increases. Low-income students got some relief in expanded Pell Grants, and a massive increase in tuition tax credits has disproportionately benefited families earning over $100,000. Middle-class families have borne the brunt.
Frustrations over high student debt have been front and center for the Occupy Wall Street protesters. Politicians have noticed, too: On Wednesday, in Denver, President Obama announced a series of steps that would do little to relieve students of the burden of paying for college, but aim to at least protect more borrowers from monthly repayment burdens that would ruin their finances or keep them from choosing public service jobs.
That may be the best the federal government can do in an era when almost everyone wants to go to college, Washington's budgetary well has run dry, and the states either cannot or will not play the same role in supporting public higher education that they have in the past.
"There's been a fundamental and permanent shift in how we see the financing of higher education in the United States," said Terry Hartle, senior vice president at the American Council on Higher Education. "Increasingly, higher education is seen as being almost exclusively a private good and therefore something that individuals ought to pay for by themselves."
Some lament the change, arguing society benefits when more students graduate and suffers when they don't. States traditionally have supported higher education, they say, and if it's more important than ever, why cut back now?
Others welcome the shift, arguing individuals who most directly benefit should pick up more of the costs. And colleges, they argue, could do more to hold down costs themselves.
On Wednesday, the College Board released the latest figures on the cost of college, and they were demoralizing enough: Four-year public colleges increased tuition 8.3 percent, and the cost of a full credit load has passed $8,000. That doesn't count room and board, and hundreds more for textbooks.
The trend is more apparent when you look at data from the College Board and other groups for the whole decade:
—In 2000, fewer than one-third of Americans said college was essential to be successful. Now the figure is well over half, and with jobs scarce, enrollment is surging. Enrollment grew 9 percent during the 1990s; during the 2000s it rose 33 percent, to roughly 21 million.
—State support, however, didn't keep up. Funding per student rose 6 percent in the 1980s and 5 percent in the 1990s. Then, between 2000 and 2010, state support fell 23 percent after accounting for inflation.
The effects are clearly visible in the prices that public colleges, which enroll 80 percent of students, charged. In the 1980s tuition rose 4.5 percent annually above general inflation. In the 1990s it rose 3.2 percent. In the 2000s: 5.6 percent.
The pain of the recent increases was magnified by the economy. During those earlier decades, median family income was rising. During the 2000s, the family incomes of Americans declined across the board.
—In 2000, the states on average kicked in more than $8,000 per student in higher education on average, and asked about $3,350 from each student (that's in constant 2011 dollars adjusting for inflation). At that time, just three states, none larger than New Hampshire, asked more from each student than the state contributed.
Fast forward to 2010, and the states' contribution had fallen to $6,500 per student. The students' share was up to $4,300. By then, 19 states had crossed the threshold of charging students more than the public contribution.
—States say they simply don't have the money, and that's partly true. But economists also measure what they call state "effort" to fund higher education — state appropriations for every $1,000 of average personal income. The figure measures a state's commitment to higher education, regardless of wealth. The efforts of states vary substantially, from $2.44 per $1,000 in New Hampshire to $12.73 in New Mexico. But nationally, the average state effort fell sharply during the last decade, from $7.25 to $6.11.
"The states are simply funding other priorities," Hartle said. "They're funding Medicaid, they're funding corrections, they're funding elementary and secondary education." Higher education, by contrast, "has an awful lot of people who look like paying customers."
It may be that funding higher education on a mass scale is now beyond the capacity of the states. But if Americans are really so determined to go to college, as they seem to be, someone will have to pay. And increasingly that's been students themselves.
"Looking at 2000-2010, things are bad, really bad, and getting worse," said Rich Williams, higher education advocate for the group US PIRG. "We saw less than half of students needing to borrow just before 2000. Now it's two-thirds. You're seeing loan debt place serious financial barriers in front of students that weren't there."
Total federal loans are up 57 percent over the last decade, and outstanding student loan volume has passed $1 trillion. Partly that reflects more students, but average indebtedness for graduates is now well over $20,000. For the average borrower, that's not life-ruining, but the increase is worrisome.
While some Occupy Wall Street protesters have called for forgiving student loan debt, most college students say they agree they should pay something for their college education.
On the campus of Eastern Michigan University, Leah Shutes, a third-year student working toward a degree in journalism, says she has no illusions college should be free or easy.
But roughly $60,000 deep in student loans already, she feels like she's bearing an awful lot of the burden alone.
"I don't believe it should necessarily paid for in full," she said. "But, you know, a little help?"
The effects of high prices are more complicated than people realize. It's not just that students drop out, though some do. More commonly, they work more hours on the side and take fewer credit hours. That strings out their time to graduation, making college even more expensive, as well increasing the risk they won't graduate at all.
Shutes works 20 hours per week and thinks it may take her three more years to finish. By then she believes her debt could hit six figures (her debt levels are unusually high; fewer than 1 percent of undergraduate borrowers have more than $100,000).
"As students we can kind of feel a lot of pressure and maybe a little bit of resentment because our entire lives we're told go to school, stay in school, get a good job," she said. "At the same time, they say, 'Here's less financial aid.'"
The Eastern Michigan campus, serving a region where the economy struggled throughout the 2000s, may not appear at first glance much different than a decade ago.
But roughly twice as many students, and about half of all enrollees, now receive Pell Grants. That's indicative of more federal aid but also more struggling students; most Pell recipients come from families earning less than $50,000.
A recent college health survey showed increased student stress. More students are trying to make do without purchasing textbooks. Administrators say students are now working two and three jobs instead of one, which affects their work.
"It's a vicious cycle," said Bernice Lindke, vice president of student affairs and enrollment management.
Ten years ago, EMU enrolled 24,300 students and received $90 million from the state of Michigan. Last year it had slightly fewer students and got roughly $65 million. Meanwhile, tuition has doubled. The university used to get one-quarter of its budget directly from students; now it depends on them for three-quarters.
Patrick Callan, president of the National Center for Public Policy and Higher Education, said there's plenty of blame to go around, but few strong incentives to change. States cut funding, knowing they can pass the blame onto colleges for turning around and raising tuition. Colleges don't fight the budget cuts terribly hard, knowing they can turn around pass price increases onto students.
Students gripe, but can usually borrow to get what they need. Only later do the bills come due. And who knows whether they will have the jobs they need to pay those bills?
"The cost of higher education has gone up faster than anything else in the economy," Callan said. "I don't know anybody who thinks the course we're on is sustainable."
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Online:
www.collegeboard.org
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EDITOR'S NOTE — Justin Pope has covered higher education for The Associated Press since 2004.
© 2011 The Associated Press
http://www.cbsnews.com/8301-215_162-20126008/analysis-college-costs-shift-to-families/ [with comments]
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As State Funds Dry Up, College Costs Skyrocket
The cost of a public college education is up more than 8 percent, and as the College Board reports, there's no end in sight to the tuition hikes
By Alison Damast
October 25, 2011, 6:54 PM EDT
The cost of a college education jumped significantly this fall as recession-weary schools passed more costs onto students and families to make up for budget shortfalls, according to a College Board report released today.
This year, public school students—who make up the vast majority of undergraduate students—are bearing the brunt of the tuition increases. Tuition and fees for the current school year average $8,244 at public four-year colleges, 8.3 percent higher than in the 2010-11 academic year. Meanwhile, at public two-year colleges, tuition and fees went up a whopping 8.7 percent this year.
Low tuition at colleges and universities has been a hallmark of public education for the last 150 years, but that is starting to change, says Terry Hartle, a senior vice-president for government and public affairs at the American Council on Education (ACE). The public university sector is at a crossroads, with schools running out of easy ways to cut costs and state governments under more pressure than ever to balance state budgets, he says. Complicating matters is a spike in total postsecondary enrollment. From the fall of 2007 to the fall of 2010, an additional 2.8 million undergraduate students enrolled in school, the College Board noted.
“It is the worst of all possible worlds,” says Hartle. “What we are really seeing is not just a big price increase over a single year, but a long-term trend in that state governments are increasingly viewing higher education as a private good, rather than a public good, and they are letting the beneficiaries pay more.”
Out of Reach?
As states like California, Washington, and Arizona posted double-digit percentage increases in tuition this fall, the cost of public education is increasingly becoming out of reach for many families. For example, California’s 21 percent tuition increase this year was so hefty it drove up average tuition and fees at public four-year colleges nationally by an additional 1.3 percentage points, the College Board noted. Without California—which enrolls 10 percent of the nation’s public college students—the average tuition increase this year for four-year public schools would have been 7 percent, the College Board said. With budget crunches so severe, many public universities are trying to attract more out-of-state students to make up for their budget shortfalls.
Tuition and fees also continued their upward climb at four-year private colleges and universities, though not quite as dramatically as at their public counterparts. Published tuition and fees at private schools for this school year averaged $20,770, which was $1,235, or 4.5 percent, higher than a year earlier. Some private schools this year managed to keep tuition increases at historically low levels, including Princeton University in New Jersey, which increased tuition just 1 percent this fall, its lowest increase in 45 years, and Syracuse University in New York, which raised tuition 3.8 percent this fall, its lowest increase in 46 years, according to the National Association of Independent Colleges and Universities’ website. Overall, the percentage tuition increases in the past three years are among the lowest for private schools since 1972, a fact the NAICU attributes in part to the work many private institutions are doing to control costs, from consolidating administrative units to flattening bureaucratic structures.
This is the fifth year in a row the percentage increase in tuition and fees at public universities outpaced that of private schools, says Sandy Baum, a College Board policy analyst and economics professor at Skidmore College in Saratoga Springs, N.Y.
“It’s hard to be surprised that tuition went up, but when you put all the pieces together and watch tuition go up year after year, it means we do have issues that we really have to face,” she says.
Inflation Outpaced Again
This year, both the 8.3 percent hike for four-year public in-state tuitions and 4.5 percent hike for privates continued to outpace the rate of inflation. The consumer price index rose 3.6 percent from July 2010 to July 2011, the College Board said.
The tuition increases come at a time when state appropriations for public university students continue their downward slide, the College Board said. State appropriations per full-time student declined by 9 percent in the 2007-08 academic year, and fell by another 6 percent in 2009-10 and by 4 percent in 2010-11, the organization noted.
“Families are struggling because their income is not increasing. States are struggling and one effect of the struggle is seen in the declining appropriations states give for higher education,” Baum says.
Fortunately, the sticker price for a college education is not what most students and families ultimately end up paying for college. The net price, or what the average student pays after grants, student aid, and tax benefits are factored in, is a more accurate indicator of the real cost of an education today, Baum says.
At public institutions, the average student receives about $5,750 in grants and tax benefits, bringing the total annual cost down to $2,494. At private colleges and universities, aid totals about $15,530, taking the annual cost to $12,970, the College Board said.
Tax Credit Savings
This year, families realized significant savings from the American Opportunity Tax Credit, a federal tax credit implemented in 2009 as part of President Obama’s stimulus legislation. Through a combination of tax credits and deductions, the program saved families $14.8 billion in each of the two most recent school years, significantly more than the $7 billion families received in the 2007-08 academic year, Baum says.
“We knew the tax credit program had become more generous, but we didn’t know how extreme it was,” Baum says. “It has really changed the story of how the federal government subsidizes students. I think that is quite surprising.”
At the same time, federal grant aid is about two and a half times greater in the 2010-11 academic year than it was a decade earlier, the College Board said. But whether federal aid will continue to offset tuition increases in the future remains an open and worrisome question, says ACE’s Hartle. It is unlikely that the $5,550 maximum Pell Grant award—a federal program that gives grant aid to the neediest students—or the amount that students can borrow under federal student loan aid programs is going to increase any time soon, he says. Even more concerning, this year the government eliminated year-round Pell Grants and the $64 million federal Leveraging Educational Assistance Partnership program, which provided matching funding to states to encourage them to spend their own resources on need-based financial aid, was cut.
“Federal student aid has increased significantly over the last 15 years, and gone up faster than tuition, but the fact is you are not going to see continued increase in federal student aid,” Hartle says. “Save for a very quick return to full employment, there is no short-term fix on the horizon.”
Damast is a reporter for Businessweek.com.
©2011 Bloomberg L.P.
http://www.businessweek.com/business-schools/as-state-funds-dry-up-college-costs-skyrocket-10262011.html [with comments]
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Higher education costs continue to soar
CBS/AP
October 26, 2011 8:04 AM
Updated at 11:08 a.m. ET
New figures on the cost of a college education aren't what students and their parents want to hear.
But it's probably no surprise: Costs are rising as public universities pass state budget cuts on to customers.
The College Board says average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, from a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high. With room and board, the average list price for a state school now runs more than $17,000 a year.
But a companion report says the actual amount families actually pay is much lower, thanks to a large increase in federal grants and tax credits for students, on top of stimulus dollars that prevented greater state cuts. The average for tuition and fees is about $2,490, or just $170 more than five years ago.
The College Board reports roughly 56 percent of bachelor's degree recipients at public four-year schools last year graduated with debt, averaging about $22,000. At private nonprofit universities, 65 percent had debt, averaging around $28,000.
The release of the College Board report comes the same day as President Obama is expected to outline a plan to allow millions of student loan recipients to lower their payments and consolidate their loans, in hopes of easing the burden of the No. 2 source of household debt.
The move to assist struggling graduates and students could help Mr. Obama shore up re-election support among young voters, an important voting bloc in his 2008 campaign, and appeal to their parents, too. Student loan debt also is a common concern voiced by Occupy Wall Street protesters.
The loans have become particularly painful for many amid the nation's economic woes, high unemployment and soaring tuition costs. They are second only to mortgages as a portion of Americans' debt, coming in ahead of credit cards.
The White House said Mr. Obama will use his executive authority to provide student loan relief in two ways.
First, he will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.
Second, he will allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million borrowers.
Education Secretary Arne Duncan told reporters on a conference call that the changes could save some borrowers hundreds of dollars a month.
"These are real savings that will help these graduates get started in their careers and help them make ends meet," Duncan said.
The White House said the changes will carry no additional costs to taxpayers.
Last year, Congress passed a law that lowered the repayment cap and moved all student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.
The law change was opposed by many Republicans. At a hearing Tuesday, Rep. Virginia Foxx, R-N.C., who chairs a subcommittee with oversight over higher education, said it had resulted in poorer customer service for borrowers. And Senate Republicans issued a news release with a compilation of headlines that showed thousands of workers in student lending, including those from Sallie Mae Inc., had been laid off because of the change.
Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.
Increases in federal aid have helped ease the burden on students dealing with tuition increases, the White House Council of Economic Advisers said in a report Wednesday.
"Despite large increases in the published price of college over the past four years, the average student has not seen commensurate increases in the net price of college, defined as the published price minus grants, scholarships and tax benefits," the report said.
Meanwhile, the Education Department and the Consumer Financial Protection Bureau announced a project Tuesday to simplify the financial aid award letters that colleges mail to students each spring. A common complaint is that colleges obscure the inclusion of student loans in financial aid packages to make their school appear more affordable, and the agencies hope families will more easily be able to compare the costs of colleges.
Separately, James Runcie, the Education Department's federal student aid chief operating officer, told Foxx's congressional panel that the personal financial details of as many 5,000 college students were temporarily viewable on the department's direct loan website earlier this month.
Runcie said site was shut down while the matter was resolved, and the affected students have been notified and offered credit monitoring.
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Obama to outline student loan relief plan
October 25, 2011
http://www.cbsnews.com/8301-250_162-20125577/obama-to-outline-student-loan-relief-plan/
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© 2011 CBS Interactive Inc.
http://www.cbsnews.com/8301-201_162-20125731/higher-education-costs-continue-to-soar/ [with comments]
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Paul Ryan Tells Student He Should Work Three Jobs To Pay For College, Not Use Pell Grants
By Travis Waldron and Pat Garofalo on Oct 20, 2011 at 6:20 pm
ThinkProgress filed this report from a town hall in Muskego, Wisconsin.
The House Republican majority, since it came into power, has repeatedly set [ http://thinkprogress.org/education/2011/04/25/177552/kline-pell-markets/ ] its sights [ http://thinkprogress.org/economy/2011/07/12/266192/cantor-taxes-students-pay/ ] on Pell Grants [ http://thinkprogress.org/economy/2011/10/04/335590/gop-pell-one-million/ ], the federal grants that help low- and middle-income students pay a portion of their higher education tuition. Republicans have not only proposed lowering the maximum Pell amount from $5,500 (which is the level to which the Obama administration raised it) but also limiting eligibility, knocking one million students [id.] from the Pell program entirely.
During a town hall today, House Budget Committee Chairman Paul Ryan (R-WI) was asked by Matthew Lowe, a student, why the GOP wants to cut Pell Grants. Ryan responded by saying that the program is “unsustainable,” before telling Lowe that he should be working three jobs and taking out student loans to pay for college, instead of using Pell Grants:
LOWE: I come from a very middle-class family and under President Obama, I get $5,500 per year to pay for school, which doesn’t come close to covering all of the funding, but it helps ease the burden. Under your plan, you cut it by 15 percent. I was just curious why you would cut a grant that goes directly to the middle- and lower-class people that need it the most.
RYAN: ‘Cause Pell Grants have become unsustainable. It’s all borrowed money…Look, I worked three jobs to pay off my student loans after college. I didn’t get grants, I got loans, and we need to have a system of viable student loans to be able to do this.
The second concern I have is, in the health care bill — people don’t know this — for budgetary gimmickry reasons, the administration and Congress at the time, took over the student loan industry. So they had the federal government, the Department of Education, basically confiscate the private student loan industry.
Watch it [ http://www.youtube.com/watch?v=p0fcDGaH82g ]:
Ryan justified the GOP’s desire to cut the highly-necessary Pell Grant program by claiming that it costs too much; but the GOP’s budget provides huge tax breaks for the wealthy and corporations which dwarf the cost of preserving the grants [ http://thinkprogress.org/economy/2011/10/13/343431/infographic-house-gop-programs/ ]. He also claimed that Pell Grants drive tuition inflation, which is a claim he has made before, while pointing to studies that didn’t actually say [ http://thinkprogress.org/education/2011/04/05/177544/ryan-budget-cuts-pell/ ] what he believed they said.
Finally, Ryan goes from claiming that Pell Grants are unaffordable to saying that he wants to repeal student loan reform (which was in no way passed for a “budgetary gimmicky reason”) that saves taxpayers billions of dollars each year by cutting unnecessary subsidies to banks that originated federal student loans. Contrary to Ryan’s assertion, there is still a private student loan industry [ http://thinkprogress.org/education/2011/05/02/177557/bachmann-student-loans-illegal/ ]; loan reform merely cut the banks out [ http://thinkprogress.org/education/2010/10/20/177487/kirk-student-banker/ ] of the federal student loan program.
At a time when student loan debt is hitting [ http://thinkprogress.org/education/2011/05/09/177560/2011-most-indebted-ever/ ] new heights [ http://thinkprogress.org/economy/2011/10/04/335590/gop-pell-one-million/ ] and joblessness is above nine percent, Ryan’s response to a student genuinely concerned about financing his higher education is quite telling. To Ryan, students should have to live the real American dream of working three jobs in order to pay back a mountain of cash to a bank.
© 2011 Center for American Progress Action Fund (emphasis in original)
http://thinkprogress.org/education/2011/10/20/349627/paul-ryan-three-jobs-pell-grants/ [with comments]
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10 Things You Didn't Know About Paul Ryan
The Wisconsin congressman is a potential vice presidential pick for John McCain
By Bobbie Kyle Sauer
July 23, 2008
1. Paul Davis Ryan, the youngest of Paul Sr. and Betty Ryan's four children, was born in Janesville, Wis., on Jan. 29, 1970. Ryan is the fifth generation of his family to live in Janesville.
2. Sharing the same first name as his father, Paul had a childhood nickname: "P. D." (Paul Davis). It was often mistaken for "Petey," which caused Ryan to dislike the nickname.
3. Ryan's father died when Paul was only 16. Using the Social Security survivors benefits he received until his 18th birthday, he paid for his education at Miami University in Ohio, where he completed a bachelor's degree in economics and political science in 1992.
4. Ryan worked as a marketing consultant for his family's construction business before being elected to Congress. Ryan Incorporated Central began as an earthmoving business created by his great-grandfather in 1884.
5. At 28, Ryan was elected to Congress in 1998, and he has been re-elected four times, most recently in 2006.
6. Early in his career as a representative to Congress, Ryan held office hours in an old truck he converted into an office. This allowed him to visit the more far-flung towns in his district.
7. Janna Little, the future Mrs. Paul Ryan, was a Washington tax attorney living in Arlington, Va., when she met him. The Oklahoma native graduated from Wellesley College and George Washington University Law School.
8. Demonstrating his love of the outdoors, in April 2000, Ryan asked Janna to marry him at Big St. Germain Lake in northern Wisconsin, one of his favorite fishing spots. The couple was married in Oklahoma City in December 2000.
9. Ryan and his wife are raising their daughter, Elizabeth, and two sons, Charles and Samuel, in Ryan's hometown.
10. Ryan's hobbies include hunting and fishing. He is a bowhunter and belongs to his hometown's archery association, the Janesville Bowmen.
Sources:
•Associated Press
•Biography Resource Center
•Capital Times (Madison, Wis.)
•Congressional Staff Directory
•Milwaukee Journal Sentinel (Wisconsin)
•National Journal's House Race Hotline
•Roll Call
•Wisconsin State Journal (Madison, Wis.)
Copyright © 2011 U.S.News & World Report LP (emphasis added)
http://www.usnews.com/news/campaign-2008/articles/2008/07/23/10-things-you-didnt-know-about-paul-ryan [with comments]
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(linked in):
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http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68390547 and preceding and following
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68390579 and http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68390686 and http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68390826 and http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68391584 and preceding (and any future following)
By Justin Pope
October 26, 2011 2:51 PM
(AP) YPSILANTI, Mich. — It was a transformation that was, by historical standards, remarkably swift: The decade of the 2000s saw a fundamental shift in how Americans answer the question "Who will pay for college?"
The bill at public universities is higher than ever, and students and their families are footing a greater share of it.
Realizing higher education would be essential to succeed in the emerging economy, Americans aspired and flocked to higher education as never before over the last 10 years. But over that same span, the 50 states did less — much less, factoring in the increased demand — and asked students and parents to do more. That was true even during the flush years in the middle of a decade bookended by two economic downturns.
The federal government, meanwhile, picked up much of the slack, with each of the last three presidents substantially increasing spending. But while the billions Washington poured into student financial aid helped many students, they did little to stem price increases. Low-income students got some relief in expanded Pell Grants, and a massive increase in tuition tax credits has disproportionately benefited families earning over $100,000. Middle-class families have borne the brunt.
Frustrations over high student debt have been front and center for the Occupy Wall Street protesters. Politicians have noticed, too: On Wednesday, in Denver, President Obama announced a series of steps that would do little to relieve students of the burden of paying for college, but aim to at least protect more borrowers from monthly repayment burdens that would ruin their finances or keep them from choosing public service jobs.
That may be the best the federal government can do in an era when almost everyone wants to go to college, Washington's budgetary well has run dry, and the states either cannot or will not play the same role in supporting public higher education that they have in the past.
"There's been a fundamental and permanent shift in how we see the financing of higher education in the United States," said Terry Hartle, senior vice president at the American Council on Higher Education. "Increasingly, higher education is seen as being almost exclusively a private good and therefore something that individuals ought to pay for by themselves."
Some lament the change, arguing society benefits when more students graduate and suffers when they don't. States traditionally have supported higher education, they say, and if it's more important than ever, why cut back now?
Others welcome the shift, arguing individuals who most directly benefit should pick up more of the costs. And colleges, they argue, could do more to hold down costs themselves.
On Wednesday, the College Board released the latest figures on the cost of college, and they were demoralizing enough: Four-year public colleges increased tuition 8.3 percent, and the cost of a full credit load has passed $8,000. That doesn't count room and board, and hundreds more for textbooks.
The trend is more apparent when you look at data from the College Board and other groups for the whole decade:
—In 2000, fewer than one-third of Americans said college was essential to be successful. Now the figure is well over half, and with jobs scarce, enrollment is surging. Enrollment grew 9 percent during the 1990s; during the 2000s it rose 33 percent, to roughly 21 million.
—State support, however, didn't keep up. Funding per student rose 6 percent in the 1980s and 5 percent in the 1990s. Then, between 2000 and 2010, state support fell 23 percent after accounting for inflation.
The effects are clearly visible in the prices that public colleges, which enroll 80 percent of students, charged. In the 1980s tuition rose 4.5 percent annually above general inflation. In the 1990s it rose 3.2 percent. In the 2000s: 5.6 percent.
The pain of the recent increases was magnified by the economy. During those earlier decades, median family income was rising. During the 2000s, the family incomes of Americans declined across the board.
—In 2000, the states on average kicked in more than $8,000 per student in higher education on average, and asked about $3,350 from each student (that's in constant 2011 dollars adjusting for inflation). At that time, just three states, none larger than New Hampshire, asked more from each student than the state contributed.
Fast forward to 2010, and the states' contribution had fallen to $6,500 per student. The students' share was up to $4,300. By then, 19 states had crossed the threshold of charging students more than the public contribution.
—States say they simply don't have the money, and that's partly true. But economists also measure what they call state "effort" to fund higher education — state appropriations for every $1,000 of average personal income. The figure measures a state's commitment to higher education, regardless of wealth. The efforts of states vary substantially, from $2.44 per $1,000 in New Hampshire to $12.73 in New Mexico. But nationally, the average state effort fell sharply during the last decade, from $7.25 to $6.11.
"The states are simply funding other priorities," Hartle said. "They're funding Medicaid, they're funding corrections, they're funding elementary and secondary education." Higher education, by contrast, "has an awful lot of people who look like paying customers."
It may be that funding higher education on a mass scale is now beyond the capacity of the states. But if Americans are really so determined to go to college, as they seem to be, someone will have to pay. And increasingly that's been students themselves.
"Looking at 2000-2010, things are bad, really bad, and getting worse," said Rich Williams, higher education advocate for the group US PIRG. "We saw less than half of students needing to borrow just before 2000. Now it's two-thirds. You're seeing loan debt place serious financial barriers in front of students that weren't there."
Total federal loans are up 57 percent over the last decade, and outstanding student loan volume has passed $1 trillion. Partly that reflects more students, but average indebtedness for graduates is now well over $20,000. For the average borrower, that's not life-ruining, but the increase is worrisome.
While some Occupy Wall Street protesters have called for forgiving student loan debt, most college students say they agree they should pay something for their college education.
On the campus of Eastern Michigan University, Leah Shutes, a third-year student working toward a degree in journalism, says she has no illusions college should be free or easy.
But roughly $60,000 deep in student loans already, she feels like she's bearing an awful lot of the burden alone.
"I don't believe it should necessarily paid for in full," she said. "But, you know, a little help?"
The effects of high prices are more complicated than people realize. It's not just that students drop out, though some do. More commonly, they work more hours on the side and take fewer credit hours. That strings out their time to graduation, making college even more expensive, as well increasing the risk they won't graduate at all.
Shutes works 20 hours per week and thinks it may take her three more years to finish. By then she believes her debt could hit six figures (her debt levels are unusually high; fewer than 1 percent of undergraduate borrowers have more than $100,000).
"As students we can kind of feel a lot of pressure and maybe a little bit of resentment because our entire lives we're told go to school, stay in school, get a good job," she said. "At the same time, they say, 'Here's less financial aid.'"
The Eastern Michigan campus, serving a region where the economy struggled throughout the 2000s, may not appear at first glance much different than a decade ago.
But roughly twice as many students, and about half of all enrollees, now receive Pell Grants. That's indicative of more federal aid but also more struggling students; most Pell recipients come from families earning less than $50,000.
A recent college health survey showed increased student stress. More students are trying to make do without purchasing textbooks. Administrators say students are now working two and three jobs instead of one, which affects their work.
"It's a vicious cycle," said Bernice Lindke, vice president of student affairs and enrollment management.
Ten years ago, EMU enrolled 24,300 students and received $90 million from the state of Michigan. Last year it had slightly fewer students and got roughly $65 million. Meanwhile, tuition has doubled. The university used to get one-quarter of its budget directly from students; now it depends on them for three-quarters.
Patrick Callan, president of the National Center for Public Policy and Higher Education, said there's plenty of blame to go around, but few strong incentives to change. States cut funding, knowing they can pass the blame onto colleges for turning around and raising tuition. Colleges don't fight the budget cuts terribly hard, knowing they can turn around pass price increases onto students.
Students gripe, but can usually borrow to get what they need. Only later do the bills come due. And who knows whether they will have the jobs they need to pay those bills?
"The cost of higher education has gone up faster than anything else in the economy," Callan said. "I don't know anybody who thinks the course we're on is sustainable."
*
Online:
www.collegeboard.org
*
EDITOR'S NOTE — Justin Pope has covered higher education for The Associated Press since 2004.
© 2011 The Associated Press
http://www.cbsnews.com/8301-215_162-20126008/analysis-college-costs-shift-to-families/ [with comments]
===
As State Funds Dry Up, College Costs Skyrocket
The cost of a public college education is up more than 8 percent, and as the College Board reports, there's no end in sight to the tuition hikes
By Alison Damast
October 25, 2011, 6:54 PM EDT
The cost of a college education jumped significantly this fall as recession-weary schools passed more costs onto students and families to make up for budget shortfalls, according to a College Board report released today.
This year, public school students—who make up the vast majority of undergraduate students—are bearing the brunt of the tuition increases. Tuition and fees for the current school year average $8,244 at public four-year colleges, 8.3 percent higher than in the 2010-11 academic year. Meanwhile, at public two-year colleges, tuition and fees went up a whopping 8.7 percent this year.
Low tuition at colleges and universities has been a hallmark of public education for the last 150 years, but that is starting to change, says Terry Hartle, a senior vice-president for government and public affairs at the American Council on Education (ACE). The public university sector is at a crossroads, with schools running out of easy ways to cut costs and state governments under more pressure than ever to balance state budgets, he says. Complicating matters is a spike in total postsecondary enrollment. From the fall of 2007 to the fall of 2010, an additional 2.8 million undergraduate students enrolled in school, the College Board noted.
“It is the worst of all possible worlds,” says Hartle. “What we are really seeing is not just a big price increase over a single year, but a long-term trend in that state governments are increasingly viewing higher education as a private good, rather than a public good, and they are letting the beneficiaries pay more.”
Out of Reach?
As states like California, Washington, and Arizona posted double-digit percentage increases in tuition this fall, the cost of public education is increasingly becoming out of reach for many families. For example, California’s 21 percent tuition increase this year was so hefty it drove up average tuition and fees at public four-year colleges nationally by an additional 1.3 percentage points, the College Board noted. Without California—which enrolls 10 percent of the nation’s public college students—the average tuition increase this year for four-year public schools would have been 7 percent, the College Board said. With budget crunches so severe, many public universities are trying to attract more out-of-state students to make up for their budget shortfalls.
Tuition and fees also continued their upward climb at four-year private colleges and universities, though not quite as dramatically as at their public counterparts. Published tuition and fees at private schools for this school year averaged $20,770, which was $1,235, or 4.5 percent, higher than a year earlier. Some private schools this year managed to keep tuition increases at historically low levels, including Princeton University in New Jersey, which increased tuition just 1 percent this fall, its lowest increase in 45 years, and Syracuse University in New York, which raised tuition 3.8 percent this fall, its lowest increase in 46 years, according to the National Association of Independent Colleges and Universities’ website. Overall, the percentage tuition increases in the past three years are among the lowest for private schools since 1972, a fact the NAICU attributes in part to the work many private institutions are doing to control costs, from consolidating administrative units to flattening bureaucratic structures.
This is the fifth year in a row the percentage increase in tuition and fees at public universities outpaced that of private schools, says Sandy Baum, a College Board policy analyst and economics professor at Skidmore College in Saratoga Springs, N.Y.
“It’s hard to be surprised that tuition went up, but when you put all the pieces together and watch tuition go up year after year, it means we do have issues that we really have to face,” she says.
Inflation Outpaced Again
This year, both the 8.3 percent hike for four-year public in-state tuitions and 4.5 percent hike for privates continued to outpace the rate of inflation. The consumer price index rose 3.6 percent from July 2010 to July 2011, the College Board said.
The tuition increases come at a time when state appropriations for public university students continue their downward slide, the College Board said. State appropriations per full-time student declined by 9 percent in the 2007-08 academic year, and fell by another 6 percent in 2009-10 and by 4 percent in 2010-11, the organization noted.
“Families are struggling because their income is not increasing. States are struggling and one effect of the struggle is seen in the declining appropriations states give for higher education,” Baum says.
Fortunately, the sticker price for a college education is not what most students and families ultimately end up paying for college. The net price, or what the average student pays after grants, student aid, and tax benefits are factored in, is a more accurate indicator of the real cost of an education today, Baum says.
At public institutions, the average student receives about $5,750 in grants and tax benefits, bringing the total annual cost down to $2,494. At private colleges and universities, aid totals about $15,530, taking the annual cost to $12,970, the College Board said.
Tax Credit Savings
This year, families realized significant savings from the American Opportunity Tax Credit, a federal tax credit implemented in 2009 as part of President Obama’s stimulus legislation. Through a combination of tax credits and deductions, the program saved families $14.8 billion in each of the two most recent school years, significantly more than the $7 billion families received in the 2007-08 academic year, Baum says.
“We knew the tax credit program had become more generous, but we didn’t know how extreme it was,” Baum says. “It has really changed the story of how the federal government subsidizes students. I think that is quite surprising.”
At the same time, federal grant aid is about two and a half times greater in the 2010-11 academic year than it was a decade earlier, the College Board said. But whether federal aid will continue to offset tuition increases in the future remains an open and worrisome question, says ACE’s Hartle. It is unlikely that the $5,550 maximum Pell Grant award—a federal program that gives grant aid to the neediest students—or the amount that students can borrow under federal student loan aid programs is going to increase any time soon, he says. Even more concerning, this year the government eliminated year-round Pell Grants and the $64 million federal Leveraging Educational Assistance Partnership program, which provided matching funding to states to encourage them to spend their own resources on need-based financial aid, was cut.
“Federal student aid has increased significantly over the last 15 years, and gone up faster than tuition, but the fact is you are not going to see continued increase in federal student aid,” Hartle says. “Save for a very quick return to full employment, there is no short-term fix on the horizon.”
Damast is a reporter for Businessweek.com.
©2011 Bloomberg L.P.
http://www.businessweek.com/business-schools/as-state-funds-dry-up-college-costs-skyrocket-10262011.html [with comments]
===
Higher education costs continue to soar
CBS/AP
October 26, 2011 8:04 AM
Updated at 11:08 a.m. ET
New figures on the cost of a college education aren't what students and their parents want to hear.
But it's probably no surprise: Costs are rising as public universities pass state budget cuts on to customers.
The College Board says average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, from a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high. With room and board, the average list price for a state school now runs more than $17,000 a year.
But a companion report says the actual amount families actually pay is much lower, thanks to a large increase in federal grants and tax credits for students, on top of stimulus dollars that prevented greater state cuts. The average for tuition and fees is about $2,490, or just $170 more than five years ago.
The College Board reports roughly 56 percent of bachelor's degree recipients at public four-year schools last year graduated with debt, averaging about $22,000. At private nonprofit universities, 65 percent had debt, averaging around $28,000.
The release of the College Board report comes the same day as President Obama is expected to outline a plan to allow millions of student loan recipients to lower their payments and consolidate their loans, in hopes of easing the burden of the No. 2 source of household debt.
The move to assist struggling graduates and students could help Mr. Obama shore up re-election support among young voters, an important voting bloc in his 2008 campaign, and appeal to their parents, too. Student loan debt also is a common concern voiced by Occupy Wall Street protesters.
The loans have become particularly painful for many amid the nation's economic woes, high unemployment and soaring tuition costs. They are second only to mortgages as a portion of Americans' debt, coming in ahead of credit cards.
The White House said Mr. Obama will use his executive authority to provide student loan relief in two ways.
First, he will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.
Second, he will allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million borrowers.
Education Secretary Arne Duncan told reporters on a conference call that the changes could save some borrowers hundreds of dollars a month.
"These are real savings that will help these graduates get started in their careers and help them make ends meet," Duncan said.
The White House said the changes will carry no additional costs to taxpayers.
Last year, Congress passed a law that lowered the repayment cap and moved all student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.
The law change was opposed by many Republicans. At a hearing Tuesday, Rep. Virginia Foxx, R-N.C., who chairs a subcommittee with oversight over higher education, said it had resulted in poorer customer service for borrowers. And Senate Republicans issued a news release with a compilation of headlines that showed thousands of workers in student lending, including those from Sallie Mae Inc., had been laid off because of the change.
Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.
Increases in federal aid have helped ease the burden on students dealing with tuition increases, the White House Council of Economic Advisers said in a report Wednesday.
"Despite large increases in the published price of college over the past four years, the average student has not seen commensurate increases in the net price of college, defined as the published price minus grants, scholarships and tax benefits," the report said.
Meanwhile, the Education Department and the Consumer Financial Protection Bureau announced a project Tuesday to simplify the financial aid award letters that colleges mail to students each spring. A common complaint is that colleges obscure the inclusion of student loans in financial aid packages to make their school appear more affordable, and the agencies hope families will more easily be able to compare the costs of colleges.
Separately, James Runcie, the Education Department's federal student aid chief operating officer, told Foxx's congressional panel that the personal financial details of as many 5,000 college students were temporarily viewable on the department's direct loan website earlier this month.
Runcie said site was shut down while the matter was resolved, and the affected students have been notified and offered credit monitoring.
*
Obama to outline student loan relief plan
October 25, 2011
http://www.cbsnews.com/8301-250_162-20125577/obama-to-outline-student-loan-relief-plan/
*
© 2011 CBS Interactive Inc.
http://www.cbsnews.com/8301-201_162-20125731/higher-education-costs-continue-to-soar/ [with comments]
===
Paul Ryan Tells Student He Should Work Three Jobs To Pay For College, Not Use Pell Grants
By Travis Waldron and Pat Garofalo on Oct 20, 2011 at 6:20 pm
ThinkProgress filed this report from a town hall in Muskego, Wisconsin.
The House Republican majority, since it came into power, has repeatedly set [ http://thinkprogress.org/education/2011/04/25/177552/kline-pell-markets/ ] its sights [ http://thinkprogress.org/economy/2011/07/12/266192/cantor-taxes-students-pay/ ] on Pell Grants [ http://thinkprogress.org/economy/2011/10/04/335590/gop-pell-one-million/ ], the federal grants that help low- and middle-income students pay a portion of their higher education tuition. Republicans have not only proposed lowering the maximum Pell amount from $5,500 (which is the level to which the Obama administration raised it) but also limiting eligibility, knocking one million students [id.] from the Pell program entirely.
During a town hall today, House Budget Committee Chairman Paul Ryan (R-WI) was asked by Matthew Lowe, a student, why the GOP wants to cut Pell Grants. Ryan responded by saying that the program is “unsustainable,” before telling Lowe that he should be working three jobs and taking out student loans to pay for college, instead of using Pell Grants:
LOWE: I come from a very middle-class family and under President Obama, I get $5,500 per year to pay for school, which doesn’t come close to covering all of the funding, but it helps ease the burden. Under your plan, you cut it by 15 percent. I was just curious why you would cut a grant that goes directly to the middle- and lower-class people that need it the most.
RYAN: ‘Cause Pell Grants have become unsustainable. It’s all borrowed money…Look, I worked three jobs to pay off my student loans after college. I didn’t get grants, I got loans, and we need to have a system of viable student loans to be able to do this.
The second concern I have is, in the health care bill — people don’t know this — for budgetary gimmickry reasons, the administration and Congress at the time, took over the student loan industry. So they had the federal government, the Department of Education, basically confiscate the private student loan industry.
Watch it [ http://www.youtube.com/watch?v=p0fcDGaH82g ]:
ThinkProgress spoke to Lowe afterward, who said, “If [the Pell grant program] was cut, I’d have to accept unsubsidized loans from banks. I don’t get it…We continue to not tax the people who are best off…He taxes small little things that affect the poor and middle class the most.”
Ryan justified the GOP’s desire to cut the highly-necessary Pell Grant program by claiming that it costs too much; but the GOP’s budget provides huge tax breaks for the wealthy and corporations which dwarf the cost of preserving the grants [ http://thinkprogress.org/economy/2011/10/13/343431/infographic-house-gop-programs/ ]. He also claimed that Pell Grants drive tuition inflation, which is a claim he has made before, while pointing to studies that didn’t actually say [ http://thinkprogress.org/education/2011/04/05/177544/ryan-budget-cuts-pell/ ] what he believed they said.
Finally, Ryan goes from claiming that Pell Grants are unaffordable to saying that he wants to repeal student loan reform (which was in no way passed for a “budgetary gimmicky reason”) that saves taxpayers billions of dollars each year by cutting unnecessary subsidies to banks that originated federal student loans. Contrary to Ryan’s assertion, there is still a private student loan industry [ http://thinkprogress.org/education/2011/05/02/177557/bachmann-student-loans-illegal/ ]; loan reform merely cut the banks out [ http://thinkprogress.org/education/2010/10/20/177487/kirk-student-banker/ ] of the federal student loan program.
At a time when student loan debt is hitting [ http://thinkprogress.org/education/2011/05/09/177560/2011-most-indebted-ever/ ] new heights [ http://thinkprogress.org/economy/2011/10/04/335590/gop-pell-one-million/ ] and joblessness is above nine percent, Ryan’s response to a student genuinely concerned about financing his higher education is quite telling. To Ryan, students should have to live the real American dream of working three jobs in order to pay back a mountain of cash to a bank.
© 2011 Center for American Progress Action Fund (emphasis in original)
http://thinkprogress.org/education/2011/10/20/349627/paul-ryan-three-jobs-pell-grants/ [with comments]
===
10 Things You Didn't Know About Paul Ryan
The Wisconsin congressman is a potential vice presidential pick for John McCain
By Bobbie Kyle Sauer
July 23, 2008
1. Paul Davis Ryan, the youngest of Paul Sr. and Betty Ryan's four children, was born in Janesville, Wis., on Jan. 29, 1970. Ryan is the fifth generation of his family to live in Janesville.
2. Sharing the same first name as his father, Paul had a childhood nickname: "P. D." (Paul Davis). It was often mistaken for "Petey," which caused Ryan to dislike the nickname.
3. Ryan's father died when Paul was only 16. Using the Social Security survivors benefits he received until his 18th birthday, he paid for his education at Miami University in Ohio, where he completed a bachelor's degree in economics and political science in 1992.
4. Ryan worked as a marketing consultant for his family's construction business before being elected to Congress. Ryan Incorporated Central began as an earthmoving business created by his great-grandfather in 1884.
5. At 28, Ryan was elected to Congress in 1998, and he has been re-elected four times, most recently in 2006.
6. Early in his career as a representative to Congress, Ryan held office hours in an old truck he converted into an office. This allowed him to visit the more far-flung towns in his district.
7. Janna Little, the future Mrs. Paul Ryan, was a Washington tax attorney living in Arlington, Va., when she met him. The Oklahoma native graduated from Wellesley College and George Washington University Law School.
8. Demonstrating his love of the outdoors, in April 2000, Ryan asked Janna to marry him at Big St. Germain Lake in northern Wisconsin, one of his favorite fishing spots. The couple was married in Oklahoma City in December 2000.
9. Ryan and his wife are raising their daughter, Elizabeth, and two sons, Charles and Samuel, in Ryan's hometown.
10. Ryan's hobbies include hunting and fishing. He is a bowhunter and belongs to his hometown's archery association, the Janesville Bowmen.
Sources:
•Associated Press
•Biography Resource Center
•Capital Times (Madison, Wis.)
•Congressional Staff Directory
•Milwaukee Journal Sentinel (Wisconsin)
•National Journal's House Race Hotline
•Roll Call
•Wisconsin State Journal (Madison, Wis.)
Copyright © 2011 U.S.News & World Report LP (emphasis added)
http://www.usnews.com/news/campaign-2008/articles/2008/07/23/10-things-you-didnt-know-about-paul-ryan [with comments]
===
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