Student debt, loans, grants and tuition on the increase
Increasing college tuition has proven to be a thorn in the sides of college students and parents nationwide. Now, more than ever, students are watching college costs, as well as the surge in competition for scholarships and grants.
“This trend is continuing and, at best, will persist into the near future, if not long term,” said Wayne Sparks, director of the WSU Financial Aid and Scholarship Services Office.
Tuition increases are influenced greatly by the health of state economies, Sparks said. Over the past 25 years, Washington state’s support for college education has decreased substantially. In the late 1970s, the state paid 75 percent of the cost of instruction at state research universities; due to the state’s economy that level had dropped to about 48 percent in 2004-2005, according to the Higher Education Coordinating Board. This trend parallels those in most states nationwide.
Opportunity for more
This year, however, Washington state’s economy has been rebounding. As a result, the state has an opportunity to devote more money to higher education, Sparks said.
In fact, this marks the first year that students at WSU will receive more from the Washington State Need Grant Program — nearly $17 million — than from the federal Pell Grant program, which is the largest federal student aid grant program.
“This makes a positive statement about the level of commitment from the state,” Sparks said. “There is a strong commitment to removing financial barriers at all institutions in the state.”
Although tuition is increasing steadily at WSU, the rate of increase has been below the national average for public universities. For example, in 2004-2005, WSU tuition increased 6.6 percent from the year before, compared with a 10 percent average tuition increase both nationally and among WSU’s peer institutions. In 2004-2005, resident undergraduates at WSU paid $5,154 for tuition and fees, while students at WSU’s peer institutions paid $5,988.
Washington state’s and WSU’s efforts to make college affordable and valuable have paid off. The Princeton Review listed WSU among “America’s Best Value Colleges” for 2006. The list was determined by comparing the cost versus the quality of education.
Tuition, inflation, loans
A big problem for many students, however, is that tuition has been increasing faster than the rate of inflation. From fall 1994 to fall 2004, WSU’s tuition and fees increased 94 percent, while Washington’s per capita personal income increased 51 percent, and inflation increased 20 percent, according to the Higher Education Coordinating Board and WSU.
While Sparks recognizes the increased cost of college, he said it is important to look at a college education as an investment. Workers with a bachelor’s degree earn an average of 61 percent more than workers with just a high school diploma. The earnings increase with each post-bachelor’s degree.
Financial aid — loans and/or gifts — are available for WSU students who need it, Sparks said. From 1994-1995 to 2004-2005, financial aid has increased significantly to help pay for rising tuition rates. During that period, tuition increased 94 percent, while the total amount of student loans went up 169 percent. Gift aid increased 185 percent.
Loans vs. grants
During the 2004-2005 school year, about 57 percent of financial aid provided to undergraduates at WSU was in the form of loans, 41 percent was in the form of grants and scholarships, and 2 percent was in the form of federal or state work study assistance.
Loan debt level
In 2004, the average undergraduate loan debt for WSU graduates who borrowed to finance their education was $20,216 — up from $18,054 in 1999-2000. However, loan debts are not increasing at the same pace as tuition, which is a good sign for students. In 1999-2000, the average undergraduate loan debt for WSU graduates who borrowed to finance their education was $18,054, about five times the cost of annual tuition and fees, which was $3,530. In 2004-2005, the average loan debt was $20,216, about four times the cost of annual tuition and fees, which was $5,154.
To help students with their college finances, the university has created new scholarship and financial literacy programs, which are overseen by the Office of Scholarship Services and the Office of Student Financial Aid, respectively.
One such program is the four-year-old Regent’s Scholars Program, which provides every high school principal in the state the opportunity to nominate two outstanding high school students to receive a scholarship at WSU. Through a highly competitive selection process, students are selected for three tiers of awards — Crimson, Silver and Distinguished. The program has proven successful, attracting 70-80 percent of qualified Distinguished Regent’s Scholars, which comprise the top tier and receive almost a full four-year scholarship to WSU.
Financial boot camp
The Office of Financial Aid and Scholarship Services is also helping to educate students on personal finances through two programs. The first is a financial literacy class, which may be nearing its end unless the office can secure future funding. The class has taught students how to manage their personal finances, including how to budget their money now and in the future.
A second program, which the office recently instituted, is enabling client services staff to become Accredited Financial Counselors. This allows selected staff to become better prepared to talk with students and parents about money management and personal finances. Presently, two out of 10 client services staff members are pursuing this professional certification.
While college costs are by no means decreasing, WSU is attempting to make college as affordable as possible for its students.