With so many Americans concerned about college costs and student loan debt, there are more and more proposals to improve college affordability and reduce or even eliminate students’ need for loans. Yet most of the proposals are not very detailed at this point, and the details matter.
One critical detail is which costs are covered. To make a real difference for low-income students, any debt-free college plan must take the full cost of going to college into account, including textbooks, transportation, and living costs like food and housing. These non-tuition costs make up the majority of the full cost of attending a public two- or four-year college (61%-79%), yet their importance is too frequently overlooked. Students may only need to pay the tuition bill to enroll in college, but to succeed in school and graduate they need to be able to cover the other costs, too. Students who can’t get to campus or can’t get the required books won’t benefit from their classes. Students who have to work long hours to pay for rent or child care don’t have enough time to study.
Students can use grants like the federal Pell Grant to help pay for either tuition or non-tuition costs. But many lower income students have to take out loans because available grants don’t cover their total costs. In fact, national data show that lower income students (those with incomes at or below the median) who attend public colleges “tuition free” are currently much more likely to borrow than higher income students who pay for some or all of their tuition bill. This underscores why plans to eliminate debt cannot just focus on tuition.
This is worth repeating: low-income students who are already attending college “tuition free” are more likely to need loans. To understand why, we have to look at students’ total net costs (cost of attendance after grant aid) as a share of family income.
Data show that the net costs of attending public two-year and four-year colleges account for a much larger share of income for lower income families than for higher income families. As a result, more lower income students have to borrow to get their degree. For instance, as shown below, community college students with family incomes under $30,000 are expected to dedicate 22% of their income toward paying for college. Unsurprisingly, graduates in this income range are more likely to leave school with debt than students from families who can better absorb net college costs.
This is why ensuring a debt-free college option requires more than covering tuition costs. It requires providing additional grant aid for lower income students who may already be going to college “tuition free,” and as we have discussed before, it requires a state “maintenance of effort” provision to ensure states hold up their end of the bargain.
1 Calculations by TICAS on data from the U.S. Department of Education, National Postsecondary Student Aid Study, 2011-12. Median income is based on family incomes for students enrolled in college in 2011-12. Students are classified as attending tuition-free if their tuition net of grant aid is zero, and as paying tuition if their tuition net of grant aid is greater than zero.
2 U.S. Department of Education calculations of 2012-13 net price for first-time, full time undergraduate recipients of federal Title IV financial aid, from http://nces.ed.gov/pubs2014/2014105.pdf, based on figures reported by colleges to the Department via the Integrated Postsecondary Education Data System. To calculate the shares of income needed to pay the net price, we used the upper bound of the income range (i.e., $30,000 for the $0-30,000 group) when available, and $145,000 for the income range of $110,001 and above which is approximately the median income for students in this group. Graduates’ debt figures from U.S. Department of Education, NPSAS, and include undergraduate students who completed a degree or certificate in 2011-12. Both net price and debt calculations are the most recent available of their kind.