College Board Reports Financial Aid at $105 Billion

After grants are taken into account, the net price that the average undergraduate student pays for a college education is significantly lower than the published tuition and fees. Evidence of these net prices, along with this year’s college costs and 2002-03 student aid funds, which continue to grow rapidly, are documented in reports released recently by the College Board, Trends in College Pricing 2003 and Trends in Student Aid 2003.

During the 2003-04 academic year, college tuition and fees increased an average of $579 at four-year public institutions, $1,114 at four-year private institutions, and $231 at two-year public institutions. In 2002-03, $105 billion was distributed in student financial aid—a record amount, which was $13 billion more than was distributed the previous year. Total aid per full-time equivalent student averages about $9,100 with $3,600 of that amount in the form of grants.

College Board President Gaston Caperton stressed the importance of higher education, while acknowledging rising costs: “Those who oversee America’s colleges and universities believe their institutional importance to economic recovery is undeniable, and they are, in large measure, correct. Still, all of us need to focus on the mounting and troubling hardships of financing an education.”

The College Board reports that student aid reached more than $105 billion in 2002-03, an increase of 15 percent over the preceding year, or 12 percent after adjusting for inflation. While the boost in total aid is encouraging, Caperton said that the relative decline in need-based aid is disheartening. “Higher education was meant to open doors, not to close them, and it must remain a conduit to the American dream,” he said. With 2004 marking the fiftieth anniversary of the creation of a national system of need-based aid, Caperton said: “We must take this opportunity to renew a national commitment to need-based aid. The upcoming reauthorization of the Higher Education Amendments gives us the opportunity to work toward removing financial barriers to higher education for low-income students.”

The price of college may cause concern among many families, but the costs associated with not going to college are likely to be much greater. Within each demographic group, median annual earnings for year-round, full-time workers with bachelor’s degrees are about 60 percent higher than earnings for those with only a high school diploma. Over a lifetime, the gap in earnings between those with a high school diploma and a B.A. or higher exceeds $1,000,000.

“In the United States, college is clearly an investment in the future that pays off over
a lifetime in both monetary and non-monetary terms,” said Caperton. “Students from around the globe continue to seek admittance to leading colleges and universities in the United States. These unique and often complex institutions, with proven records of exceptional teaching, creative research, and needed service to society, are envied on the international scene.”

Caperton also noted that families are getting more involved in the process of saving for college. Rapidly growing Section 529 college savings plans now contain assets of more than
$35 billion, with an average value of $6,573 per account.

“What all of us need to remember, and tell others, is that America’s future and quality of life are tied to the benefits of higher learning, to what transpires in the lecture halls and labs across the country,” said Caperton.#

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