Knowledge Bound: The RSC Blog
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When a product gets too expensive, people stop buying it and the price goes down. People even do this with food. If it’s too expensive to eat out, they stay home. If they can’t afford healthy food, they eat processed goods. Basically, if you can’t afford it, you don’t need it. It’s the basic law of supply and demand.
Except for college. The price has been going up rapidly over the past 30 years. Since 1982, the cost has jumped 530%, twice that of inflation. And yet more people than ever are going.
Until now, that is. Finally, people are deciding they can’t afford college and are starting to pull back. That doesn’t mean they don’t want it, it’s just that they can’t afford it. And it’s leading to a backlash from the public and the president.
But will it be enough to curtail the cost of higher education?
Family Efforts to Make College More Affordable
· State schools. Students choose seemingly low-cost public universities, but tuition, thanks to budget cuts, is actually rising faster at state schools than private colleges.
· Transferring from community colleges. This may provide a low-cost start to college, but if you want a bachelor’s degree, know that only 10% of community college transfer students get one.
· Taking semesters off to work. Students often take a semester or two off to earn money for college. Some never come back, and others return only to discover that tuition has risen more than their savings. Also, if you’re over 24, it can increase your expected family contribution and make college even costlier.
· Advanced Placement classes. These are great, particularly if the colleges you apply to accept them for credit, but If not, they still help you graduate college earlier and avoid remedial classes. They make you a better college applicant.
Government Efforts to Make College More Affordable
· Pell Grant money. The government increased the maximum amount students can be awarded to $5,550, but they cut the “automatic zero” expected family contribution from $30,000 to $20,000. In other words, if your family makes more than $20,000, expect to pay something for college.
· Tax credits. The majority of education tax credits go to upper income families because they make more.
· Student loan reforms. Graduates who go to work in the public sector can stop paying on their loan after 10 years, but otherwise, these are now harder to pay back. The six-month post-graduation grace period has ended for subsidized Stafford Loans, unsubsidized loans are now a standard part of financial aid offers, and interest rates could double this summer.
· Tying tuition to financial aid. President Obama proposed this in his State of the Union address. When it was first proposed in 2002, it went on to resounding defeat. Students could end up paying more out of pocket if colleges accept giving out less financial aid by not drastically curbing tuition hikes.
There are many plans on the table to make college more affordable, but some have serious shortcomings, largely because there’s no one trick to revamping an entire system. While systemic change is important and worthwhile, you need to focus on your needs, and that means understanding the system as it is now. Find ways to get both need-based and merit-based financial aid. That way, you’re not waiting for government reforms to go into effect someday, or delaying your own graduation and adding to your cost of college.
For more on how to do this, visit our Financial Aid page.
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