7 Things Every Parent Should Know About College Prices and Debt
7 Things Every Parent Should Know About College Prices and DebtMaria Eugenia Alcon-Heraux, Director, Media Relations
As a parent attending the Trends in College Pricing and Trends in Student Aid event at Forum 2015, here are a few findings in the report that caught my eye.
- The net price — which is what you actually have to pay after getting scholarships and grant money — is $26,400 for a private college, $14,120 for an in-state public college, and $7,160 for a two-year community college. You should have started saving yesterday.
- “Room and board prices at public institutions went up faster than tuition over time,” said Sandy Baum, senior fellow at the Urban Institute and research professor of education policy at the George Washington University Graduate School of Education and Human Development. This means parents may want to think about sending their child to a public university closer to home and delay being an empty-nester if they want to save money.
- Student borrowing continued to decline for the fourth year in a row. Wait, what? Actually, it’s not what you think. Technically, fewer people who need to borrow money are applying for college. It doesn’t mean we are all fine and need to borrow less to pay for college.
- Some good news for parents: The total borrowing from the PLUS program for parents of undergraduate students fell by 9 percent ($1 billion). This means more money for retirement, which is something we all need.
- The highest-income sector has the most college debt. In 2013, households in the top quartile of the income distribution held 47 percent of outstanding education debt, and those in the lowest-income quartile held 11 percent. But there is more behind those numbers. “People who are in the bottom quartile didn’t go to college, or if they went, they didn’t stay very long and they didn’t borrow a lot of money,” said Baum about the income versus debt data.
- The longer it takes to finish college, the more debt students have. Make sure your kids graduate on time and you’ll reduce their (i.e., your) debt.
- “Everyone is feeling the pain,” said Baum. “The problem is that incomes have not risen, so when tuition rises, it makes it harder for families to pay for college.” Add to that the fact that financial aid is not keeping up with the tuition increases so families are having to come up with more of the money themselves, and you’ve got the state of college costs in a nutshell.