Analysis: College costs shift to families
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."
EDITOR'S NOTE -- Justin Pope has covered higher education for The Associated Press since 2004. You can reach him at twitter.com/jnn--pope9.