Sen. Kennedy’s “Strengthening Student Aid for All Act of 2008” contains provisions that would provide for a marginal increase in the Pell Grant program; as well as annual loan limit increases in the Stafford Loan programs. The purpose of the bill is to increase access through affordability by (1) providing more up-front grant funding to students and (2) permitting students to borrow more funding through federal loan programs. Based on the provisions of this bill, dependent students with high need could qualify for an additional $1750 in financial aid each year; and independent students could qualify for an additional $2750.
For many students and families, whether or not college is “affordable” is dependent on the relationship between total educational costs (tuition and fees, room and board, books and supplies, transportation and other costs) and financial aid. The simple fact is, while financial aid available to students from all sources is increasing each year, educational costs continue to rise at rates outpacing inflation. Between 2006-07 and 2007-08, the tuition and fee costs at U.S. colleges and universities, increased an average of 5.65 percent; and room and board costs increased an average of 5.2 percent (see www.collegeboard.com, 2008). Considering a student can expect to pay, on average, about $1000 for books and supplies, $1000 for transportation costs, and about $1500 in other costs on top of tuition and fee and room and board costs, the final, discounted price for higher education can still be very painful!
Why does college cost so much?!? The truth of the matter is that private, state and federal funding for higher education of any kind has decreased significantly over the last few years. This means more and more colleges are subsidizing (paying for) their own expenses (staff, administration, faculty, space, maintenance, utilities, etc.).
Where do colleges and universities get the money to pay for their operational expenses if it is not coming in from donors or the government? From families and students! Yes, colleges and universities are paying for much more of their costs out of the money families and students pay them in tuition and fees (including room and board fees). Which means as campus costs increase, families and students will end up paying more to attend college or university.
Shouldn't the government pay more towards higher education? Maybe yes, maybe no. The issue of who should pay for a higher education or who should bear the greater burden of these costs is sticky. What it boils down to in most cases is who benefits more: the state or the individual? The state benefits economically and socially from an educated population. Individuals also benefit economically and socially from higher education. Who benefits more? That's a toss-up.
The reality is that regardless of circumstance or ability to qualify for discounts, tax breaks or other types of financial assistance for higher education, families and students are being asked to shoulder a larger portion of their educational costs. Even if the federal government approves the amendments to the Pell Grant Program and Stafford Loan Programs, it is doubtful that this increase will have much of an impact on “affordability.” Why? Because the purchase power of financial aid relative to the increases anticipated in educational costs is declining. Or, in simpler terms, even though students receive more funding, their funding is buying less and less.
For those students who do not qualify for grants or scholarships and rely entirely on loans or outside funding to support their educational efforts, the impact of rising educational costs will be even more painful.
That's my two cents on the topic.
Until next time!
Lynn Byrne
Preparing for college admissions? Trying to find direction? Need a little help with the planning? Check out my college planning series:
- College Planning Made Easy--the planning and preparation workbook for the take charge, college-bound student,
- Paying for College Made Easy--a college financing guide designed to assist students and families in preparing and planning for higher education expenses; and
- The Great Scholarship Search--my guide for students and parents researching and applying for scholarship funding.
