College price increases moderate, but reliance on borrowing still up

For students and parents, it's the first sliver of good news about college costs for several years: price increases slowed this year, growing at the lowest rate since 2001. <br/><br/>But the bad news

Tuesday, October 18th 2005, 8:15 pm

By: News On 6

For students and parents, it's the first sliver of good news about college costs for several years: price increases slowed this year, growing at the lowest rate since 2001.

But the bad news is the 7.1 percent increase at public four-year universities remains well above the general inflation rate, and drove the ``list price'' of tuition and fees at those schools to an average of $5,491, according to an annual survey released Tuesday by the College Board.

Prices at two-year public colleges, which educate nearly half of American college students, rose 5.4 percent to $2,191. At four-year private, nonprofit colleges, costs rose 5.9 percent to $21,235.

Most families don't pay the full list price, thanks to grants from the government and other sources, as well as tax breaks. Typical net costs: $11,600 at private four-year schools; $2,200 at public four-year schools, and just $400 at community colleges.

Yet students at four-year public colleges are paying an estimated $750 more than just two years ago. And while total financial aid is increasing, loans accounted for more of the growth than grants for the third consecutive year, the College Board said. Students have to pay back loans, but not grants.

James Boyle, president of the group College Parents of America, said schools and policy-makers aren't working hard enough to hold down costs. ``The beat goes on with increases in colleges costs, and parents are growing weary of the same old tune,'' he said.

Average debt for undergraduate borrowers is now $15,500 _ a figure experts consider manageable for most students, given that college graduates can expect to earn nearly $20,000 more per year than high school graduates. Still, increases in borrowing raise concerns that some students will be priced out of college, drop out, or graduate but stay away from low-paying public service jobs so they can repay debts.

``We have deserving students who are being kept out of college or have difficulty completing degrees because of a lack of money,'' said Gaston Caperton, president of the nonprofit College Board, which also owns the SAT college entrance exam.

The results come as Congress is negotiating a new version of the Higher Education Act, which would set federal financial aid policy for the coming years. A House version passed last month increases some grants, but critics say it would harm borrowers by cutting $9 billion from student loan programs.

College Board officials and university presidents devoted much of a news conference announcing the results to concerns over college access for poor students, who _ even if they have high test scores _ earn college degrees at significantly lower rates than rich students. They also criticized the proliferation of popular state programs that award college grants based on merit, not need.

``Basically, they are subsidizing the education of middle- and upper-income families,'' said William Kirwan, chancellor of Maryland's university system, citing as an example the Georgia Hope Scholarship program, which covers tuition and fees at a Georgia public university to any student with a B average.

While state spending on need-based aid has increased, merit-based aid has grown faster in recent years, College Board and university officials noted. Merit aid went from 10 percent of all state aid in 1993 to 26 percent by 2003, the most recent year for which figures are available.

Including charges for room and board, published costs at public four-year schools rose 6.6 percent to an average of $11,376. At private four-year nonprofit schools, they rose 5.7 percent to $27,465.

However, nearly half of students at four-year schools attend college where tuition and fees are less than $6,000. There is also considerable regional variation: in New England, the average published price for four-year public colleges is $7,277, while in the South it's just $4,433.