For Adults


Frequently Asked Questions About Paying for College


Questions About Tuition Prices:


Q. Media reports seem to indicate that the cost of college, even with financial aid, is becoming prohibitively expensive for most American families. Is this true?

A. It's true that college is certainly a significant investment. At four-year colleges, almost 70 percent of four full-time undergraduates pay less than $8,000 a year for tuition. The average tuition at a public community college was $1,735 this academic year (2002-03). When you factor in the various forms of financial aid (grants, loans, and work-study) that figure is even smaller. Even the most expensive schools provide an enormous amount of financial aid. The most critical point is that, while a college degree can be expensive, when families know all the resources that are out there to help them, they usually can find a way to make it happen.


Q. Tuition prices keep rising. Isn't that because colleges have a monopoly and can just charge whatever they want?

A. While tuition went up significantly in the 1980s and early 1990s, when state support for higher education remained strong in the late 1990's the increase stabilized at about 5 percent. The economic down turn coupled with recent cuts in state budgets and higher education appropriations have resulted in increases in 2002-03. Even so, college administrators are still working on innovative ways to further cut costs and minimize annual tuition increases.

Tuition rises because colleges' costs increase and, in some cases, because of cuts in government funding. For example, in the past 15 years, when the federal government has curtailed its spending on grants and assistance, private colleges have had to triple what they spend on student assistance from their own funds. So tuition goes up, but financial aid is going up as well.

At public colleges and universities, studies have shown a direct correlation between increasing tuition and decreasing state appropriations. Increases in enrollment also contribute to rising tuition prices. More students require enhanced facilities -- dorms, labs, computer centers. These, too, contribute to rising costs. Colleges that wish to remain competitive must have the latest technology, which is a constantly rising expense and one that was not a factor for schools 15 to 20 years ago. Maintaining a strong technological infrastructure for dorm rooms and classrooms is putting a strain on college budgets. Yet no college can afford to go very long without doing so and still expect to be competitive. In addition, increasing government regulations are very costly for colleges, as they must pay for legal help and the cost of administration to comply.


Q. How much has tuition risen over the past 10 years?

A. Nationally, tuition at four-year public colleges rose by 38 percent, adjusted for inflation, over the last 10 years; four-year private college tuition rose by 37 percent over the same period.


Q. Can only the most elite in our country attend college?

A. Not at all! Sixty-six percent of high school graduates go to college immediately, and many more ultimately attend college. Nationally, about 20 percent -- that's one in five -- of traditional-aged undergraduates come from families with income of less than $25,000 per year. The United States leads the G-7 nations in college degree completion; 24.4 percent of Americans ages 25 and older have college degrees.


About Financial Aid:


Q. Many parents fear that financial aid is only for the poor and that the middle-class gets left out. Is that true?

A. Actually, there are many resources available to parents of middle-class students. With grants, scholarships, and low-interest loans, more than half of families with income of $50,000 or more receive student aid each year. A total of $89 billion is available to students in grants, scholarships, low-interest loans and tax credits.


Q. What percentage of this $89 billion is in loans?

A. Of the $89 billion in aid available to students, low-interest loans account for about 54 percent and grants 39 percent.


Q. What should parents do if they have a young child and want to begin saving for the child's college education?

A. First, congratulations on starting early! Because, while it is possible to pay for an education when you haven't saved for it, it is infinitely easier with financial planning. Many parents are surprised to discover how little they really need to put aside on a monthly basis to save for tuition costs. Parents should consult with a reputable financial advisor who can guide them through the process of saving for education. There are tax ramifications and other complexities with which parents need to be familiar. In addition, many states, universities, and consortia of universities offer tuition savings and pre-payment plans, which frequently are worth investigating. There are variations depending upon the state offering the program, and there may be tax liabilities associated with some of the programs. Some colleges and universities offer pre-payment programs of their own. These programs allow you to pay a lump sum to the college just before the student begins attending college, or even years before the student is ready to attend college. Parents also should become familiar with the education tax benefits, such as the Coverdell Education Savings Account, Hope Tax Credit, and Lifetime-Learning Tax Credit.


Q. Why should parents save for their child's college education when they will just be penalized for having done so when applying for financial aid?

A. It is true that those who have savings will be expected to contribute more toward their children's education than those who do not. However, the formulas for determining this contribution count employment income far more heavily than savings, so the difference is usually not substantial. Furthermore, a family that saves will have the funds necessary to meet their expected contribution, while a family that does not save may have to borrow, with interest charges more than making up for their smaller expected contribution.


About General Statistics:


Q. What is the average tuition for a four-year college?

A. For the 2002-03 academic year, average tuition charges for full-time undergraduates before student aid was deducted were as follows:

Public Community College
(two-year, AA-granting)		 $1,735
Public University
(four-year, BA-granting)*		 $4,081
Private College or University
(four-year, BA-granting)		 $18,273


Q. What percentage of students receive grants?

A. Forty-four percent of college students receive grants on an annual basis, and the average amount received is nearly $3,500. On average, grants cover about one-third of tuition and about 20 percent of the total budget for full-time students.


Q. What percentage of community college students receive aid?

A. At community colleges, nearly 38 percent of the students receive aid, and the average amount received is over $2,300. Average tuition at community colleges is $1,735 per year.


Q. What percentage of students receive aid at four-year public institutions?

A. At four-year public institutions, 62 percent of students receive aid, and the average amount received is over $6,200.


Q. At private colleges, what percentage of students receive aid?

A. At private colleges, 76 percent of students receive aid, and the average amount received is almost $11,600.


* This figure is for in-state students. Tuition charges for out-of-state residents typically are higher. Approximately 14 percent of students at public four-year colleges pay out-of-state tuition rates.