Every parent wants their children to have a better life. As a result, most parents will counsel their children to attend college. However, this is a diminishing possibility for more and more Americans as tuitions costs skyrocket in relation to median family income. Over the next few days, I will be posting some diaries on varies aspects of this problem. The overlying picture is not pretty. As with health care, the problems occur at numerous stages in the tuition payment system.
According to the Education Commission of the States:
Nationwide, the percent of family income needed to pay for postsecondary education is 28.5% for public four-year college and 22.3% for public two-year colleges.
4-year college tuition consumes 28.5% of family income. That’s a hefty number which would effectively bankrupt a family. It also indicates that families should save for tuition to help deal with the expense. However, the national savings rate is at an all-time low, indicating families are not saving. The cause of this low savings rate is topic for another discussion. However, for whatever reason, people are not saving.
While the average cost of college tuition rose by 110% between 1981 and 2001, median family income rose by only 27% during that period. (The College Board, Trends in College Pricing, 2001)
College tuition increased 5 times faster than average income over a 20-year period. That is a hefty increase. It indicates that college is slowly becoming more and more difficult for the median income family to afford. As a result, their children will have to borrow more of the their tuition. However, note these statistics:
Between 1981 and 2000, the amount of aid states allocated on the basis of need declined from 91% to 78%. (The College Board, Trends in Student Aid, 2002)
After adjusting for inflation, Pell Grant funds – the largest need-based financial aid program in the country – increased 6% between 2002-2003 and 2003-2204. This is smallest real increase since 1999-2000. (The College Board, Trends in Student Aid, 2004).
So, when families need more help, the government is providing less help. In other words, the average middle-class family is again losing ground on the American dream.
http://www.ecs.org/ecsmain.asp?page=/html/issue.asp?issueID=199