Academic journal article College and University

Back to the Future of Financial Aid: From the Net Price Calculator to the Upcoming Prior-Prior Year Shift

Academic journal article College and University

Back to the Future of Financial Aid: From the Net Price Calculator to the Upcoming Prior-Prior Year Shift

Article excerpt

FINANCIAL AID IN THE HOT SEAT

The rate of tuition increase at U.S. higher education institutions makes it easy to understand why affordability has become a focal concern. Bureau of Labor Statistics data show that college tuition costs have increased 1,225 percent in the past 36 years ( Jamrisko and Kolet 2014)-nearly double the 634 percent increase in health care costs (the second highest increase across all reporting sectors). During this same period, housing costs increased 370 percent, food costs 257 percent, and the overall consumer price index 279 percent. To the layperson, the rate of increase for higher education tuition is extremely startling-especially because no end is in sight.

In November 2015, the College Board released its annual "Trends in Student Aid" and "Trends in College Pricing" reports for 2015. It reported a 40 percent increase in average sticker price at four-year public universities, a 29 percent increase at two-year institutions, and a 26 percent increase at four-year private non-profits-all over the past ten years (College Board 2015). However, it also found that over the same time period, the average net price (the price paid by a student after subtracting all financial aid) has not increased at these types of institutions as a whole (for-profit colleges were not included in this particular data point). This is contrary to the story told by the media and many political leaders, who routinely report on the financial aid crisis in America.

While problems with financial aid certainly exist, it is important to consider both sides of the story. The reported student loan debt crisis is a perfect example of the need to dig deeper into data analysis. The College Board (2015) found that the borrowing rate for the 2014-15 academic year actually decreased for the fourth year in a row and came in 14 percentage points lower than in 2010-11. Moreover, nearly 50 percent of the entire U.S. student loan debt in 2013 was held by families in the top quartile of income distribution (that is, families who could conceivably afford to pay off their debt), and just over 10 percent was held by individuals in the lowest income bracket. Nearly 40 percent of indebted students in 2014 owed less than $10,000, and approximately 30 percent held less than $25,000 in outstanding loans. Only 4 percent of borrowers held more than $100,000 in loans across the undergraduate and graduate sectors, yet these extreme cases are often the focus of news reports on student debt.

Regardless of opinion (biased or not) or fact checking (or the lack thereof ), there are a multitude of potential benefits related to this interest in student aid transformation. The Obama administration in particular has leveraged the conversation about higher education and implemented new policy that will reduce barriers in the financial aid process. The urgency of reducing such barriers cannot be ignored: "An estimated 2 million students who are enrolled in college and would be eligible for a Pell Grant never applied for aid, and an unknown number failed to enroll in college because they did not know that aid is available" (The White House 2015, para. 2). Students are paying thousands more tuition dollars than they should be or are missing entirely the opportunity to earn advanced postsecondary degrees. Given that access to higher education has been a legislative priority for more than 50 years, financial aid is an appropriate hot-button issue as it still hinders many students from attending college.

HISTORICAL CONTEXT OF FINANCIAL AID POLICY

Financial aid is not new to higher education. In 1965, President Lyndon B. Johnson sought to reform education as part of an effort to increase resources allocated to higher education institutions and financial aid dollars allocated to students. His goal was to increase access to and availability of the newly recognized American dream of a college education for everyone. The Higher Education Act (HEA) of 1965 earmarked more than $800 million in federal dollars to support higher education facilities, library education, training, research, continuing education, and community service (Capt 2013). …

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