College Costs Are Up Again - part 2

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At the same time, college costs are far outpacing the average U.S. family’s ability to pay. In 2009, the average family income was 11 percent lower than it had been a decade earlier for families with incomes in the bottom 20 percent of incomes in the U.S. , and 5 percent lower for those in the middle 20
percent of incomes , the College Board said.

There has been a significant shift in the way public higher education is being financed as a result of state budget cuts, said Terry Hartle, a senior vice-president of the American Council on Education, in a telephone interview. There are 19.5 million students currently enrolled in higher education, about 80 percent of whom attend public institutions, he said. In the last two years, almost every state has cut funding for higher education, while at the same time enrollment in higher education has ticked up steadily, he said. This year, the federal government provided $150 billion to colleges and universities, while the states provided only $75 billion, a funding model that is different from years past, he added.

“The general approach to public higher education in the U.S. for more than a century has been low tuition to encourage all students to enroll, but what we are now starting to see is a shift to high tuition with
moderate amounts of student aid to offset high tuition for low-income students,” Hartle said. “It’s a fundamental change in the pricing strategy for public higher education and is almost entirely driven by uncertain funding levels from state governments for higher education.”

Grants and tax breaks managed to lower the average net price at four-year private
institutions by $16,000, bringing the average actual cost to $11,293 at private four-year institutions, the College Board said. At four-year public colleges and universities, students on average receive about $6,100 in aid, lowering the average annual tuition to about $1,505 a year.
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