Before College: America’s Postsecondary Affordability Crisis

You may wonder if education after high school is worth what you pay for it. And you have good reasons for doing so, because postsecondary educational costs are way too high.

In academic year 2018-19* U.S. Median Household Income (MHI) was $63,179. Here’s the share of that needed to cover the average full-time student’s budget at various types of postsecondary schools:

The result is that, without considerable financial aid, postsecondary studies are simply unaffordable for low and even many middle-income students. But such assistance is woefully inadequate these days.

Federal Pell Grants are the nation’s single largest source of student grant and scholarship funds. But inadequate appropriations limit them to the lowest-income undergraduates. And even then, Pell Grants averaged only $4,160 in 2018-19 — just 8% to 23% of what students budget for their expenses.

Loans are by far the largest source of student financial aid, and 65% of the Class of 2018* who earned bachelor’s degrees did so after borrowing an average of $29,200 — swelling their lifetime costs for postsecondary learning by as much as $5,230 even at today’s low interest rates.

Not surprisingly, postsecondary attendance has declined significantly. Since fall 2010, when 20.1 million Americans were attending colleges, universities, and trade and technical schools, there’s been a net enrollment decline of 14%. So even before the spring 2020* COVID-19 pandemic, fewer than 17.2 million Americans were at such institutions.

That’s bad news, because in the 21st century’s knowledge-based, high-skill economy, Americans without postsecondary degrees and certificates are increasingly limited to shrinking numbers of lower-paying and less-healthy jobs.

For example, in 2017, the median lifetime earnings of bachelor’s degree holders was $1.2 million — twice that of high school graduates. And in 2019* the unemployment rate among those with bachelor’s degrees was 2.2%, considerably less than the 4.1% unemployment rate for high school graduates. Moreover, during the current pandemic, those least likely to suffer layoffs and/or contract COVID-19 are those working online from home — and they’re mostly college graduates.

Absent big changes, student costs will continue to rise and government appropriations for limiting those costs are unlikely to keep pace. So education after high school will become even more unaffordable, and student debt will keep increasing.

But if you hope to one day be a postsecondary student, or postsecondary parent, there’s a way to help offset these problems, even if you’re not rich. It involves designing and living within a “Pre-College Finance Plan.” We’ll discuss strategies for such a plan right here every Wednesday for the next four months.

So don’t miss a single one of the Pre-College Finance Plan elements we’ll be covering this fall!

* Most recent data available.

It’s never too early or too late to put together your Pre-College Finance Plan! Become a follower of this website now to make sure you receive every article we publish on such plans!

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