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Insights From College Board on How Families Pay College Expenses

April 4, 2013

In academic year 2012-13, the average listed price (tuition, fees, room, and board) for full-time undergraduates attending four-year private non-profit colleges and universities was $39,518, while four-year public institutions had average total listed charges of $17,860 for in-state resident students. A new analysis of family college financing patterns produced by the College Board shows how families managed to pay these expenses. The analysis, "How Students and Parents Pay for College," presents data on the grants, loans, tuition tax benefits, and other resources available to full-time undergraduates and their families. The data also estimate the amount families pay using earnings or other sources. These data show how the resources used by students and families differ by sector and how they have changed over time.

Variances by Type of Institution

Overall, according to the College Board's analysis, total grant aid and federal education tuition tax benefits accounted for 36 percent of the listed total cost of attendance. The amount of total costs covered by grants and tax-based benefits ranged from 32 percent for students enrolled in public four-year colleges and universities to 41 percent for those who attended two-year public (community) colleges.

Student and parent borrowing also had a noticeable effect on college financing. Amounts borrowed from student and parent loan programs covered on average 26 percent of total charges, ranging from 19 percent for students in community colleges to 37 percent for those enrolled in for-profit institutions. The remaining amount of higher education expenses-primarily parents' and students' employment earnings, savings, and other resources- covered an average of 38 percent of total higher education expenses. These "out-of-pocket" financing resources ranged from 31 percent for those attending for-profit institutions to 40 percent for students who attended community colleges and four-year private non-profit colleges and universities.

Changes in Financing Resources Over Time

Since academic year 2002-03, as the listed price for higher education has risen, the amounts available to finance these expenses has changed substantially. Between 2002-03 and 2012-13, the average total cost of attendance rose 28 percent in inflation-adjusted dollars, from $16,480 (in 2012-13 dollars) to $21,030. But over the same time period, the total assistance provided to students and families from grant aid and federal education tax benefits increased 56 percent, from $4,850 to $7,550. As a result, the combined amount of grant aid and tax benefits that covered total cost of attendance rose from 29 percent in 2002-03 to 36 percent in 2012-13.

Despite the increase in grant and tax benefits assistance, use of students loans also rose dramatically. The average annual amount students and parents borrowed to finance higher education expenses increased 41 percent, from $4,010 in 2002-03 to $5,640 in 2009-10. Since 2009-10, the average amount borrowed fell to $5,440, largely because fewer students received private student loans, and federal student loan limits remained essentially unchanged. While overall the amount borrowed has risen, the amount of costs covered by student debt remained relatively stable, rising from 24 percent of total expenses in 2002-03 to 26 percent 10 years later.

But the overall increase in loan funds, grants, and tax benefits has meant that the share of education expenses that parents and students have had to pay through their savings, employment earnings, and other resources has declined from 46 percent in 2002-03 to 38 percent in 2012-12. Funds from resources other than loans, grants, and tax benefits rose just 6 percent in inflation-adjusted value in this time span.

Copies of the College Board report are available for no charge from the College Board Web site.

Contact

Ken Redd
Director, Research and Policy Analysis
202.861.2527
E-mail