So, What Will A Pell Grant Buy You In 2019?

From the College Board:  "In 2007-08, the $4,310 maximum Pell Grant equals 32 percent of the average published price at four-year public institutions and 13 percent at the average four-year private college or university."

	2007-08		2018-19
Pell Grant	$4,310		$5,995
4-Year Public	$13,469		$25,568
4-Year Private	$33,154		$62,936
Pell Grant as %age
4-Year Public	32%		23%
4-Year Private	13%		10%

Despite the significant increase in the Pell Grant over the past two years (the maximum Pell Grant increased 24% from $4,310 in 2007-08 to $5,350 in 2009-10), the Pell Grant will lose a significant amount of its purchasing power at four-year public and private institutions over the next decade, assuming a 6% rate of annual tuition increases.  

From the College Affordability Fact Sheet put out by the Obama Administration:  "Specifically, he will ensure that the [Pell Grant] award keeps pace with the rising cost of college inflation."  Many of you are probably reading this thinking "I guess no good deed goes unpunished."  My point is that while the Administration funneled as much of the CBO calculated savings as possible into Pell ($36 billion out of the $42 billion excluding money targeted for deficit reduction or to help the health care side of the ledger), there is clearly more that needs to be done "to make college more affordable."

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Anyone care to share their ideas for how to bend this curve to make college more affordable? 

This chart shows how Tuition and Fees have grown at faster annual rates (6.8%), compared to healthcare costs (4.9%) and house prices (4.0%) since 1987. 

click to enlarge

Figure 1. College tuition and fees (Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers), US house prices (S&P/Case-Shiller Home Price Composite-10 Index), and medical care costs (Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers). We start at 1987 since this is the first year in the house price index.

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This issue of affordability came up quite frequently on The Diane Rehm Show today on the Student Loan Overhaul which had the following guests: 

• Kim Clark, senior writer for U.S. News and World Report 
• William Wells, Director of Financial Aid at Wake Forest University. 
• Nina Marks, former college counselor at the National Cathedral School. She is founder of Marks Counseling Associates, LLC and the non-profit Collegiate Directions, Inc. 
• James Boyle, President, College Parents of America

Comments

[Jonathan Swain]

Re: Anyone care to share their ideas for how to bend this curve to make college more affordable?

To answer this, ask yourself one question: What incentive do schools have to lower the cost of college? ...still thinking? It may be awhile. With students virtually insulated against the cost of tuition until 6 months after they graduate, there's absolutely no reason why any school would consider lowering their costs. That is, unless they suddenly needed to compete for customers. The only way that higher education will get cheaper is if more options become available to students. Think about it. Why would I take a class where I pay $600 (or more) for some "forced tutoring"? That's all college really is -- forced tutoring. Everything you learn in a job, you learn "on the job". You have the responsibility to learn it or you're gone. Why is higher education so different? Can't I be given the option to study on my own and then take an exam to demonstrate my understanding? Why am I forced to pay for tutoring...I mean, tuition expenses, when I'm perfectly capable of learning on my own? Yes, some people will need a teacher to help them along. But for those of us that are driven to succeed (or would just like to save several thousands of dollars), we don't need someone to read for us. We're perfectly capable of doing it ourselves.