The College Board has published its latest “Trends in College Pricing” which they publish each year. This report examines what has happened to the price of various types of colleges including private colleges and public colleges. Not surprising is the fact that on average, the cost of college increased last year.The cost increase was greater at public colleges than private colleges.
Many sources have reported the increased cost of college under the doom and gloom category. What is being lost in all of this noise is the fact that while the cost of colleges rose last year, so did the financial aid available to pay for college. In a companion report, “Trends in Student Aid,” the College Board reports that total grant aid (the free money), and total federal loans, both increased by 5.5% after adjusting for inflation. Also significant is the finding the the amount of private loans, those not backed by the federal government, decreased by 1% last year. Private loans traditionally have had higher interest rates and less protection than federally backed loans and are thus less desirable.
No one likes to see the cost of anything increase. Colleges, besides contributing to the public good, are also businesses that have to pay salaries, pay for increased health care costs and increased fuel costs. Despite the recent downturn in the economy the actual cost to the students is not much different than it has been in the past. The long term ramifications of this downturn may affect future financial aid awards but for right now, there is no need to panic.
Now, more than ever, it is critical that students and their parents understand how financial aid works. If you are a new reader to this blog and haven’t heard me rant on this subject before, head on over to our page on Financial Aid Basics.