Most students can’t afford cost of 4-year or 2-year colleges

Recent loan relief helps millions now, but the future looks murky for higher education unless changes are made, including doubling the Pell Grant, says NCAN's Kim Cook.

The average student can only afford to go to 24% of four-year institutions of higher education in the United States. They can only make 40% of two-year colleges work financially.

According to the National College Attainment Network, the affordability gap is around $2,600 for bachelor’s degree paths and $900 for associate degrees. That is part of the reason why the numbers on completion are still not great nationally and why, if there isn’t more relief, they might get worse.

“Those numbers are clearly moving in the wrong direction,” says Kim Cook, chief executive officer at NCAN. “We’re getting fewer and fewer that even meet at 24% to 40% of affordability test. This is the student who does everything possible–works that summer job, uses the entirety of that towards college, continues to work, takes the amount of a subsidized federal loan, applies for and receives state aid. You name the box, they’ve checked it. They’ve pursued all the avenues to find aid. That’s why we talk so much about Pell Grants.”

NCAN has been a strong proponent of doubling the Pell Grant, a promise made early on by the Biden Administration and one that the president included in this year’s fiscal budget, although it would happen in increments and not come to fruition until 2029, if it does at all.

“He has made good in his budget documents, not yet made good in the money in the appropriations, but he has indicated his commitment to double the Pell Grant,” Cook says. “We’re glad someone is having that conversation. It feels like forever away, but it will be here before we know it.”

While tens of millions of borrowers are in line to get big relief under Biden’s recently released student loan forgiveness plan ($10,000 in cuts, plus another $10,000 for Pell recipients), that targeted benefit won’t help future generations. The cost of a college education continues to rise while family wages largely have not kept pace. Inflation is another factor socking families in a number of areas – housing, food, and yes, college, too. Many institutions that raised tuition after remaining level during the pandemic decided to increase costs because of it. Meanwhile, questions around value, not of a degree but the cost of it, are growing.

“I don’t want to say this is the evil empire of colleges running amok,” Cook says. “I do appreciate as a leader of an organization that there are external factors: staffing for the cafeteria, supplies for your offices, travel for new employees, all of those things going out. I think we do need to ask why as a sector, it seems increases are outpacing other sectors. Where we’ve been asking a lot of questions is, what’s their performance? Are students really getting a return on investment? So if I send Kim to this institution, she’s about 70% likely to complete, but if you send Kim to that institution, she’s about 40% likely to complete. We’re getting a lot smarter about looking at institutions that serve students well, that support them through completion. It’s much more affordable to complete than to not complete.”

More from UB: A state-by-state look at FAFSA filings and two huge trends

Although public institutions continue to show far lower tuition costs than private nonprofits, many privates offer huge financial breaks and scholarships for those who attend who might be from a lower-income or middle-class family. Still, the perception is often that many are still too pricey and some aren’t exactly welcoming to large groups of Pell students. While Harvard offers big aid to incoming students, its Pell numbers are barely above 10%.

“There are a lot more than 11% of students who are Pell Grant recipients who are probably admissible to a highly selective,” Cook says. “But it’s harder work to recruit a student from a lower-income high school or area. They may need more support when they get to campus. They probably need more financial aid to consider enrolling and being able to pay that bill. Those selectives could and should do a lot more to enroll more Pell Grant recipients. Of the aid they give, there’s need-based aid and then there’s this hazy tuition discounting. Our other hope for many of these selectives and privates who have the funding is that they would focus their financial aid on need-based aid. That doesn’t happen everywhere.”

Because of the Common App and other factors, more students who are Pell eligible have in the past few years taken a stab and applied to highly selectives. That’s led to higher acceptance of that pool at some institutions, although Cook said there might be another change at play, too, besides the Common App.

“Some of the very recent upticks, particularly the highly selectives, I think were a function of test-optional policies that came in during the pandemic,” she says. “It will be interesting to see how many of those stand the test of time and if any of those in fact do change the makeup. I’m eagerly awaiting five years from now. What’s the trend? Who enrolled? Who completed? More students did apply because they thought, sure, I’ll give it a try. I’m not going to be automatically subjected to a cut score or some minimum number, so maybe they’ll have a look at me now.”

For some that do get in, the cat-and-mouse process of affordability begins. That’s true at most institutions for most students. Can they really afford it or not? Some realize, before they sign on or once they’ve been on campus, that it just isn’t feasible.

“Some of them say, I tried. I did everything right. I can’t make it work. I’m going to get a job,” Cook says. “The ones who are fortunate to have good advisors may say I can’t afford the four-year, but I’m luckily in the group that can afford the two-year. They can take classes that will transfer. They can do a little more saving. And some students say I’m going to go for it. The numbers are not in my favor, and I know that this aid offer says I’m going to have to come up with $2,600 a year, but I think I can find it. The second semester comes, and the bills keep coming, they run out of steam and they have to leave. They’ll probably leave with debt and no degree to show for it. That’s the ultimate worst-case scenario.”

Part of the affordability equation is filling out the FAFSA. College renewals were down by 9% at last check in late June. They have risen among high school seniors, but largely only because Texas and Alabama required them. “For a good part we were trailing,” Cook says. “Then there was a bit of a rally at the end.” However, Cook put the positive upswing in context, saying that a small rise in FAFSAs coming off a down year still doesn’t recapture the numbers of FAFSA occurring before the pandemic.

Even with the aid, currently not near Double Pell numbers, it hasn’t been enough. That’s why 43 million people are getting relief and why that forgiveness still won’t eliminate all $1.7 trillion. Even if it were to be paid off, where does that leave the next generation of students?

“The reason you hear NCAN talk so much about doubling the Pell Grants, or strengthening the Pell Grant in general, is because we don’t want to be back in this position in X number of years, where we again have students struggling with unmanageable debt,” Cook says. “And then we say, how do we relieve that?”

The best institutions, while trying to remain affordable as they wait for further word on Pell, are going above and beyond for students in other ways. “They’re really committing to the students that they accept, and saying we know you may need developmental education, supports for mental health and there’s a variety of pieces here. We’re going to schedule in a way that support students who have jobs.”

Chris Burt
Chris Burt
Chris is a reporter and associate editor for University Business and District Administration magazines, covering the entirety of higher education and K-12 schools. Prior to coming to LRP, Chris had a distinguished career as a multifaceted editor, designer and reporter for some of the top newspapers and media outlets in the country, including the Palm Beach Post, Sun-Sentinel, Albany Times-Union and The Boston Globe. He is a graduate of Northeastern University.

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