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Bill Tyson
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May 02, 2002

College Prices Outpace Growth in Family Income and Inflation

Americans Losing Ground in Paying for College

San Jose, CA. - Public college and university tuition requires an ever-larger share of the annual income of most American families, according to a new report released today. The report, Losing Ground, finds that public higher education has become less affordable for all but the wealthiest Americans. Early indications show that more ground is being lost during the current economic downturn.

Losing Ground, released by the National Center for Public Policy and Higher Education, focuses on the nation's public two- and four-year colleges and universities, which enroll more than 80% of college students in America. The report identifies five continuing national trends that have emerged over the past two decades.

  • College has become less affordable-as measured from the perspective of American families.
      From 1980 to 2000, the percentage of family income required to pay for tuition increased for all families, except for those in the top 20% as measured by family income. The largest percentage increase occurred for low- and middle-income families.

      In 1980, tuition at public four-year colleges and universities consumed 13% of family income for low-income families; by 2000, that figure had risen to 25%. At two-year colleges, tuition increased from 6% to 12% of family income during the same time period.

      From 1992 through 2001, tuition at four-year public colleges and universities rose faster than family income in 41 states. Tuition at two-year colleges rose faster than family income in 34 states.

  • Financial aid grants have increased, but not as fast as tuition.
      The federal government and the states have increased financial aid for those college-eligible students who have financial need, but these increases have not kept pace with tuition. The average federal Pell Grant award (aid to financially needy students) at a public four-year college or university covered 98% of tuition in 1986, but only 57% in 1999. State grant aid awards (need-based and non-need-based) paid 75% of tuition in 1986 and 64% in 1999.

  • More students are borrowing to pay for college-and the amounts borrowed are greater.
      From 1989 to 1999, the average cumulative debt of college and university seniors in the bottom income quartile grew from $7,629 to $12,888 in constant dollars.

  • For the past 20 years, the states and public colleges have raised tuitions most steeply during times of economic difficulty.
      In the recessions of the early 1980s and 1990s, tuition at public institutions increased sharply. This pattern is recurring in the current economic downturn.

  • State support of higher education has risen faster than inflation and enrollment over the last 20 years, despite some years of budget cuts.
      Tuition, however, has been the fastest growing source of revenue for public colleges and universities. It has soared by 107% since 1980.
Losing Ground also finds that the decline in college affordability is a broad national concern, and that its most pernicious effects are on low-income Americans-those who attend college in lower numbers and, when they do enroll, must borrow more in relation to their income. Increasing dependence upon debt presents special problems for many low-income groups, who may be inhibited from enrolling due to fear of debt, who are more likely to be supporting their families while attending college, and whose families cannot help repay loans.

The report urges college officials, governors, and legislators to take family income explicitly into account when establishing tuition levels, and to avoid precipitous tuition increases when the country is facing economic hardship.

"The continuing pattern in setting tuition over the past 20 years is that during recessions, the financial problems of states and colleges are given more weight than those of students and families," said Patrick M. Callan, President of the National Center for Public Policy and Higher Education, which issued Losing Ground.

Losing Ground also presents state-by-state information on the eroding affordability of American higher education.

The National Center for Public Policy and Higher Education is an independent, nonprofit, nonpartisan organization that promotes public policies that enhance Americans' opportunities to pursue and achieve a quality higher education. It is not affiliated with any government agency, political party, or college or university. The National Center was established in 1998 with founding grants from The Pew Charitable Trusts and The Atlantic Philanthropies that have supported the initiation and continuation of its programs, including Measuring Up 2000: The State-by-State Report Card for Higher Education. The Ford Foundation also has provided core support to the National Center.

Losing Ground was made possible by special support from The Ford Foundation and The Pew Charitable Trusts. The statements and views expressed in this report, however, do not necessarily reflect those of its funding organizations, and are solely the responsibility of the National Center for Public Policy and Higher Education.

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