Higher education costs continue to soar

(CBS/AP) 

Updated at 11:08 a.m. ET

New figures on the cost of a college education aren't what students and their parents want to hear.

But it's probably no surprise: Costs are rising as public universities pass state budget cuts on to customers.

The College Board says average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, from a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high. With room and board, the average list price for a state school now runs more than $17,000 a year.

But a companion report says the actual amount families actually pay is much lower, thanks to a large increase in federal grants and tax credits for students, on top of stimulus dollars that prevented greater state cuts. The average for tuition and fees is about $2,490, or just $170 more than five years ago.

The College Board reports roughly 56 percent of bachelor's degree recipients at public four-year schools last year graduated with debt, averaging about $22,000. At private nonprofit universities, 65 percent had debt, averaging around $28,000.

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The release of the College Board report comes the same day as President Obama is expected to outline a plan to allow millions of student loan recipients to lower their payments and consolidate their loans, in hopes of easing the burden of the No. 2 source of household debt.

The move to assist struggling graduates and students could help Mr. Obama shore up re-election support among young voters, an important voting bloc in his 2008 campaign, and appeal to their parents, too. Student loan debt also is a common concern voiced by Occupy Wall Street protesters.

The loans have become particularly painful for many amid the nation's economic woes, high unemployment and soaring tuition costs. They are second only to mortgages as a portion of Americans' debt, coming in ahead of credit cards.

The White House said Mr. Obama will use his executive authority to provide student loan relief in two ways.

First, he will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.

Second, he will allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million borrowers.

Education Secretary Arne Duncan told reporters on a conference call that the changes could save some borrowers hundreds of dollars a month.

"These are real savings that will help these graduates get started in their careers and help them make ends meet," Duncan said.

The White House said the changes will carry no additional costs to taxpayers.

Last year, Congress passed a law that lowered the repayment cap and moved all student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.

The law change was opposed by many Republicans. At a hearing Tuesday, Rep. Virginia Foxx, R-N.C., who chairs a subcommittee with oversight over higher education, said it had resulted in poorer customer service for borrowers. And Senate Republicans issued a news release with a compilation of headlines that showed thousands of workers in student lending, including those from Sallie Mae Inc., had been laid off because of the change.

Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.

Increases in federal aid have helped ease the burden on students dealing with tuition increases, the White House Council of Economic Advisers said in a report Wednesday.

"Despite large increases in the published price of college over the past four years, the average student has not seen commensurate increases in the net price of college, defined as the published price minus grants, scholarships and tax benefits," the report said.

Meanwhile, the Education Department and the Consumer Financial Protection Bureau announced a project Tuesday to simplify the financial aid award letters that colleges mail to students each spring. A common complaint is that colleges obscure the inclusion of student loans in financial aid packages to make their school appear more affordable, and the agencies hope families will more easily be able to compare the costs of colleges.

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[Moravecglobal1]

Every qualified California student should get a place in University of California system. That's a desirable goal for a public university. However, UC Berkeley Chancellor Robert Birgeneau displaces Californians qualified for education at Cal. with $50,600 tuition Foreigners.
UC tuition increases exceed the national average rate of increase. The University of California Board Of Regents jeopardizes Californians attending higher education by making UC the most expensive public university in the United States.
Self-serving tuition increases are used by UC President Mark Yudof to increase the pay of 80,000 eligible faculty and others. Payoffs like these point to higher operating costs and still higher tuition for Californians.
I agree that faculty in higher education and senior management, like Yudof and Birgeneau, should consider the students' welfare and put it high on their values.
Deeds unfortunately do not bear out the students' welfare values of senior management and the UC Board of Regents.
Opinions to UC Board of Regents, email [e-mail]

[ghendric]

Cost is soaring because of government subsidizies... College didn't cost anything like it does now when I went to college.. Its kind of pointless now anyway because for the price you pay now, you aren't gaurenteed a job in your field of study when you graduate anyway.. I'm really sick and tired of government manipulation of everything we do! I want out of this system! I'd rather live out in the woods somewhere.. At least I would be free to do what i wanted then..

[signseeker1717]

There never WERE any guarantees; there were just more job opportunities to pursue. Many new grads have already come to that conclusion, and are creating their OWN opportunities. Entrepreneurship is up 8% from last year.

[valjean7]

Knowledge has the same value whether acquired at a high priced university, community college or sitting at home reading and thinking. It's knowledge that should count and a method needs to be initiated to determine that and credit given when documented. A national system for personalized acknowledgement of such would be beneficial.

[signseeker1717]

There are already ways to do that; many schools allow you to test out of lower level prerequisites, and receive credits (although not entire degrees) for work experience.

[valjean7]

Signseeker1717. Tests should include all subjects at all levels and credit given if the test is passed...even to earn a degree. Recognition of knowledge is the goal now matter where or how it is acquired, including individual effort, something conservatives (like Mr. Cain) loudly tout.

[hattmann]

Maybe its time to "Occupy -(Insert Name of University)" and ask them why they did not tell their students there were no chances of getting a job if they majored in "You Name it" studies.

[gdinsb]

It has to be said: tuition is sky rocketing because there is money available for loans and students are willing to take on that debt. It sounds bad, but student loans need to be harder to get. That's the only way to reverse the tide of university profiteering. Universities are getting rich off the working class through loans (not to mention exploiting their non-union graduate students). The only way to end the repression of the university-education complex is to stop taking out loans to pay them. This will partly work itself out as students realize the debt ain't worth it, but money supply must be tightened.

[Mike3215]

The University of Central Florida is $17,310 for a 4-year degree if you go to a community college for the first two years.

This looks like a great investment to me no matter what you major in.

What's to complain about?

[briteyes1]

higher education has become a scam and it has become a greed fest. Universities and collages especially the online schools are taking the money that further education is suppose to enable students to earn after graduating and it is no longer worth the investment.

[briteyes1]

higher education has become a scam and it has become a greed fest. Universities and collages especially the online schools are taking the money that further education is suppose to enable students to earn after graduating and it is no longer worth the investment.

[credibility2]

Here are some suggestions...if you can't afford the tuition and related financial obligations, then either go to another school that you can afford, or don't borrow and rack up the debt that you try to get out of paying back...college isn't a right or entitlement...it is a privilege, financial risk and obligation...don't live beyond your means...consider a community college or trade school...and, don't expect others, like taxpayers, to give you a break and cover your debt...you made the debt, now pay it like an adult...grow-up kid...

[TeaPartyPaul]

I oppose any aid to school higher than 12th grade. We need more working class people to work on farms and in factorys, not just more ivory league elitists to take money away from the majority and give it to the unproductive.

[helloall34]

:)

[elitistnot]

I agree, but, you need factories and farms as well. And most of the factories are in China or the rest of Asia. And who can afford to start a farm? You can thanks Nafta, Cafta and Obamafta for there being no blue collar jobs.