We see that yet again this year, as the average tuition price has increased 8.3%. This is creating a bubble in student debt. [Oct 19, 2011: Student Loan Debt Continues to Hit New Records] Looks like Obama is introducing a plan to 'refinance' into lower rate debt on student loans, but perversely this just allows tuition to go up even more. The two things most subsidized in this country are healthcare and tuition - and both have been increasing at pace well in excess of wages. People don't seem to get the connection. If you had a non subsidized market, prices would have to fall to what the masses could afford. It would require a few hard years as markets adjust, but in the long run many more people would prosper with a correctly prices product. Good intentions gone bad.
I'm not sure if online universities and colleges are included in these numbers, but it would be interesting to see how they play into it.
- As President Obama prepared to announce new measures Wednesday to help ease the burden of student loan debt, new figures painted a demoralizing picture of college costs for students and parents: Average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, compared with a year ago.
- Nationally, the cost of a full credit load has passed $8,000, an all-time high. Throw in room and board, and the average list price for a state school now runs more than $17,000 a year, according to the twin annual reports on college costs and student aid published Wednesday by the College Board.
- The large increase in federal grants and tax credits for students, on top of stimulus dollars that prevented greater state cuts, helped keep the average tuition-and-fees that families actually pay much lower: about $2,490, or just $170 more than five years ago. Some argue that while Washington's largesse may have helped some students, it did little to hold down prices.
- "The states cut budgets, the price goes up, and the (federal) money goes to that," said Patrick Callan, president of the National Center for Public Policy and Higher Education. "For 25 years we've been putting more and more money into financial aid, and tuition keeps going up. We're on a national treadmill."
- Obama will use executive authority for two loan-relief measures. First, he will move up the start date -- from 2014 to 2012 -- of a plan Congress already passed that reduces the maximum repayment on federal student loans from 15 percent of discretionary incomes to 10 percent. The White House says about 1.6 million borrowers could be affected, and that 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 -- direct lending the Family Education Loan Program -- to consolidate into a direct loan, potentially saving some borrowers hundreds of dollars per month.
- Those changes may not help new borrowers much, but they could put cash in the pockets of millions still paying back their loans. They also could encourage more borrowers to take advantage of the income repayment options that are already in place, but not widely known.
- Finally, by consolidating into direct lending, more could qualify for that program's public service loan forgiveness, which can forgive debts after just 10 years of repayments for people working in nonprofit or public service jobs.
- In the College Board's latest price report, some of the increase was driven by huge increases at public universities in California, which enrolls 10 percent of public four-year college students and whose 21 percent tuition increase this year was the largest of any state.
- But even without California, prices would have increased 7 percent on average nationally -- an exceptional burden at a time of high unemployment and stagnant family incomes.
- Terry Hartle, senior vice president at the American Council on Education, which represents colleges in Washington, said the cause of the price increases for the 80 percent of college students who attend public institutions is clear. State appropriations to higher education declined 18 percent per student over the last three years, the College Board found, the sharpest fall on record.
- The College Board reports roughly 56 percent of 2009-2010 bachelor's degree recipients at public four-years graduated with debt, averaging about $22,000. At private nonprofit universities, the figures were higher -- 65 percent and around $28,000.
- Meanwhile, both community colleges and private four-year colleges reported lower tuition inflation than public universities.
- At nonprofit private four-year colleges, tuition and fees were up 4.5 percent to $28,500. Factoring in aid, the average total net cost, including room and board, was about $22,970 -- lower than five years ago. At community colleges, where list prices rose 8.7 percent nationally to just under $3,000, net costs also are lower than five years ago, and aid generally covers the whole price.
- Still, while net costs are important to note, they don't tell the whole story. They don't cover living costs, which for many students are a higher obstacle than tuition, especially if they can't work as much while enrolled.
- Hartle and others say this year's sharp increases came despite the last chunks of stimulus dollars from Washington used to plug holes in education spending. Looking forward, state budgets remain broken and there's little indication Washington will come riding to the rescue. "I'm not exactly sure where higher education in the United States is going," he said. "But I have a feeling California is going to get there first."
[Aug 19, 2011: The Atlantic - The Debt Crisis at American Colleges, Plus a Chart Showing the Incredible Explosion of College Loans]
[Dec 21, 2010: Video - CNBC, the Price of Admission - America's College Debt Crisis]
[Dec 14, 2008: WSJ - K-12 Schools Slashing Costs, College Bills Wallup Families]
[Dec 5, 2008: NYT - College May Become Unaffordable for Most in US]