Cost of Higher Education

The Cost of Higher Education

in Pennsylvania

Report to the Pennsylvania State Board of Education

NOVEMBER 2008

Office of Postsecondary and Higher Education Pennsylvania Department of Education

The cost of attending college in Pennsylvania is a serious and growing concern.

TablE Of cOnTEnTs 1 The cost of Higher Education in Pennsylvania 4 family Resources and the cost of attending college in Pennsylvania 8 Pa in the national context

13 Debt load and Personal Income of Graduates 15 Impact of college cost on Pennsylvania citizens 18 conclusion 20 appendix 24 References

Commonwealth of Pennsylvania Edward G. Rendell, Governor

Department of Education Dr. Gerald L. Zahorchak, Secretary

Office of Postsecondary and Higher Education Dr. Kathleen Shaw, Deputy Secretary

Compiled by Dr. David Tandberg, Special Assistant to the Deputy Secretary

Pennsylvania Department of Education 333 Market St Harrisburg, PA 17126-0333

November, 2008

The Pennsylvania Department of Education (PDE) does not discriminate in its educational programs, activities or employment practices based on race, color, national origin, sex, sexual orientation, disability, age, religion, ancestry, union membership, or any other legally protected category. This policy is in accordance with state law, including Pennsylvania's Human Relations Act, and with federal law, including Title IV and Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the rehabilitation Act of 1973, the Age Discrimination in Employment Act of 1967 and the American Disabilities Act of 1990.

For more information about the cost of higher education in Pennsylvania visit pde.state.pa.us or call 717-783-9259.

The Cost of Higher Education

in Pennsylvania

Pennsylvania enrolls more students in higher education than all but three states in the country. Higher education options abound, ranging from community colleges to public and staterelated universities to a broad array of independent institutions. Pennsylvania can also boast of having one of the largest needbased grant aid programs in the country. The Pennsylvania Higher Education Assistance Agency (PHEAA) annually distributes $452 million in grant aid to Pennsylvania college students across the Commonwealth.

Despite all of these merits, the cost of attending college in Pennsylvania is a serious and growing concern. This issue has been exacerbated by recent reports of a student loan crisis that threatens to constrict access to affordable loans and further reduce postsecondary education options.

THE cOsT Of HIGHER EDucaTIOn In PEnnsylvanIa 1

In September of 2008, the Pennsylvania Board of Education requested that the Deputy Secretary for Postsecondary and Higher Education in the Department of Education conduct research to document whether, and to what extent, the cost of postsecondary education in the state of Pennsylvania constitutes a significant barrier to college access, retention, and graduation. This report is a partial response to that request. It contains data gathered from a variety of sources, including the College Board, PHEAA, the Integrated Postsecondary Education Data System (IPEDS), Peterson's Financial Aid Survey, the U.S. Census Bureau, and the annual National Association of State Student Grant & Aid Programs (NASSGAP) Survey. The Pennsylvania Board of Education will collect additional information by means of a survey of Pennsylvania residents that focuses on how families pay for college. Particular emphasis will be placed on the total amount of debt families incur to send students to college, and on the degree to which these debt levels affect going to college or subsequent employment decisions.

2 THE cOsT Of HIGHER EDucaTIOn In PEnnsylvanIa

The results of this survey will be available in January 2009. Finally, the State Board of Education is conducting a series of five hearings across the state to receive testimony on college cost and debt burden, and on how these factors affect decisions regarding college attendance and employment.

This report is organized into four main sections. First, data are presented on the cost of attending college in Pennsylvania, and on families' ability to pay for college. Second, the report places Pennsylvania in the national context by comparing the cost of attending college in Pennsylvania and the debt load of Pennsylvania students to the national average and nine comparison state averages. Likewise, personal income data in Pennsylvania are compared nationally as well. Finally, relevant information garnered from the 2006 A Rising Tide report on Pennsylvania higher education is reviewed.

THE cOsT Of HIGHER EDucaTIOn In PEnnsylvanIa 3

A significant gap exists between available needbased grant aid and the total cost of attending either a PASSHE institution or a community college-- Pennsylvania's most affordable college options.

Family Resources and the Cost of

Attending College in Pennsylvania

One way of analyzing the cost of higher education is to look specifically at the gap between the resources available to families to pay for college and the actual cost of attending college. To illustrate this gap, we focus in this section on the two most affordable sectors of public higher education in Pennsylvania--the community colleges and the Pennsylvania State System of Higher Education (PASSHE).

As Table 1 indicates, a significant gap exists between available need-based grant aid (Pell and PHEAA grants) and the total cost of attending either a PASSHE institution or a community college (CC). Furthermore, even after adding the expected family contribution (EFC) to the available need-based grant aid, most students do

not have enough money to attend a PASSHE university or community college.1 For example, students from families making $50,000 or less encounter a gap of nearly $3,000 per year when attending the most affordable option in Pennsylvania higher education--community colleges in a student's home county or school district. This gap grows to over $7,200 when attending PASSHE institutions. Moreover, across all income groups qualifying for financial aid, there are gaps between cost and available aid for students attending PASSHE institutions and those attending community colleges outside of their counties or school districts. In short, even at the state's most affordable public institutions, students must utilize sizable loans in order to finance their education.

Table 1: Gap Between the Cost of Attendance and Available State and Federal Need-Based Aid Plus EFC2

Sector/Residency

PASSHE

CC in-district3

CC out-of-district

Gap for Families Making $50,000 or Less (4 Members)

Gap for All Families

Before Family

After Family

Before Family

After Family

Contribution (EFC) Contribution (EFC) Contribution (EFC) Contribution (EFC)

$8,802

$7,247

$11,445

$4,262

$4,502

$2,947

$5,548

$0

$6,577

$5,022

$8,043

$1,700

Source: PHEAA and the Higher Education Institutions

1 EFC is a federally calculated estimate of the amount a family can be expected to pay towards the student's education.

2 All dollar figures are averages.

3 In-state community college students who come from outside a community college's funding district are charged a

higher rate of tuition. Often these students pay the tuition that an in-district student pays plus the district's share.

4 THE cOsT Of HIGHER EDucaTIOn In PEnnsylvanIa

Students from the lowest income brackets pay a disproportionately high price for attending college. As Tables 2 through 44 show, lowerincome families have to commit a significant proportion of their yearly income to pay for college. For example:5

? Families making $20,000 or less with a dependent student attending a PASSHE institution must devote an average of 73% of their yearly income to paying for college before loans and 37% after loans;

Table 2: The Cost of Education as a Percent of Income for PASSHE Students

Lower-income families have to commit a significant

proportion of their yearly income to pay for college.

Percent of Income Percent of Income

Dependent Students6 90% 80% 70% 60% 50% 40% 30% 20% 10%

0% $1-$20,$02000,001-$40,$04000,001-$60,$06000,001-$80$,8000,0001-$10$01,0000,0001-$120,000 $120,001 + 2005 Family Income

Net Cost as a % of Income

Net Cost Minus Loans as % of Income

Independent Students 90% 80% 70% 60% 50% 40% 30% 20% 10%

0% $1-$20,$02000,001-$40,$04000,001-$60,$06000,001-$80$,8000,0001-$10$01,0000,0001-$120,000 $120,001 + 2005 Family Income

Net Cost as a % of Income

Net Cost Minus Loans as % of Income

4 Full data for tables 2-4 can be found in Appendix A.

5 Net price is calculated by taking the average cost of attendance, which is tuition and fees plus room and

board charges, and the cost of books, minus all state and federal grant aid. Only federal and state loans and

grant aid are included.

6 Dependent students are those students that can be claimed as dependents on their parent's or guardian's tax forms.

Independent students are those that cannot be claimed as a dependent.

THE cOsT Of HIGHER EDucaTIOn In PEnnsylvanIa 5

? Families making $20,000 or less with a dependent sponsored student attending a community college must devote an average of 37% of their yearly income to paying for college before loans and 24% after loans;

? The percent of family income that must be devoted to paying for college declines significantly as one moves up the income

ladder, meaning that federal and state student aid policies have not equalized access to higher education.

These issues are even more pronounced among independent students; and in each case, federal loans are a necessary, yet insufficient, resource for paying for college.

Table 3: The Cost of Education as a Percent of Income for Community College Sponored Students

Dependent Students

90% 80% 70% 60% 50% 40% 30% 20% 10%

0% $1-$20,$02000,001-$40,$04000,001-$60,$06000,001-$80$,8000,0001-$10$01,0000,0001-$120,000 $120,001 + 2005 Family Income

Net Cost as a % of Income

Net Cost Minus Loans as % of Income

Independent Students

90% 80% 70% 60% 50% 40% 30% 20% 10%

0% $1-$20,$02000,001-$40,$04000,001-$60,$06000,001-$80$,8000,0001-$10$01,0000,0001-$120,000 $120,001 + 2005 Family Income

Net Cost as a % of Income

Net Cost Minus Loans as % of Income

Percent of Income Percent of Income

6 THE cOsT Of HIGHER EDucaTIOn In PEnnsylvanIa

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