higher education - tuition, grants & loans
As college applications increase (see higher ed overview) so do tuitions – and a college education, though desirable, remains unaffordable to many Americans. To help reduce the high costs of a college degree, the federal government offers large amounts of student aid in various forms. Here's a summary of what the federal government is doing to help students.
Average tuition and fees at a 4-year public university (05-06) CB:
Average tuition and fees at a 4-year private university (05-06) CB:
Factoring in financial aid, tuitions come down some. CB
Average tuition with aid (05-06) at:
Public 4-year colleges:
Private 4-year colleges:
over the years - average tuition factoring in aid
During the 2004-2005 school year $129 billion in total aid to students plus $14 billion in private loans was served up to help reduce the high cost of attending college. Here's where the money came from:
source: CB - pdf
The Feds' role
The federal government offers various types of financial assistance to undergraduate and graduate students.
What they are: A loan is money offered to students or parents which is to be paid back after college.
How much is available: The federal government issued $56.8 billion in loans during the 2003-04 school year. Additionally, $11.3 billion in non-federal loans was awarded to students. The average amount of loans a student received during the year was $5,840 . CB
Number of students that receive loans: During the 2003-04 school year 33.7% of undergraduate as well as 39.5% graduate students borrowed money from the federal government. NCES
Types of loans FSA:
Perkins Loans: Perkins Loans award a certain amount of money to a college or university who in turn awards it to students. Each school gets a capped amount to loan out. Undergraduates can receive up to $4,000 a year and graduate students can receive up to $6,000 a year. Students have up to 10 years to repay their college. The Perkins Loan has an interest rate of 5%.
Stafford Loans: Stafford Loans are loans issued directly to students either by the Department of Education or by a bank or credit union. Undergraduate students can receive up to $10,500 a year and graduate students can borrow up to $18,500 a year. Recipients have between 10 and 30 years to repay their loans. The interest rate on Stafford Loans changes every year but during the 2004-05 school year it was 3.37%. Updates: A 2006 budget bill raised the ceiling on how much students could borrow and also set a new fixed interest rate at 6.8% (NYT). In 2009, the Education Department lowered the payment schedules for graduates in public service jobs and reduced interest rates yet more - down to 3.4% by 2012 (NYT).
PLUS Loans: PLUS (Parent Loans for Undergraduate Students) Loans are just like Stafford Loans except they are issued, as the name implies, to parents of undergraduate students. Parents can receive loans equal to their child's entire cost of attendance. Like Stafford Loans, Parents have between 10 and 30 years to repay their loans. The interest rate during the 2004-05 school year was 4.17%. Update:
The 2006 budget bill raised the ceiling on how much parents could borrow and also set a new fixed interest rate at 8.5% (it was scheduled to go up to 7.9%). NYT
What they are: Grants are money issued to students to pay for college that do not have to be paid back.
How much is available: The federal government issued $17.2 billion in grants to students during the 2003-04 school year. Additionally, states offered $6.0 billion and colleges and universities issued $23.3 billion in grant money. The average amount of grant aid a student received during the year was $3,986. CB
Number of students that receive grants: During the 2003-04 school year 27.6% of undergraduate students received grants from the federal government. 50.7% of undergraduate and 40.1% of graduate students received some type of grant money. NCES
Types of grants available FSA
Pell Grants: While there are different federal grant programs for students, such as grants for veterans and medical students, the main program is the Pell Grant. Pell Grants are usually only available to undergraduate students. During the 2004-05 school year the maximum award was $4,050 .
Federal Supplemental Educational Opportunity Grants (FSEOG): The federal government awards a certain amount of FSEOG to colleges or universities who in turn award the money to their students. FSEOG are awarded to undergraduate students with exceptional financial need . Students can receive up to $4,000 a year in these grants.
What it is: Federal Work-Study provides part-time jobs for students to help them pay for their education.
How much is available: Federal Work-Study accounted for $1.2 billion in student aid during the 2003-04 school year. CB
Number of students involved in Federal Work-Study: 5.6% of undergraduate students were involved in Federal Work-Study during the 2003-04 school year. NCES
What they are: Tax credits reduce the amount of income tax an individual must pay so they will have more money to pay for higher education.
How much is available: During the 2004-05 school year education tax benefits accounted for $6.3 billion in higher-ed financial aid. CB
Number of students receiving education tax credits: Anyone with an income under $52,000 who is paying for higher education, whether they are an independent student or a parent paying for their child, is eligible for a tax break. IRS In 2002 6.5 million people received education tax credits. IRS -download
Types of tax credits available IRS
Hope Credit: Anyone with an income under $52,000 or a joint income under $105,000 and is paying for higher education is eligible for the Hope Credit. The tuition-payer can receive up to $1,500 per student, however the Hope Credit is only available for the first 2 years of higher education.
Lifetime Learning Credit: The eligibility requirements for redeeming the Lifetime Learning Credit are the same as for the Hope Credit. The tuition-payer can receive up to $2,000 per year, no matter how many students he or she is paying for. This credit, unlike the Hope Credit, can be redeemed for an unlimited amount of years. An individual cannot claim both credits in a single year.
Where the facts are from:
CB - College Board
FSA - Federal Student Aid - the ed. department's financial aid wing
IRS - Internal Revenue Service
NCES - National Center for Education Statistics - the ed. department's statistics wing
The Advisory Committee on Student Financial Asssistance - government site
National Association of Colleges and Employers - for stats on grads going into the workforce
Random opinions and articles that caught our eye
The president of Miami U. in Ohio explains how public colleges are in a financial and regulatory pinch and how states can reverse that trend.
An NYT article explains one reason why private colleges are hiking up prices and increasing financial aid (spoiler: shoppers love a sale).
Updated August 2006
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