Some good news and bad about college costs and student aid came out last week.
According to The College Board, total costs for tuition, room and board and fees continue to rise, but not more than they have been over the past few years. Costs rose about 2.6% for public four-year colleges and 3.2% for private nonprofit four-year schools for the 2018-2019 academic year.
The average published total price for the 2018-2019 academic year for a public four-year college is $21,370 for in-state students and $37,430 for out-of-state students. The total cost for a private nonprofit four-year school is $48,510 on average.
Average grant aid, however, is also rising, though not enough to offset the full increase in costs, according to the College Board.
Grant aid, provided primarily by higher educational institutions, has been climbing steadily for the past 20 years, reaching an average $8,970 for the 2017-2018 year (there’s a one-year lag on the data), more than double the amount in the 1997-1998 academic year, in 2017 dollars.
As a result of grants plus tax credits such as the American Opportunity Credit, the net price to attend one year of a public four-year college as an in-state undergraduate averages about $14,900, according to the College Board. For undergraduates attending a private nonprofit four-year colleges the net price is about $27,300 in tuition, fees, room and board after grant aid and tax benefits.
The lower the net price, the less money a student and his or her family has to borrow to finance college costs.
“Every year grant aid is up for undergraduates, loans have decreased,” says Sandy Baum, one of the authors of The College Board’s Trends in College Pricing and Trends in Student Aid. “Students are borrowing less but receiving more grants.”
Their parents, however, are borrowing more, at least on a per capita basis. They borrowed an average $16,450 in Parent PLUS loans in the 2017-2018 academic year while students borrowed just $6,570 in federal subsidized and unsubsidized loans. Moreover, Parent Plus borrowing has jumped more than 20% from 10 years ago, when average borrowing was $13,480.
The growing role of parent borrowing to finance college is also a finding of Sallie Mae’s latest report, How America Pays for College 2018, which is based on a survey of students and parents, unlike the College Board report, which uses data from schools and the Department of Education.
The Sallie Mae survey of roughly 800 undergraduate students age 18 to 24 and 800 parents of undergrads found that parent borrowing and parent income both rose as a share of college financing while student borrowing and student income and savings fell as a share of costs.
Parent borrowing for the 2017-2018 academic year paid for 10% of the typical college bill, which Sallie Mae put at $26,458. That’s a higher percentage than any previous year going back to 2012-2013, according to Sallie Mae.
The rest of the typical bill was financed by parent income (34%), student borrowing (14%), student income (13%), grants and scholarships (28%) and relatives and friends (2%). The percentages total just over 100% due to rounding.
“Families draw on funding resources varying degrees. No single resource is used by all families,” reads the Sallie Mae report, whose surveys were conducted in July by Ipsos, a global market research company.
The most popular funding resources, according to the survey, were parent income, scholarships and grants and student income, each used by about 60% of families.
(Related: How American Families Pay for College: 2017)
Parents borrowed in 22% of the families studied, primarily using PLUS loans but also using private parent loans, credit cards, home equity loans and retirement accounts; students borrowed in 39% of the families studied. In either case, families expect students to share the responsibility for repayment. About 60% of families expect students will be solely responsible for repaying student loans and partially responsible for repaying parent loans.
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