The cost of a higher education in the United States, which already drains family and student budgets, rose sharply for the 2011-2012 school year, the College Board reported on Wednesday. Those increases have made the right to education less affordable, as average family inflation-adjusted incomes have fallen just as sharply in the last decade. Now, increases in public school costs outpace those in private school tuitions. Attending a state school is not necessarily the cheaper option.
At public 4-year schools, average tuition and fees rose 8.3 percent for in-state students and 5.7 percent for out-of-state students, not including room, board and other related expenses. Private, nonprofit four-year schools raised their tuition and fees by 4.5 percent. In a country where undergraduate programs at the best schools can run well over $60,000 a year, including room, board, health costs and travel, students are often forced to apply for financial aid, meaning they will graduate with debts in the tens of thousands of dollars.
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Financial aid packages only go so far in covering school fees. "..costs are still outpacing family incomes and available aid," said Lauren Asher, president of the advocacy group, Institute for College Access & Success. "The maximum Pell Grant covers barely a third of the full cost of four years of college and we have more people with student loans than ever before, and they are borrowing more than ever." Students often take out personal loans to supplement federal aid packages.
A new requirement on October 29 would have U.S. colleges and universities post net price calculators on their web sites. Those calculators supposedly go beyond sticker prices to include estimated prices of the extras, like room and board, as well as estimates of typical aid paid to students at the school. But some institutions have buried the calculators beneath other content on their websites. Others have made the calculators extremely complex and virtually unusable.
President Obama announced Wednesday that he will authorize changes in federal policy to make loans more affordable and easier to repay for millions of cash-strapped borrowers. The plan, which Obama will impose by executive authority, will address a sector of the credit market that has become increasingly problematic in the bad economy and that gained renewed attention through the Occupy Wall Street movement, which claims student-loan relief as one of its priorities. Obama will move up the start date of a plan Congress already passed, which seeks to cut the maximum repayment on federal student loans from 15 percent to 10 percent of discretionary income, up two years from 2012. Almost 1.6 million borrowers could be affected, and remaining debt would be forgiven after 20 years instead of 25. The administration also will allow 5.8 million borrowers with outstanding loans from two federal programs to consolidate into a direct loan, potentially saving some borrowers hundreds of dollars per month.
The importance of a college degree in the working world has never been greater than it is today. Many workplaces require their employees to have advanced degrees to move up, automatically excluding people from higher-paying jobs they might be qualified for simply because they don't have that degree. There is very little consideration by employers that their employees might not be able to easily afford a higher education, and most jobs will not cover debts incurred by getting that education. Today's job market is complicated and tricky enough to navigate without having to consider which ones will let workers break even.