Exploding Some Myths About College Costs
by Richard G. DiFeliciantonio
The alarming myth that colleges are unaffordable for the average student has to be counted as one of the more destructive “urban legends” ever foisted upon the American public. The fact is that American higher education today, the envy of the world, provides more options than ever before and is as financially accessible as it has been at any time since the post-World War II boom era.
• Myth 1: Colleges are too expensive for the average American family. A recent headline in USA Today (June 28, 2004) declares: “Tuition burden falls by a third; 80% jump in aid offsets price hikes.” The article goes on to detail how since 1998 the actual cost at colleges and universities have, in fact, fallen thanks to federal tax breaks, increases in direct federal and state aid, and large increases in scholarship dollars from the colleges themselves. The biggest beneficiaries have been middle class families earning between $40,000 and $100,000 per year, but there is money for everyone.
• Myth 2: The government does little to help the average family pay for college. Financial aid comes in many forms. Tax breaks and federal and state need-based financial aid has increased $22 billion annually since 1998. Government need-based financial aid simply requires families to complete the so-called Free Application for Federal Student Aid or the FAFSA (“Free,” in this instance does not mean a student attends college free; it means the form is free to process.) Government aid mainly comes in the form of federal Pell grants, federal supplemental grants, state grants, and federal student loans. These monetary awards are based on federal and state eligibility rules, but are well worth the time and effort required to complete the FAFSA. But there’s more. The HOPE Scholarship Credit, the Lifelong Learning Credit, and the Tuition Tax Deduction rule can all significantly reduce federal income taxes owed by the parent of a college student. Just pay close attention to your Form 1040 instruction book.
• Myth 3: “My family makes too much to qualify for aid.” Colleges compete fiercely for talented students. The amount of scholarship money coming directly from higher education institutions themselves has, in some parts of the country, increased on the order of 500% in the past decade alone. A businessperson might think of this money as a “discount” since colleges do tend to “invest” heavily in their own students. These plentiful merit scholarship opportunities are available to both families with incomes inside and outside the range of need-based aid - especially at private colleges.
• Myth 4: Students are heavily in debt upon graduation. According to a recent report by the American Council on Education (ACE), student borrowing data reveal that “while the borrowing trend certainly bears careful monitoring... a majority of students who receive post-secondary degrees or certificates do not borrow to finance their education and, for most of those who do borrow, debt levels remain reasonable.” In addition, the federal government recently reported that defaults on student loans are at an all-time low, an excellent indication that student borrowing is under control. One caveat: a great deal of student debt is not actually related to education costs, but represents consumer debt. Keep a close watch on college kids’ credit cards, consumption expenses, and those Spring break trips to Cancun!
Between 1990 and 2000, traditional-age college enrollment in the U.S. increased by 12 percent. The National Council on Education Statistics projects another 21 percent rise between 2000 and 2010. Yes, the demand for better faculty, lower student-teacher ratios, bigger stadiums and workout rooms, better food and dorm rooms, better microscopes and labs, more campus psychologists, better information technology and prettier landscaping puts upward pressure on college costs. Yet, more students are doing better work than ever, and federal, state, local, and college financial aid is more than keeping pace with those rising costs and parents’ ability to meet those bills.
DiFeliciantonio is the Vice President for Enrollment of Ursinus College, Collegeville, PA.