College Tuition, Student Borrowing On the Rise In Down Economy

Published 03 November 08 01:50 AM | Student Loan Girl

A new report has found that last year’s increases in college tuition were more on pace with rises in the Consumer Price Index — the measure of the average price of consumer goods and services. But despite the relative steadiness of college affordability, students still received record amounts of financial aid and borrowed more in student loans, according to findings of the College Board’s 2008 Trends in Higher Education Series.

The 2008 Trends in College Pricing report, which covers this academic year’s college costs, found that while the CPI rose nearly 5.6 percent this year, the average in-state tuition and fees at public four-year institutions increased by 6.4 percent to $6,585. Average tuition and fees at two-year public colleges jumped 4.7 percent to $2,402, and increased 5.9 percent at private four-year colleges and universities to $25,143.

“College prices are doing what other prices are doing. They’re not going up more rapidly; they’re just keeping pace,” said Sandy Baum, a senior policy analyst for the College Board and a Skidmore College economics professor (“Downturn Expected to Drive Tuition Up,” The New York Times, Oct. 30, 2008).

Lagging Economy Could Spark Increased Demand for Financial Aid

The concern among education experts is that while tuition increases were milder and closer inline with the CPI this year, these numbers may already be out of date. Since the data was gathered before the economy began its downward spiral, students at both public and private institutions may be in for even larger tuition hikes and even more borrowing next year.

The current economic crunch has led many states to slash their higher education budgets. In order to compensate for the loss of state funds, public colleges and universities in more than 12 states have been forced to raise their tuition costs.

But the flagging economy hasn’t just affected state schools; private colleges and universities have had difficulties raising funds from private donors — their largest source of financing — and have had to push any increased costs onto students.

“Private colleges face a real quandary,” Baum said. “Everybody’s going to have more people applying for financial aid, and it could really be that they’re going to lose enrollment if they can’t meet the need.”

According to the 2008 Trends in Student Aid report, part of the College Board’s Trends in Higher Education Series, graduate and undergraduate students received more than $143 billion in federal financial aid last year, and borrowed $19 billion from state and private lending sources — figures that are expected to rise as the cost of college increases.