Survey Says: Families Perceive College Costs as Increasing by 17% Compared with Last Year
August 09, 2010
Families reported that about a fifth to a quarter of college costs came from grants and scholarships (19% at public 2-year colleges, 21% at public 4-year colleges and 27% at non-profit 4-year colleges), meaning that average out-of-pocket costs after subtracting grants and scholarships were $8,069, $17,148 and $33,578 at public 2-year, public 4-year and non-profit 4-year colleges, respectively. This contributes to an ongoing shift of enrollments from non-profit colleges to public colleges and from 4-year colleges to 2-year colleges, especially among lower income families.
A previous report by the Advisory Committee on Student Financial Assistance (ACSFA), The Rising Price of Inequality, found that increases in out-of-pocket costs lead to greater family concerns about paying for college, causing a shift in enrollment from public 4-year colleges to public 2-year colleges which in turn resulted in a decline in Bachelor’s degree attainment among low and moderate income families.
Among the families that attended the more expensive colleges, parent income and savings accounted for the bulk of the difference in funding, with $17,258 at non-profit 4-year colleges compared with $7,838 at public 4-year colleges and $3,831 at public 2-year colleges. This was followed by student and parent borrowing, which totaled $9,796 at non-profit 4-year colleges, $5,466 at public 4-year colleges and $2,101 at public 2-year colleges. Thus family financial strength has a significant influence on where students enroll.
Families who did not borrow to pay for college attended colleges that cost $5,675 less than families who borrowed, $21,607 compared with $27,281. While the $12,549 in average parent and student debt enabled the families to enroll in more expensive colleges — with four out of five families who borrowed attending 4-year colleges (82%) compared with two out of three families who didn’t borrow (66%) — the families who didn’t borrow spent $5,441 more from student and parent income and savings, $13,569 compared with $8,128. The grants and scholarships received by both families were similar, with $5,456 among the families with no debt and $5,975 among the families with debt.
Cost played an increasingly important role in the college selection process. 40% of families eliminated colleges based on cost after receiving the financial aid packages this year, compared with 36% last year and 34% two years ago. 63% eliminated colleges based on cost at any point in the selection process, compared with 56% last year and 58% the year before.
83% of families viewed college as an investment in the student’s future, with 60% willing to borrow rather than not go and 60% willing to stretch financially. 71% said that having a college degree is more important now than previously and 52% said that college is definitely worth the cost.
14% of families rated student loans as not at all acceptable, compared with 17% for mortgages and car loans, 24% for home equity lines of credit, 44% for retail purchases on credit, 46% for cash advances and personal loans, and 52% for credit card debt.
72% of families completed the FAFSA. Lower income families were more likely to complete the FAFSA, with 85% of those with family incomes under $35,000, 79% of those with family incomes of $35,000 to $50,000, 71% of those with family income $50,000 to $100,000, 70% of those with family income $100,000 to $150,000 and only 50% of those with more than $150,000 in income. Of the 28% who did not complete the FAFSA, 37% said that they didn’t think they would qualify for student aid, 34% said that they did not need financial aid, 13% were unaware of the FAFSA, 4% missed the deadline, 3% were not US citizens and 9% gave other reasons (e.g., too complicated, privacy concerns, waiting on tax information and parents refused to complete the form).
The How America Pays for College survey findings are based on telephone interviews of 801 undergraduate students age 18-24 and 823 parents of undergraduate students age 18-24 who had been enrolled in academic year 2008-09. The survey was conducted from March 24, 2010 through May 3, 2010. The survey results are statistically significant with a confidence interval of +/- 3% (4% for student-only or parent-only questions) at the 95% confidence level.