There is a growing perception that college is unaffordable for most Americans. It is true that the price of college—particularly the “sticker price”—is rising more rapidly than other prices in the economy. It is also true that incomes are stagnating or declining, while unemployment remains distressingly high.
But if college really is unaffordable, how can enrollments be skyrocketing? More and more people are choosing—and managing—to pay the price of a college education. A few facts and a more nuanced look at the topic could help dispel the exaggerated myth of unaffordability.
First, prices vary widely among the thousands of colleges and universities in the United States. In 2010-11, the average price of a full-time year at a community college was $2,963. For in-state, public, four-year colleges, the price was $8,244. According to the College Board’s Trends in College Pricing 2011, the approximately 20 percent of students enrolled in private, nonprofit, four-year institutions face sticker prices averaging $28,500.
Second, while four-year college students can expect a median price tag of $9,900, 15 percent of these students will pay less than $6,000. (For the 15 percent at the other end of the spectrum, the average is $30,000 or more, according to the college pricing report.)
Third, these published or “sticker” prices do not represent what most students actually pay. Data from a 2008 National Center for Education Statistics study show that two-thirds of full-time students receive some form of grant aid. Considering grant aid from all sources and federal tax credits, full-time community college students receive, on average, enough assistance to cover all their tuition with some left over for books and other expenses. The average net price is about $2,500 for public four-year college students and $13,000 at private, nonprofit, four-year colleges, according to the College Board data. That’s a big difference from the “sticker price.”
Against this background, it is constructive to ask what “unaffordable” really means.
Most people do have to make sacrifices to go to college. There are certainly some people who are motivated and could benefit from higher education but simply cannot piece the funds together. Combined with their work and other responsibilities, college and its costs would be too much. It is important that we work to address the problems these people face. But fortunately, they are a relatively small minority.
There is also the question of debt. It is not reasonable to define an “affordable” college education as one for which someone can pay out of pocket at the time of enrollment. College is an investment in the future, paying off in the form of better opportunities. College graduates have greater likelihood of employment, higher earnings, good fringe benefits, and other quality-of-life and citizenship outcomes. It’s true that too many recent college graduates are unemployed or underemployed. But many more who did not attend college are in that unfortunate situation, and are less likely to escape it quickly.
Because college is an investment that pays off over time, it is reasonable to pay for it over time as well. No one thinks a house is unaffordable simply because it requires a mortgage. No one thinks a small business is untenable because it requires a bank loan. Why, then, should people think college is unaffordable just because it requires borrowing?
About two-thirds of bachelor’s degree recipients graduate with debt, averaging about $25,000. Some students borrow much more, and many of them struggle. But most borrowers will be fine, especially in light of the government’s income-based repayment plan, which calculates payment amounts based on a graduate’s earnings. A meaningful definition of college affordability has to include not just resources available at the time of enrollment, but resources likely to result from the investment.
People believe college is unaffordable because they see headlines about the most expensive colleges and largest tuition increases. They don’t understand how much aid is available from federal and state governments, not to mention institutions. Higher education’s complex pricing system, makes it easier for students to respond to sticker prices than to net prices. Moreover, people tend to think of living expenses as part of the price of college, even though they would still have many of these expenses if they were not in college.
Ultimately the concept of affordability is subjective. Some are perfectly willing to scrimp and save to pay for education. Others resent having to pay for something they believe is their right. And visualizing the high expected return is made more difficult by the reality that this very promising investment is, like many investments, uncertain. It does not always pay off immediately and does not pay off for everyone. The visibility of the minority of students for whom the decision to go to college (or at least go to their particular college) turned out to be questionable creates an exaggerated impression of the risks.
College presidents can help dispel the myth that college is affordable for only the privileged few by avoiding defensive responses to questions about high or rising prices and by clarifying both the reality of the price of college and the lifelong benefits their graduates enjoy.
Sandy Baum is a senior fellow at The George Washington University Graduate School of Education and Human Development and a consultant to the College Board.