Are you “middle-class”? Do you want your children to go to get bachelor’s degrees? Well, you’ve got a problem, because such degrees are fast becoming unaffordable for families like yours.
Median Household Income (MHI) is right at the center of middle-class earnings. The latest data show MHI in the U.S. to be $63,179. A year at today’s average public 4-year university costs $26,590 for everything — tuition and fees, books and supplies, room and board, transportation, and other basic expenses. That’s 42% of MHI. Can you afford to spend 42% of your annual income to send a child to college?
And things are getting worse. Public 4-year institutions have always been affordable pathways to bachelor’s degrees. But rising costs are bringing that to an end. Four-year university costs grew 144% over the last 20 years, while MHI increased just 62%. Should these trends continue, over the next two decades the cost of going to a public 4-year college will grow to almost $65,000, or 63% of MHI.
Of course, there’s always financial aid and student loans. But, unfortunately, they’re not keeping pace with rising higher education costs, either.
The country’s biggest program for students needing financial assistance is Federal Pell Grants, but households with incomes of $40,000 or more get just 26% of Pell recipients and 18% of Pell dollars.
Furthermore, the portion of the average public 4-year university’s cost covered by the maximum Pell Grant slipped from 39% to 23% over the last two decades. This forced states and institutions to devote more of their grant funds to help their lowest-income students go to and stay in college. Result? Shrinking amounts of state and institutional grants for needy middle-class students.
Furthermore, Congress last set the annual limits for federal student loans in 1996. Thus the costs they cover for public university freshmen dwindled from 50% in 1999-00 to just 21% in 2019-20.
So if you’re middle-class, what should you do? Here are a few ideas:
- You (and your children) should save and invest every possible penny for college;
- Have your children shorten their time at a university while they’re in high school by steering them into transferable AP and dual credit courses; and
- Forgo the status symbol that comes with going to a university right after high school and have your children generate big savings by living at home and taking transferable courses at a community college for a year or so after high school — today, average community college costs are about 1/3 of 4-year university costs.
You should also push your lawmakers for funding and policies that’ll make bachelor’s degrees more affordable. We’ll look into what’s brewing in Washington next Wednesday.
Need help identifying strategies to keep college costs from cutting your children off from bachelor’s degrees? Contact College Affordability Solutions at (512) 366-5354 or firstname.lastname@example.org to arrange a no charge consultation.