Originally created 05/06/02

College costs outpace family income

Betty Luz Morales is one in a long line of students to prosper at City College of New York, a pioneering public university that has opened doors for working-class Americans and immigrants since 1847 and counts Colin Powell and Jonas Salk among its alumni.

Morales, a junior from the South Bronx, says the $1,854-a-semester tuition plus state and federal grants, a 20-hour-a-week job and $4,000 in student loans are worth the price: "A high school diploma will get you somewhere, but it's not going to get you where you want" - in her case, a degree in physical therapy.

Financially her case is one in a long line, too: Soaring tuition costs since 1980 have outstripped rises in family income and government aid, making college less affordable for most families and causing them to go deep in debt, a new study finds.

The National Center for Public Policy and Higher Education, a California think tank chaired by former North Carolina Gov. James Hunt, concludes that:

- Tuition increases since 1980 claimed a bigger share of income for all but the top 20 percent of families. Lower-income students are most hard-pressed, with tuition to a public university consuming 25 percent of family income compared to just 13 percent in 1980.

- Low-income students carry $12,888 in student loans on average, up almost 70 percent from their student loan debt levels in 1980 when inflation is taken into account.

- Federal financial aid has been transformed since 1980 - with little debate - from a system of needs-based grants to one dominated by debt. Student loans now account for 59 percent of student aid versus 41 percent for grants - the exact opposite of debt-to-grant ratios two decades ago.

- Tax breaks including Hope tax credits, tax-free 529 college investment accounts and the like are transforming student aid again but are too new to know their impact. Skidmore College economist Sandra Baum of the national center board notes these tax breaks are targeted to better-off families who can afford to save, not less-well off families who may not pay income tax to get those tax breaks. They still rely on grants and loans.

- The states and public colleges have cut higher-education budgets and raised tuition during recessions over the past 20 years.

That pattern is repeating itself coast to coast during the current downturn, prompting national center President Patrick Callan to urge states and public colleges to give more weight to student and family needs.

His call is timely: The tuition component of the Consumer Price Index rose 6 percent in the 12 months ended in March while overall inflation rose just 1.5 percent. But the situation is about to get worse: President Bush wants to squeeze $1 billion from the federal deficit by preventing students from consolidating federally-guaranteed loans - a move that would add $5,300 interest to the typical $20,000 student debt load, while public colleges pinched by state budget woes are approving tuition hikes for fall:

- The University of North Carolina at Chapel Hill approved a 21 percent hike for in-state tuition to $2,814. That comes atop a 25 percent hike for the 2001-02 school year.

- Iowa's three public universities will raise the cost of attendance by 19 percent next fall and are considering capping enrollment and cutting staff to hold down costs.

- When Virginia lawmakers cut higher-education spending 12.5 percent and ended a six-year tuition freeze, University of Virginia raised in-state tuition 8.8 percent. Rector John Ackerly said the school had no choice but "to make up for lost time."

- Tennessee's ongoing budget crunch could cause $90 million in higher education cuts, causing faculty defections and student protests after tuition rose 15 percent last year.

When protests fell short, students from Tennessee's 21 state colleges and universities staged a bake sale complete with brownies and brass band on the Capitol steps in Nashville and presented the state with a $247 check. Gov. Don Sundquist thanked the students for more higher-education money "than the General Assembly has passed."

"You'd think politicians would understand the payback from investing in higher education when college-educated Tennesseans earn almost twice as much as high-school graduates - and have more money to pay taxes to support our schools," says Betsey Kirk, a Chattanooga finance major at University of Tennessee-Knoxville who instigated the bake sale.

"Losing Ground's" 20-year look-back confirms the cumulative wisdom of yearly reports from the College Board and others that tuition sticker schock is producing a scramble for financial aid among college-bound students and their families.

The College Board, for one, is holding town meetings around the country to discuss financial aid's changing face and search for ways to make sure good students aren't priced out of the market. Board President Gaston Caperton, a former West Virginia governor, says the board's eventual recommendations on what to do about the unintended "drift" toward student debt will be forwarded to President Bush and Congress for action.

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