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College Costs Are Up Again - part 3

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“Grant aid and tax benefits on average have gone up fast enough to mean that what students are really paying is going up about the rate of overall inflation,” said Baum. “Once you adjust for inflation, in all of the sectors, students are paying something less than they were paying five, 10, or even 15 years ago.”

A new federal tax credit, the American Opportunity Tax Credit, part of President Obama’s stimulus legislation, has also helped make a dent in tuition bills. Families are eligible to receive a tax credit of up to $2,500. This made college more affordable for 8 million families, who on average claimed $1,700 in college tax credits in 2009, according to a report
from the Treasury Dept. released earlier this month.

“These findings do really reinforce the crucial importance of recent and substantial Pell Grant increases for students and families who are struggling to figure out how to pay for college,” said Asher in a telephone interview. “Given the challenging economic situation, Pell Grants are going to be even more important this coming year.”

More families are eligible for the Pell Grant this fall because of an increase in the minimum amount a family is expected to pay toward the cost of  college. At the same time, the
maximum federal Pell Grant students can receive increased by 16 percent, the largest one-year rise in its history, But even the maximum award only covers 34 percent of the average published tuition, fees, and room and board at public four-year colleges, and 15 percent of charges at private four-year institutions, Asher said.

“The Pell Grant makes a huge and important contribution, but it doesn’t come anywhere near to covering the full cost of going to a public four-year institution,” she said.
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