Rising Costs, Declining Aid? : Financing a College Education

In the old days, if you made a good living you could send your children to college.

For such people it was a comfortable American axiom. But many families earning as much as $60,000 a year are now caught by surprise when it comes time to send junior to college.

They can’t afford it.

Not Saved Enough

They have not saved enough; they cannot come up with the extra $4,000 to $10,000 a year, and the whole idea of having to borrow money and pursue grants strikes some middle-class parents as groveling for handouts, something they feel too successful to do.

Then comes the second half of the one-two punch. Because it’s more difficult for middle-income families to qualify for need-based aid than it is for low-income parents, they have to hunt even harder for financial help.

“Nobody really likes to ask for help. There’s a stigma attached to it,” said Lawrence Dreyer, director of financial aid at UCLA. “They don’t like to come in and talk about it. They don’t like you to know they don’t have enough money to pay.”

Dorothy Sexton, director of financial aid at California State University at Long Beach, said she sees a great deal of surprise experienced by middle-income parents.

“Most of us feel that when we made it to the middle-income bracket we were going to be able to take care of all our family’s needs,” said Sexton. “Then we realize that education is just more expensive than we anticipated.” Sexton said she has had some parents tell her they decided against sending their children to college because of the financial difficulty.

Misconceptions abound, according to college financial experts. Despite what seems to be endless publicity about the rising costs of college tuition, many parents believe they don’t need to think about it until the situation is about to present itself, or that the big numbers are only coming out of fancy private schools.

Many Forms of Aid

Then there are those who feel just the opposite, that no matter what they do, there will never be a way they can send their children to any college because it is so expensive. (The American Council on Education estimates that students entering college in the fall of 1988 will pay an average total cost of $6,175 at a public school or $12,511 at a private one.) Many parents who think nothing of financing houses, cars, vacations and credit card debt feel embarrassed about borrowing for college, and many parents in all financial brackets know little about the many different forms of aid available.

Because of widespread confusion like this, an educational foundation has produced a video for parents and their junior high children, explaining in a simple way what they should expect and how to prepare for it.

The 20-minute video, “Paving the Way,” is being made available on a rental or purchase basis to all 32,000 local chapters of the PTA, and to anyone else.

Produced by the Teagle Foundation for the National Institute of Independent Colleges and Universities, the film drives home two main points:

- Save money.

- Regardless of your income, if you need financial assistance, apply for it. There are many forms of aid.

Controversy rages at the highest levels of government and education regarding the skyrocketing costs of college and the accompanying decline in federal aid. According to a report prepared by the American Assn. of State Colleges and Universities, the purchasing power of federal student aid has declined 25% since 1980.

Reagan Administration officials have contended that colleges are raising their costs too rapidly, based on the notion that government will foot the bill.

“We have seen the growth of college costs to be way beyond the rate of inflation,” Secretary of Education William Bennett said on the MacNeil/Lehrer NewsHour. “The last five years, college costs have increased 85% higher than the rate of inflation.”

The Same Contribution

Americans who believe college is at least worth a try wonder primarily about putting together the money. In the video presentation, the independent colleges seemed most concerned about parents who would like to send their children to private schools but assume they cannot afford it. The film contends that the family’s financial contribution need not be larger at a private institution than at a state-funded one.

“The family contribution remains the same,” said John Phillips, past president of the institute of independent schools and chairman of the video project’s steering committee. “The difference can be covered by various forms of financial aid.”

The film and an accompanying workbook, which were unveiled at a press conference here, were produced after the institute commissioned a Roper poll in 1984, which reflected parents’ misguided notions and actions in connection with college. Among the findings:

- About 77% of parents plan to send their children to college.

- Nearly all the parents are saving money, but only 51% name education as a reason for saving.

- Only 24% of parents expect to receive federal or state financial help. In fact about 50% of families with children in college have government help.

‘A Frightening Prospect’

“A lot of people want the degree but are dubious about the likelihood of getting it,” said Phillips. “The emergence of the average cost of a private institution to a five-figure number ($10,000 per year) is a frightening prospect for parents.”

One year’s tuition at the University of Southern California is $10,374. Adding average expenses for other student fees, room and board, books, supplies, transportation and miscellaneous, the total comes to $16,464 per year, according to the school’s public affairs office.

Of USC’s 15,000 undergraduates, 8,200 are receiving some sort of financial aid.

“A family with an income of $15,000 would pay no more here (from their own pockets) than at UCLA,” said Ed Mervine, associate director of USC’s financial aid office.

At USC, as elsewhere, the picture becomes a little more murky for middle-income families who don’t have enough money.

“A family of $50,000 would get some aid here, perhaps, but would be expected to pay a substantial amount of it,” Mervine said.

At UCLA, the all-inclusive total for a California resident living in a dormitory is $6,000 a year, $7,500 to live off campus or $4,600 to live at home with parents. Some 35% of UCLA students receive some kind of financial help.

Most students attending Cal State Long Beach live in off-campus apartments, for a total yearly expense of about $8,200. Those staying in the limited dorm housing spend $6,300 and those who commute from their parents’ homes, $4,000. One out of four receives financial help.

Costs Rising Steeply

Parents of young children developing a savings plan need to keep in mind that college costs are multiplying dramatically. When today’s 4-year-olds are ready to enroll in the year 2000, a spokesman for the College Scholarship Service has estimated that top schools may be charging $40,000 annually.

Educators involved with the film, as well as financial aid directors and private financial planners interviewed, all agreed on one piece of advice: Start saving as much money as you can, as soon as you can, if you hope to send your child to college, and don’t just give up if you can’t save the whole amount.

Said Long Beach’s Sexton, “We recommend that parents talk to a financial planner and get the best savings plan for their dollars when their children are first born.”

Saving Is Crucial

Saving is especially crucial for middle-income families.

“Financial aid is really mostly for people who can’t afford college at all,” Sexton said. “If you have a family of four with a $50,000 to $60,000 income with one child in college who lives in an apartment, you wouldn’t necessarily be eligible for aid at Long Beach, but you might be eligible at a higher-cost institution, because it’s based on your need.

“It is difficult for middle-income parents to demonstrate need. The need analysis takes into consideration adjusted gross income, ages of the parents, family size, the number of children in college and assets and tries to mesh it out to discover discretionary income.”

Despite these problems, aid directors urge anyone needing money to apply for it.

“Too many parents say, ‘The money is not there for me,’ ” UCLA’s Dreyer said, adding that it is rare for a student to be unable to attend college strictly because of a shortage of money.

“If the student has good grades, if they do everything on time, if they have genuine need; those students are generally taken care of,” Dreyer said.