When financial aid and grants are utilized, the price of college is within the reach of most people, Sen. Lamar Alexander (R-Tennessee) writes in the Wall Street Journal.
The Senate education committee chair took to the commentary pages in an attempt to dispel the notion that higher education is too expensive for the masses and to suggest five ways to improve access.
Community colleges are "free or nearly free" for students from low-income households, he says. The national tuition for such institutions averages $3,300 annually—the same figure as the average Pell Grant at those institutions.
And public four-year colleges average about $9,000 per year for tuition and fees. On top of Pell Grants, state-run financial aid programs awarded $11.2 billion to students in 2013—85% of which came in the form of scholarships.
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"The reality is that, for most students, a four-year public institution is also within financial reach," writes Alexander.
Even private schools are not as expensive as their list prices may suggest, he says. Approximately 15% of the nation's higher ed students attend a private school where the cost averages $31,000, according to College Board. Elite schools may cost even more, but those institutions often offer discounts and work-study programs, writes Alexander.
And whatever cost that remains may be covered with federal student loans, he says. Undergraduates today may take out up to $5,500 as freshmen, $6,500 as sophomores, and $7,500 as juniors and beyond. By law, the interest rate for new loans is set at 4.29%. And under the Income-Based Repayment program, borrowers currently pay a maximum of 10% of their monthly income in debt service, and any remaining balance is forgiven after 20 years.
Alexander further argues that the stories of students taking on more than $100,000 in debt account for just 4% of all student borrowers—and 90% of those are individuals who earned an MBA, MD, JD, or other graduate degrees. About 10% of all student debt is in default—and according to the Education Department, most of that is eventually paid back.
On average, the amount of debt a graduate of a four-year institution carries—$27,000—is equal to that of the average new car loan.
"But a student loan is a lot better investment. Cars depreciate. College degrees appreciate," writes Alexander.
That is not to say paying for a college degree is easy, he says. To improve access further, the federal government must:
- Allow Pell Grants to be used year-round;
- Simplify the FAFSA;
- Change laws to stop colleges from telling students not to borrow;
- Ensure colleges assume some risk in student loans; and
- Reduce "federal red tape" to free up college staff and funds (Alexander, Wall Street Journal, 7/6).
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