Sara Goldrick-Rab - Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream

There is a new economics of college in America. In the past, students and families who worked hard stood a real chance of attaining a college degree, a ticket to the good life. But then the world shifted. Today, the promise of a college degree in exchange for hard work and dedication no longer holds true. Instead, students encounter a price so high that it has changed what it means to attend college.

Unfortunately, many people dont know this. Millions enroll in higher education with plans to work, borrow, and save, only to find that their funds still fall short. Even living on ramen, doubling up with roommates, and working a part-time job isnt enough to make ends meet. Many who start college cant afford to complete their degrees. Others take on huge debt that either they cannot repay or limits their future opportunities. And this is occurring at a time when diplomas matter more than ever.

What happened? Just as Americans decided that college was essential, states began spending less on public higher education and the price of college rose. At the same time, the financial aid system, long intended to make college affordable, failed to keep up with growing student and family need. Student loans became the stopgap. And, to make matters worse, for nearly 80 percent of the public, family income declined.

What does this mean for students facing the new economics in public colleges and universities? How are they managing to make it through higher education today, and where are they falling short? This book is the result of my six-year-long effort to find out. As you will see, the statistics and stories make one thing quite clear: college students are paying a hefty price.

At dinner tables around the country, families talk about the cost of college. Usually, they speak of tuition and fees, which have been steadily rising over time. The other costs of college, those that come with books and supplies, transportation, housing, and food, have also grown. This is true across public higher education, at two-year and four-year schools alike. As

Figure 1 . Trends in average tuition, fees, room, and board in the public sector, by college type: 19742014. All figures are constant 201213 dollars. Room and board for two-year colleges is estimated in the College Board report and figures are in the underlying data provided in the Download Data link. Source: adapted from Ma, et al., Trends in College Pricing: 2015, table 2: Tuition and Fees and Room and Board over Time.

In 2013, middle-income families earned about $64,000 per year, a decline of 5 percent over the prior decade. Families in the bottom fifth of the income distribution had earnings of about $16,000down 8 percent.

Figure 2 . Percentage change in mean family income by quintile: 19831993, 19932003, and 20032013. Income is reported in constant 2013 dollars. Source: adapted from Baum and Ma, Trends in College Pricing: 2014, figure 22A: Changes in Family Income over Time.

The financial aid system was built to help with these challenges by offsetting the price of college for financially constrained families, thereby making college affordable. Grants, loans, work-study, and tax credits areat annual cost of almost $240 billionsupposed to lower the official cost of attendance to a manageable price based on assessed financial need.students. Soon, nearly ten million people will receive Pell support each year.

But financial aid is falling far short of expectations. Even community college, an institution most think of as free, is no longer actually free for Pell recipients. Consider some bottom-line numbers for low-income families. Students from families earning an average of just $20,000 a year are required to pay at least $8,000 for a year of community college and more than $12,000 a year at a public university. That net price is the cost after all grants (including the Pell and state and institutional grants) are subtracted from the cost of attending college.

The hard truth is that while financial aid reduces the ever-increasing cost of college, more often than not it still leaves families expresses the average net price of a year of college as a percentage of family income. It depicts substantial growth over time in the burden of paying for college. In 1990, only the poorest quarter of American families had to pay much more than 20 percent of their annual income for higher education. Today, 75 percent of families pay at least that muchafter all grants are distributed! And when it comes to the group that this financial aid system was designed to help the mostthose families earning an average of $16,000 per yearthe net price of college now amounts to a whopping 84 percent of their income.