How Much Does College Cost?

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Number of Students Receiving Aid Reaches All Time High

The U.S. Department of Education released statistics today showing the number of college students receiving financial aid is at an all time high. Data from the 2011-12 academic year show that 57% of students receive some type of aid from the federal government. This is the first time that a majority of college students are receiving federal aid.  According to an article in Politico

About 41 percent of all undergraduates took out loans, up from 35 percent four years ago. Borrowing is on the rise even in top income brackets. About 46 percent of students with families making more than $100,000 per year took out student loans, and a majority of students from families making $80,000 or less borrowed to pay for college.

The numbers also show the effect of skyrocketing spending on the Pell Grant. About 41 percent of all students received the grant in 2011-12, a 14 percent increase. Congress expanded the grant program several times between 2007 and 2009. As the economy faltered and incomes fell, spending on Pell grew from $12.8 billion in 2007 to $35.6 billion in 2011 before falling slightly last year.

A competitive financial aid market is causing colleges to offer more money to attract students on the basis of their accomplishments rather than need.

About 39 percent of students from families making less than $20,000 per year received grants from colleges’ own funds. But so did 38 percent of students from families with incomes of more than $100,000, up from 33 percent four years ago. The average grants were higher for the wealthiest students, who averaged $10,200 in college aid, than for the poorest, who got about $8,000.

The full study is available on the website of National Center for Education Statistics.
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Finding College Value Through “ROI”

Yesterday’s Sunday New York Times included a special section on Education Life. One of the articles helps potential students evaluate the “return on investment” from various colleges and universities. The ROI is defined as “the cost of attending set against future earnings”.  While there are many reasons why students choose to attend a specific university,

middle- and low-income students who can’t afford to make mistakes, and students considering low-paying professions like social work or art, may want to figure in R.O.I. “The qualitative benefits of college, such as how fun the dorm life is, are temporary,” said Katie Bardaro, lead economist for PayScale, a Web site that reports compensation. “Your after-graduation earnings are permanent.”

The Following the Money article provides a number of websites with tools that compare ROIs.