Reducing the Costs of Higher Ed

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Ways to Reduce College Costs: Reform Financial Aid

This is an occasional blog that summarizes an item from From 25 Ways to Reduce the Cost of College.

by Jason Beideman

The American financial aid system fails simply because it is not streamlined. The system is not user friendly and in fact discourages people from getting their fair share. Families filling out FAFSA don’t learn of their aid availability until months after they send in the form. This leads to students not knowing whether that can afford school or not, until way after they have completed all the steps to apply and get aid. To fix this problem, the system needs to change at its core. Financial aid must be visible at a much faster rate. Since financial aid is need based this can be done before the student has decided on a school so they will know how it will affect the prices of the schools they wish to apply to. The system needs to be more user friendly to allow people to understand what costs will lie ahead of them and give them a path in order to achieve their goals and get a degree. The only thing in the way of reform is the current position colleges are in, they have the power and obviously don’t want to lose it. The United States would need to regulate the colleges and expedite the financial aid process if they want to prioritize higher education.

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AICUP Student Aid Advocacy Day Tomorrow!

We’ll be headed to Harrisburg tomorrow for the Association of Independent Colleges and Universities of Pennsylvania (AICUP) Student Aid Advocacy Day. Please follow our live posts on Twitter (@CSC_Cubed)! We’re asking for more aid for middle income students – here’s our advocacy letter:

Lobby Day Material

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Ohio Works to Make College More Affordable

John Carey, the Chancellor of the Ohio Department of Higher Education, has written a guest column outlining the steps that the Buckeye State has taken to make college more affordable.

Ohio has increased spending on higher education by 8.5% and frozen tuition and fees at state supported schools for two years. Additional money has been appropriated to help underprivileged and under-represented students pay for tuition at community and four year colleges.

One of the biggest sources of increased debt for college students is not graduating on time. Ohio has tried to address this by devoting resources to helping students get college credit in high school and to creating guidelines for more skilled counselors to keep students on track for a four year graduation once they are in college.

For more details on the Ohio plan please see the article.

 

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New Data on Colleges!

The Federal government has released new data on American colleges in an effort to help students choose where they want to study. According to Inside Higher Education

These new data show publicly, for the first time, the share of a college’s former students who make some progress in paying down their federal loans within the first three years after leaving college. And they provide the first comprehensive look at how much students who receive federal loans and Pell Grants end up earning after they leave a specific college, both in the short term and long term.

The College Scorecard is available at https://collegescorecard.ed.gov/

 

 

 

 

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529 College Plans No Longer Face Demise

Recently President Obama announced a plan to end the tax breaks associated with popular 529 college savings plans. According to the New York Times

The idea was to end one tax break…and plow that billion-dollar savings over 10 years into a far larger expansion of another tuition tax credit aimed more squarely at the middle class.

However, President Obama came under fire from House Speaker John Boehner, former Speaker Pelosi, states and other politicians for ending what is perceived as a middle class tax break.

The opposition has caused President Obama to drop the idea. According to a White House spokesperson

“Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the president’s broader package of tax relief for child care and working families”

Obama Relents on Proposal to End ‘529’ College Savings Plans

 

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The Rise in Tuition Is Slowing, But College Still Costs More

by Shae Spicer

The costs of tuition and fees to attend college have been rapidly increasing for years, even decades, but this increase may be slowing according to data from recent years. This news comes as a relief to students and families who are struggling to find ways to make the investment in paying for a college education. However, even though the increase in sticker price to attend college is slowing, there is a rise in what students are actually paying when you subtract the financial aid they receive.

Although even in the most recent years tuition and fees are still going up from year to year, the rise is much smaller than in the growth in past years. Both public and private four-year institutions have seen the effects of the slow in the rise of the sticker price to attend in the past year because they have both seen the smallest one-year percentage increase of the tuition and fees in decades. However, the net prices of what students and families actually pay to attend college minus all of the forms of financial aid they receive have been increasing more and more in recent years because the growth in financial aid has not been keeping up with the increase in tuition prices.

The average net price that students and families paid was actually much lower at the height of the recession than it is now when some families are still trying to recover from the recession because there is no longer a rapid increase, but a decline in the amount of grant aid supplied by states and the federal government while tuition and fees prices are still going up each year. Some families are able to pay for a postsecondary education with no problem, but many students and families nowadays rely on subsides to pay for a college education. Although financial aid is obviously still present, it is no longer increasing by any substantial amount like it was in previous years during the recession.

Pushing for more financial aid from the states and federal government may not be the answer though, because it will only temporarily bail families out since the net prices of colleges are still likely to increase from year to year. The real problem that needs to be addressed is for college leaders and policymakers to evaluate what it really costs to supply a college education, and how to overall sticker price, therefore lowering the net price for students and families.

http://www.usnews.com/news/articles/2013/10/24/the-rise-in-tuition-is-slowing-but-college-still-costs-more?page=2

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Pay It Forward, Pay It Back

by Mike Ciaverelli

Oregon proposed a program that would allow students to attend state colleges tuition free. This proposal, called the “Pay It Forward, Pay It Back” program would have students go through their higher education without the stress of taking out loans and racking up a lot of interest and massive debt. They would do this by paying the state back a small portion of their income over the course of about 20 to 25 years. After graduating, the student would pay 0.75% of their yearly income per year of schooling. This means a 4 year student would end up paying 3% interest for the time that they are paying. This interest would be put into a trust fund that would help other students in the future.

There are some problems with this proposed plan. One problem is the massive cost that the states would have to pay to start this program. Washington looked into the feasibility of this plan for their state and determined that it could cost as much as 1.4 billion dollars a year. Also, because the payment plan is based on the income of the students after they graduate, it may drive the top students away from state schools if they believe that a portion of their possibly higher income will be taken away from them over the next 20-25 years.

Although this plan is not perfect, it may be a step in the right direction to help students pay for their education without amassing a large amount of debt.

White, M. (2013, July 17). Oregon’s ‘Pay It Forward’ Program: Imagine College with No Tuition, No Loans, No Debt. Retrieved September 23, 2014, from http://business.time.com/2013/07/17/oregons-pay-it-forward-program-imagine-college-with-no-tuition-no-loans-no-debt/

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IBR and the Need for More Help

by Brianna Englert

The income-based repayment program is a great response to the difficulties people face when pursuing a career in public services where usually a college degree is mandated.  A low income and high student loan truly brings out the question whether or not college is worth it? With this program capping the percentage of one’s income one can pay on student loans leans the answer towards yes; however, only federal loans are covered. Often the cost of education causes many students to take out private loans with high interest rates and there really is not much help for those people. Articles about people suffocating in their student debt and retirees losing financial stability because of student loans still have the worth of college being questioned.

Education is key. Education is the most consistent way to create a financially stable life and possibly family. The lottery is always a fall back. In order for America to retain its image in the world it needs to be filled with educated citizens furthering, promoting, and expanding its economic success.  The government needs to be aiding younger generations with programs such as the IBR. They also need to do more because the importance of furthering education should not be competing with a price. High school graduates should not be wondering, “is college worth it?”

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PA Governor Corbett Won’t Support Budget w/out Ready to Succeed Scholarships

Steve Esack of the Allentown Morning Call reports that House Republicans in the Pennsylvania legislature are proposing a “bare-bones $28.6 billion ‘budget scenario'” for 2014-15. The plan is a response to a projected $1.3 billion budget shortfall faced by the Commonwealth by the end of the next budget cycle.

Among other things the House GOP proposal includes

Five percent cuts in all state departments — with the exception of reductions to basic education, special education, preschools, state-funded universities and the state’s college loan program.

According to Budget Secretary Charles Zogby, Governor Corbett

does not support a bare-bones budget that removes proposals he made in February to spend $400 million more for public education, create a $25 million college scholarship for middle class students and $5.4 million more to reduce the waiting list for disabled adults to find community-based homes.

CSCubed applauds the House GOP plan’s preservation of existing funding for education. However, with college tuition and student debt both undergoing dramatic increases we stand with Governor Corbett’s proposals to raise education funding. We are particularly supportive of the $25 million Ready to Succeed Scholarship (RTSS) program. RTSS has been CSCubed’s #1 priority for the past two years. For more information on RTSS please click here.