Field Notes: The Myth of Affordable Tuitions

A report published by Demos demonstrates the increasing unafforability of a college education—particularly for minorities—kicking away a latter for social mobility.  In partnership with the Lumina Foundation, Demos uses the Rule of 10 to outline specific parameters in defining college affordability:

According to the Rule of 10, the net cost of college—defined as tuition, fees, room and board and books, minus any grant or scholarship aid—is affordable for students if the total price can be met with 10 hours of work per week throughout the school year and summer (approximately 500 hours a year) at the minimum wage, as well as 10 percent of a family’s discretionary income saved over 10 years. In simple terms, discretionary income means income above 200 percent of the poverty threshold; families whose earnings are below that are not expected to have saved.

After specifying what constitutes college affordability, Demos researched the “average net price for low-income students in every state at both public four-year colleges and community colleges.” They found that college was unaffordable in all 50 states, for low-income students pursuing Bachelor’s Degrees. However, Demos notes that “it’s no coincidence that Hawaii and North Carolina, the two states that come closest to making college affordable for low-income residents, fund higher education at levels well above the national average.”

Furthermore, community college was also unaffordable in all 50 states for low-income students. These findings are particularly troublesome because students at community colleges are less likely to “shop around in other states” because these colleges tend to serve as commuter schools for those with family and financial responsibilities.

Adult students pursuing two- and four-year college degrees make up nearly 50 percent of all students, and adult minorities pursuing degrees faced a larger affordability gap than their white counterparts. Demos stresses that “it should be of the utmost concern that black and Latino students—the very students who already enroll and complete college in lower numbers, often due to concerns about cost and debt—face greater challenges doing so.”

Demos suggested a few solutions to lessen the affordability gap, including raising Pell Grants, increasing minimum wage to $15/hour, increasing state funding and expanding the Federal Work Study program. A recent White House report from the Council of Economic Advisors argues that mounting student loan debt in America is not damaging on a macroeconomic level, but does this justify the increasing costs of tuition?

[I]f the maximum Pell Grant were doubled and then indexed to a measure of tuition inflation, 26 states could potentially claim that four-year colleges are affordable for low-income students… Any increase of this magnitude would of course require federal policymakers to think about which institutions have access to new federal dollars. Dollars could be limited to institutions that both enroll and graduate high numbers of low-income students and students of color or have relatively low debt-to-income ratios among graduates.

It is a matter of consensus that rising college costs at public institutions are a product of state funding cuts, and increasing grant aid at the federal level is only one solution. Demos has proposed a federal-state partnership to expand state funding through a federal matching grant program, known as the Affordable College Compact.

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