ED 448 616

AUTHOR

TITLE

INSTITUTION

REPORT NO

PUB DATE

NOTE

AVAILABLE FROM

PUB TYPE

EDRS PRICE

DESCRIPTORS

ABSTRACT

DOCUMENT RESUME

Henschel, Gregory;

Rhodes, David

Managing the Price

Families.

National Inst. on

Lifelong Learning

PLLI-2000-8003

2000-11-00

58p.

ED Pubs, P.O. Box 1398, Jessup, MD 20794-1398. Tel:

877-576-7734 (Toll Free); Fax: 301-470-1244. For full text:

http://www.ed.gov/pubs/collegecosts/cover.html.

Guides Non-Classroom (055) -- Numerical/Quantitative Data

(110)

MF01/PC03 Plus Postage.

*College Bound Students; Educational Finance; *Family

Characteristics; Financial Aid Applicants; Higher Education;

*Paying for College; Student Loan Programs

HE 033 625

Kirshstein, Rita J.; O'Malley, Amy;

of College: A Handbook for Students and

Postsecondary Education, Libraries, and

(ED/OERI), Washington, DC.

This handbook shows how families in various income groups

manage to pay for college. The handbook is based on the real experiences of a

large number of actual families, as described by national surveys. To find

out exactly what it would cost to attend a particular college, the student

would have to apply for financial aid, but this guide gives some idea about

what to expect. The guide discusses why students pay different amounts for

college and provides some illustrative examples of how people manage to pay

for college. Information tables show some college prices and aid figures for

public and private 2- and 4-colleges. An explanation of expected family

contribution and a discussion of borrowing are included. Technical notes

describe the surveys on which these data are based. Some other sources of

information are listed. (Contains 11 tables and 14 references.) (SLD)

Reproductions supplied by EDRS are the best that can be made

from the original document.
ItnRi_ln@CIM@ u

CDY

AND FARELLEES

National Institute on Postsecondary Education,

Libraries, and Lifelong Learning

Office of Educational Research and Improvement

U.S. Department of Education

BEST COPY AVAILABLE

U.S. DEPARTMENT OF EDUCATION

Office of Educational Research and Improvement

EDUC TIONAL RESOURCES INFORMATION

CENTER (ERIC)

This document has been reproduced as

received from the person or organization

originating it.

Minor changes have been made to

improve reproduction quality.

Points of view or opinions stated in this

9

document do not necessarily represent

official OERI position or policy.
Customer Survey of OERI Publication Users

To help us improve future editions of this publication and give

you better customer service, we would appreciate your

comments on this survey form. Please check the appropriate

box(es) below for each question. Responses will be kept

completely confidential. You may return the survey by mail or

FAX. It can be folded and taped closed to allow mailing to the

address listed on the reverse side of this form, or it can be

returned by FAX to 202-219-1321. Many thanks for

your customer feedbackit is very important to usl

la. Name of publication

lb. Publication number

lc. Author name

2. How did you receive a copy of this publication?

C:1 Bought it

Borrowed it

Mailing list membership

Telephone request

Internet request

Other (please describe)

3. Was this publication easy to get?

Very 1:11 Somewhat Not at all

4. How did you find out about this and other OERI

publications? (Check all that apply.)

Conferences

Journal articles

Teacher/educator

Professional associations

Internet (WWW)

Publication announcement

Received in mail

OERI staff contact

5. For what purposes did you use this OERI

publication? (Check all that apply.)

Planning

Policy or legislation

Administrative decisions

Teaching, class material

Research/analysis

General information

Writing news articles, TV or radio material

Marketing, sales, or promotion

Other (please describe)

6. Did the publication help you accomplish whatever you

needed it for?

1:11 Yes No Partially

7. What is your occupation?

Parent Teacher Administrator

Librarian Researcher Statistician

Journalist/writer Policy Analyst Student

Program Planner

Other (please specify)

8. How could this OERI publication (or other OERI

publications) better meet your needs?

(Check all that apply.)

1:11 More important topics in education

More timely release of data

More text introductions to each section

More research statistics

Shorter reports (less than 10 pages)

Other (please describe)

9. Overall, how satisfied are you

with this product?

a. Comprehensiveness of information

b. Clarity of writing (readability, interpretability)

c. Clarity of presentation (e.g., tables, charts)

d. Timeliness of information

e. Accuracy of information

f. Clarity of technical notes

g. Usefulness of resources and bibliography

h. Organization

i. Length

i. Format

Very Satisfied

EDI

Satisfied Dissatisfied

EDI

PAPERWORK BURDEN STATEMENT

Office of Education Research and improvement (OERI)

Publication Customer Survey

According to the Paperwork Reduction Act of 1995. io persons are required to respond to a collection of information unless it displays a valid OMBcontrol number. The valid

OMB control number for this information collection is 1880-0529.The time required to complete this Information collection is estimated to average 10 minutes per response,

Including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have anycomments

concerning the accuracy of the time estimate(s), suggestions for improving this form, or concerns regarding the status of your individual submission of this form, write directly

to: P. Quinn, Room 204, Media and Information Services, OERI, U.S. Department of Education, 555 New Jersey Avenue NW, Washington, DC 20208-5570.

3 BEST COPY AVAILABLE
OERI Publication Customer Survey

Media and information Services

U.S. Department of Education

Washington, DC 20202

Official Business

Penalty for Private Use, $300

BUSINESS REPLY MAIL

FIRST-CLASS MAIL PERMIT NO. 012935 WASHINGTON DC

POSTAGE WILL BE PAID BY U.S. DEPARTMENT OF EDUCATION

U.S. Department of Education

Mail Code: 5570

400 Maryland Avenue, S.W.

Washington, D.C. 20277 -2935

11111111111111111111111111111111111111111111111111111

NO POSTAGE

NECESSARY

IF MAILED

IN THE

UNITED STATES

Fold on lineTAPE CLOSEDDO NOT STAPLE

10. Do you have any suggestions regarding the content or format of future editions of this publication or other comments?

4

MIS 1999-6532
Managing the Price of College

A Handbook for Students and Families

National Institute on Postsecondary Education, Libraries, and Lifelong Learning

Office of Educational Research and Improvement

U.S. Department of Education

5
U.S. Department of Education

Richard W. Riley

Secretary

Office of Educational Research and Improvement

C. Kent McGuire

Assistant Secretary

National Institute on Postsecondary Education,

Libraries, and Lifelong Learning

Sandra Garcia

Acting Director

Media and Information Services

Cynthia Hearn Dorfman

Director

November 2000

The findings in this report are those of the author and do not necessarily reflect

the views or policies of the U.S. Department of Education.

To obtain copies of this report (while supplies last) or ordering information on

other U.S. Department of Education products, call toll free 1-877-4ED-Pubs

(877-433-7827), or write:

U.S. Department of Education

ED Pubs

P.O. Box 1398

Jessup, MD 20794-1398

TTY/TTD: 1-877-576-7734

FAX: 301-470-1244

This report is also available on the Web at:

http://www.ed.gov/pubs/collegecosts/cover.html
Table of Contents

Page

WHAT THIS HANDBOOK IS ABOUT 1

WHY STUDENTS PAY DIFFERENT AMOUNTS TO ATTEND COLLEGE 3

DIFFERENCES AMONG COLLEGES 3

DIFFERENCES AMONG STUDENTS AND THEIR FAMILIES 4

WHAT ELSE Do I HAVE TO PAY IN ADDITION TO TUITION? 7

HOW PEOPLE MANAGE TO PAY FOR COLLEGE 9

ILLUSTRATIVE EXAMPLES 10

INFORMATION TABLES ON PRICES AND AID 17

ABOUT PERCENTAGES AND RANGES 17

LIST OF TABLES SHOWING COLLEGE PRICES AND AID 21

PUBLIC FOUR-YEAR COLLEGES AND UNIVERSITIES: LOWER-PRICED STATES 22

PUBLIC FOUR-YEAR COLLEGES AND UNIVERSITIES: MEDIUM-PRICED STATES 24

PUBLIC FOUR-YEAR COLLEGES AND UNIVERSITIES: HIGHER-PRICED STATES 26

PRIVATE FOUR-YEAR COLLEGES AND UNIVERSITIES:

LOWER-TUITION (BELOW $10,000) 28

PRIVATE FOUR-YEAR COLLEGES AND UNIVERSITIES:

MEDIUM-TUITION (BETWEEN $10,000 AND $14,999) 30

PRIVATE FOUR -YEAR COLLEGES AND UNIVERSITIES:

HIGHER-TUITION (ABOVE $15,000) 32

PUBLIC TWO-YEAR COLLEGES 34

WHAT HAS CHANGED SINCE 1995-96 36

OTHER THINGS YOU SHOULD KNOW 39

UNDERSTANDING STUDENT FINANCIAL AID 39

A NOTE ON BORROWING 41

EFC: THE EXPECTED FAMILY CONTRIBUTION 43

TECHNICAL NOTES 47

NATIONAL POSTSECONDARY STUDENT AID STUDY (NPSAS96) 47

COLLEGE BOARD 47

NATIONAL ASSOCIATION OF STATE STUDENT GRANT AND AID PROGRAMS 47

ANALYSIS CONVENTIONS 48

OTHER SOURCES OF INFORMATION 49

PUBLICATIONS 49

INTERNET RESOURCES 49

REFERENCES 51

ACKNOWLEDGMENTS 53

III
What This Handbook

Is About

This handbook shows how families in various income groups

manage to pay for college. The handbook is based on real

experiences of a large number of actual families, as described by

national surveys.' While some figures date back to the 1995-96

school year, they are the most current available, and they will give

you a general answer to the question, "How do people like me

manage to pay for college?" Of course, to find out exactly what it

will cost you to go to a particular college, you will have to apply to

that college and for financial aid. This handbook gives you some

idea of what to expect.

We use the term college in this report to refer to all kinds of

institutions of higher education, including large research

universities, small liberal arts colleges, and community colleges.

But this handbook does not address the experiences of students at

all levels of study. We only describe the costs for students pursuing

either an associate's or bachelor's degree. These students are

generally referred to as "undergraduates." We do not attempt to

describe costs for masters and doctoral programs (graduate

programs), vocational schools, nor for professional programs, such

as law and medicine. Vocational schools and programs beyond the

4-year level of study are priced differently and are paid for

differently. Part-time students are not covered in this handbook

either; their financial circumstances and level of enrollment are too

varied and complicated to fit into the framework presented in this

handbook. Finally, we focus exclusively on the costs of dependent

students, that is, college students who are financially dependent on

their parents.

' The National Postsecondary Student Aid Study of 1995-96 (NPSAS96) and

the College Board Annual Survey of Colleges, 1999.

8

1
What This Handbook Is About

In 1998, people with

earnings who held a

bachelor's degree made

$43,782, compared to only

$23,594 for those with only

a high school diploma.

Community college

graduates' earnings

averaged $32,468 in 1998.

The average earnings for

earners with advanced

degrees (master's,

doctorate, or professional)

was $63,472.

SOURCE: U.S. Census

Bureau, Current Population

Reports, P60-206, Money

Income in the United

States: 1998, 1999.

2

But if you wish to go to college full time, and if you are

supported by your parents, this handbook will giveyou a ready

overview of how people in different circumstances covered their

college expenses. First, you will see how likely you are to receive

financial aid. Next you will see typical amounts of financial aid

received by students like you at various types of colleges. Finally,

you will see how much financial aid was left over after paying for

tuition to cover the cost of living and other expenses related to your education (things like laboratory fees).

Before looking at the tables that show the up-front price of

your college investment, consider the payoff. Today, more than ever

before, college is the key to financial and overall success. Recent

figures show that, on average, college graduates earn approximately

twice what high school graduates do.

In the long run the trend is clear: more education, higher

earnings. College is usually your best investment, whether you pay

from your savings or whether you borrow money to attend.

When you look at the tables in this handbook, you may be

surprised. Many students and families think the price is much

higher than it really is. Such misunderstandings are often fueled by

the media, which tend to emphasize the tuition at the nation's most

expensive colleges and universitiesthose with the $30,000 price

tags.

9
Why Students Pay Different

Amounts to Attend College

What students and their families pay to attend college

depends upon two main groups of factors: differences among

colleges, and differences among students and their families.'

Differences among Colleges

In this handbook, colleges are grouped according to key

factors that affect the tuition they charge and the financial aid they

give out. These factors are described below.

Public or private. Public collegesthose supported by state

and local governmentstypically charge less than private colleges.

On the other hand, many private colleges have relatively more

money to help students who can't afford the higher tuition.

Two-year or four-year. There is generally a big difference

between the price of 2-year and 4-year colleges. Public 2-year

colleges (community colleges) are usually less expensive. This price

difference has prompted many students to begin at less expensive

community colleges, then move to a 4-year college, if they want to

complete a 4-year degree (bachelor's degree). A few students attend

private 2-year colleges, but they are not discussed in this handbook.

We do not discuss private 2-year colleges due to the relatively small

number of students attending and the large differences in price and

financial aid policy among private 2-year colleges.

Higher-priced or lower-priced states. Among public 4-year

colleges, it is important to account for tuition differences across

2We recommend that you also read Understanding Student Financial Aid

(page 39). This section will help you to ask the right questions and

understand what people tell you about student aid.

10

STATE INITIATIVES

Many states have

responded to recent

increases in the price of

college by establishing new

or expanding existing state

scholarships, college

savings-trusts, and prepaid

tuition programs. Many new

state scholarships are merit

based, rewarding high

academic achievement

during high school and/or

linking continued support to

maintaining good grades in

college.

SOURCE: The Chronicle of

Higher Education, April 16,

1999.

At the beginning of 1999,

20 states offered prepaid

tuition plans that provide

protection from future tuition

increases. Here's how this

works: families can pay for

college ahead of time, even

many years in advance. In

return the college locks in

the current tuition that they

charge. Most of the states

that do not have prepaid

programs do have

established savings-trust

programs that enable people

to invest (often with

accompanying tax breaks)

in state-operated investment

funds. Only Massachusetts

had both a prepayment and

savings-trust program in

early 1999, but many states

were debating one or the

other at the time this

handbook was written.

SOURCE: The Chronicle of

Higher Education, February

19, 1999.

3
Why Students Pay Different Amounts to Attend College

states. States differ in the amount they charge to attend their public

colleges. There are also differences across states in the amount of

student aid they offer. Some states keep tuitions high, but make up

for it by providing more aid to their students. That is why what you

might pay to attend a public 4-year college will depend on what

state you live in.

Public 4-year colleges: lower-, medium-, and higher-priced states

Lower-priced Medium-priced Higher-priced

Arizona

Arkansas

District of Columbia

Florida

Georgia

Hawaii

Idaho

Kentucky

Louisiana

New Mexico

North Carolina

Oklahoma

Tennessee

Texas

West Virginia

Wyoming

Alabama

Alaska

California

Colorado

Illinois

Indiana

Iowa

Kansas

Minnesota

Mississippi

Missouri

Montana

Nebraska

New York

North Dakota

Oregon

South Dakota

Utah

Washington

Wisconsin

Connecticut

Delaware

Maine

Maryland

Massachusetts

Michigan

New Hampshire

New Jersey

Nevada

Ohio

Pennsylvania

Rhode Island

South Carolina

Vermont

Virginia

The above table groups states based on their average tuition

and size of their student aid programs.' The public tuition

groupings that we use are based on the 1995-96 school year. The

three categories that we use throughout this handbook are: lowerpricedless than $2,100; medium-pricedbetween $2,100-3,100;

and higher-pricedover $3,100.

Differences among Students

and Their Families

Income. Most financial aid is need-based; in other words, it

depends on the difference between the price of attending a given

college and a family's ability to pay. When you apply for financial

3 These groupings resulted from subtracting the average state scholarship

from the state's average public four -year tuition. These figures are for fulltime undergraduates only.

4
Why Students Pay Different Amounts to Attend College

aid, the college will use a formula to determine how much you and

your family are expected to contribute. The formula takes into

account family income and other factors. Using this formula,

colleges come up with an "Expected Family Contribution (EFC)."

When you decide to apply for financial aid, your EFC will

determine how much need-based financial aid you will be eligible

for. (To really understand EFC, go to the description on page 43.)

Income isn't the only factor that determines if you get aid,

how much aid, and what types of aid you might get (grants, loans,

or work study). There are other factors. Income is, however, the

main factor, so the tables in this handbook show you average aid

awards for people in different income groups. This provides a good

general guide. Your chances of getting aid, and the amounts you

actually get, will vary from other people within your income group.

The factors that determine how aid may vary for you are described

in the section About Percentages and Ranges, page 17.

Year in college. Students are eligible to borrow more the

further they get in college. This means that in the early years,

students get more of their financial aid from grants than they do in

later years. In later years, they are asked to borrow more and get

less from grants. Tables in this handbook show averages for all

years in college.'

In addition to the factors cited above, what you pay to attend

college will depend on a number of choices that you will make,

discussed below.

Hard work in high school. Merit scholarships are given to

outstanding athletes and to students with very good academic

records (like the National Merit Scholarships). In part to attract or

reward specific students, colleges give out some of these

scholarships (gift aid) without considering financial need.

About 9 percent of students at 4-year public colleges get

merit scholarships.

A similar percent of students who attend public 2-year

colleges, 8 percent, get merit scholarships.

° During the most recent year (1999-00), first-year dependent students were

allowed to borrow up to $2,625; second-year students up to $3,500; and

juniors and seniors up to $5,500. These figures are for students who are

financially dependent on their parents.

12

ATTENDING A PUBLIC

COLLEGE IN ANOTHER

STATE

In 1996, over 80 percent

of public 4-year college

students attended a school

in their home state. An

increasing number of

students, however, are

crossing state lines to

attend public colleges.

Unless a college student

can establish legal

residency in the state

where the college is

located, he or she will pay

an out-of-state tuition rate.

Even with the additional

charges, attending an outof-state public college may

be less expensive than

attending a private school.

It is important to keep in

mind, however, that

colleges that charge more

often make up for the

difference with additional

institutional financial aid.

SOURCE: U.S. Department

of Education, National

Center for Education

Statistics, National

Postsecondary Student Aid

Study: 1995-96.

5
Why Students Pay Different Amounts to Attend College

INDEPENDENT STUDENTS

Independent students

are much more likely to

attend college part time

than dependent students,

67 percent compared to

30 percent in 1995-96.

About half, 48 percent, of

independent students

received financial aid in

1995-96.

SOURCE: U.S. Department

of Education, National

Center for Education

Statistics, National

Postsecondary Student Aid

Study: 1995-96.

6

Students at private 4-year colleges are more likely to get

merit scholarships. About 23 percent get this type of

assistance.'

Not very many students get merit scholarships. But for those

who do, it can really help. This is another reason to study hard and

do well in high school.'

Attending part time. Some students pay for college by

working while going to school part time. It naturally takes longer to

finish college this way. Yet some students choose to study part

time for many reasons. Part-time students usually pay less, but also

get less financial aid. The tables in this handbook are based on the

experiences of full-time studentsthey will not apply to you if you

are planning to study part time. In that case, you should consult

with your college's financial aid office to see what types and

amounts of financial aid may be available to you.

Attending in-state or out-of-state. If you go to a public

college outside your home state, you usually have to pay more.

How much more? The answer depends on which state you are

considering. Figures in this handbook are based on students

studying in their state of legal residence. To find out the price of

attending a public college in another state, contact the admissions

office of the college you are interested in.

Attending college as an independent student. Approximately

half of all college students in 1995-96 attended as independent

students. If you are financially independent of your parents, your

parents' financial circumstances are not considered in calculating

financial aid. To be independent you must:

be 24 years of age by January 1 of the school year in

question; or

be married; or

have a dependent other than a spouse; or

be an orphan or ward of the court; or

be a veteran of the armed services.

Figures in this handbook are for dependent students only.

Independent students should get information from the college they

are interested in attending.

5 Figures are for full-time, full-year dependent students (NPSAS96).

6 The tables in this handbook include merit scholarships with other types of

grants.

13
Why Students Pay Different Amounts to Attend College

What Else Do I Have to Pay in Addition

to Tuition?

In addition to tuition, you will have other expenses as a

college student. 'These expenses include educational expenses, such

as books and laboratory fees. You will also have living expenses,

such as housing, food, and transportation. Adding these expenses to

tuition gives you a more realistic estimate of what it might cost to

attend college. We refer to all of these expenses together as the total

price of attendance.' Below is a table that shows the average

additional expenses students recently had to pay, including living

expenses. These figures should be similar to what you will face if

you live on campus. Of course, if you live at home you can probably

reduce your living expenses.

Average expenses for full-time students living on campus at

4-year colleges in 1999-00

Public Private

Books and su I lies 681 700

Room and board 4 730 5 959

Transionation 658 558

Personal ex.enses 1 484 1 054

SOURCE: College Board, Trends in College Pricing, 1999.

Also referred to as "total cost of attendance."

11
How People Manage

to Pay for College

The tables that follow should give you an idea of how people

pay for college. There are seven sets of tables, according to the seven

categories of colleges in this handbook. Within each set of tables,

you will find financial aid and college price information based on

the experiences of students whose families' income levels differ.

These figures are not price quotes. The actual price of

attending college depends on many factors. You will not know

exactly what your first year of college will cost until you apply to a

college and are accepted, apply for and receive a financial aid offer

from that college, and decide how much of any loan or work-study

aid to accept.

Remember this handbook shows how students paid for

college, given the choices they had. Some students decided not to

apply for financial aid. And not all students were willing to borrow

to finance their college education. The tables do not show what aid

students might have been offered or taken; they show how students

and their families actually financed college in a recent (1995-96)

academic year.'

'Several things have changed since 1995-96. By 1999-00, tuition at public 4-

year colleges had increased on average by 17 percent (College Board, Trends

in College Pricing 1999). Family incomes increased by roughly the same

amount (15 percent) between 1995 and 1998 (U.S. Census Bureau 1999).

Financial aid per college student also increased 15 percent between 1995-96

and 1998-99 (College Board, Trends in Student Aid 1999). For more details

see page 36, "What Has Changed Since 1995-96."

15

OTHER WAYS FAMILIES

MANAGE THE PRICE OF

COLLEGE

Financial aid is only part of

the college financing

strategies students and

their families use to pay for

college. There are a

number of other ways

families manage to pay:

Saving for college

beginning early in a

child's life;

Contributions from

parent's current income;

Contributions from

student's summer or

school-year employment;

Parent borrowing, such

as mortgage loans, bank

loans;

Tuition payment plans;

Reducing the total price

of attending college by

living at home;

Acquiring some of the

credits toward a 4-year

degree at less expensive

community colleges;

Explore accelerated

degree programs (e.g.,

3-year Bachelor's

Degree); and

Getting a head start on

college while still in high

school by taking

Advanced Placement

courses.

9
How People Manage to Pay for College

10

Illustrative Examples

To clarify these tables, take a look at two examples of

students planning on attending a public 4-year college. Our first

example is Sharon. Sharon lives in Arizona with her mother. Our

second example is Michael. Michael lives in North Carolina with

his mother, father, and brother. Michael also has a sister who will

be entering her junior year of college this fall. Both Sharon and

Michael have decided they would like to attend one of their state's

4-year public universities.

The first step for Sharon and Michael is to find their state on

the "tuition-level" table.9 Sharon finds Arizona is a lower-priced

state, as does Michael for North Carolina. Therefore, both Sharon

and Michael turn to the tables for public 4-year colleges and

universities in lower-priced states (page 22). If Sharon lived in

Wisconsin, she would turn to the medium-priced tuition tables. If

Michael lived in Massachusetts, he would turn to the higher-priced

tuition tables.

By turning to the first table for students at a public 4-year

college in a lower-priced state (page 22), Sharon and Michael find

that the average tuition was $2,350, and the total average price of

attending that includes all other expenses was $9,050 in 1995-96.

To see the amount of financial aid provided to students like

Sharon and Michael, we start with their family income. Sharon's

family income is $35,000, based on her mother's income. Therefore,

Sharon will look for information on the family income-level row

labeled "$20,000-40,000" on the table. Michael's family income is

just over $90,000, based on the combined earnings of his mother

and father. Therefore, Michael will refer to information provided on

the "$80,000-100,000" row. Take a look across the table row by

TOW.

What Are My Chances for Receiving Aid?

What are Sharon and Michael's chances for receiving

financial aid? Look at the first two columns of the table.

9 States needed to be grouped because the NPSAS96 data (on which the tables

are based) did not contain enough cases to support accurate estimates for

single states. The size of state scholarship programs was also considered in

grouping the states into lower, medium, and higher public 4-year tuition

levels.

16
How People Manage to Pay for College

Family income and the likelihood of receiving financial aid

Family

income

level

Percent of students

who received any

type of financial aid

Below $20,000 83%

Sharon $20,000-40,000 76%

$40,000-60,000 56%

$60,000-80,000 54%

Michael $80,000-100,000 40%

Above $100,000 32%

SOURCE: U.S. Department of Education, National Center for Education

Statistics, National Postsecondary Student Aid Study: 1995-96.

Find your family income in the first column. The second

column shows the percentage of full-time students attending 4-year public colleges and universities that got financial aid in 1995-96. Sharon sees that three-fourths of students like her received some

financial aid (76 percent) when they attended a public 4-year college.

Michael sees that his chances for receiving financial aid are not as high as Sharon's. Only 40 percent of students from families

with income levels similar to Michael's received financial aid.

Michael knows that based on other factors that are considered, he

may be more likely to receive aid, because he has an older sister

who will also be attending college next year. Although the table

shows he has less than an even chance of getting aid, given this

major additional factor, his chances could be better.'° In fact,

Michael's sister, who will be entering her third year of college, may

find that she is now eligible for aid, perhaps for the first time.

There are other additional factors that could affect your financial aid award. These are discussed beginning on page 18.

How Much Financial Aid Might I Get?

Now that Sharon and Michael have a sense of how likely it is

that they will receive financial aid, the next question is, "How much?" The next column provides the range of financial aid awards

received by most aid recipients within a given range of family

incomes. By "most," we mean the middle half. One-quarter of aid

'The formula for expected family contribution (EFC) takes into account

families having multiple children in college at the same time by dividing the EFC from parents equally among all of their children attending college. So if a

family's EFC were $6,000 and they had two children enrolled in college at the

same time, they would be expected to contribute $3,000 to each child's

educational expenses.

11

17
How People Manage to Pay for College

recipients received less and one-quarter received more than the

indicated range.

Family income and typical aid awards

Family income

level

Percent

of

students

who

received

any

type of

financial

aid

Below $20,000 83%

Sharon $20,000-40,000 76%

$40,000-60,000 56%

$60,000-80,000 54%

Michael $80,000-100,000 40%

Above $100,000 32%

Sharon

For those students who received financial aid:

Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

$3,200 $6,500 87% $800 $4,200

$2,800 $6,550 83% $600 $4,350

$2,300 $5,500 76% $50 $3,550

$2,000 $5,100 71% 0 $3,050

$1,500 $4,950 64% 0 $2,600

$2,250 $6,000 84% $300 $3,550

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Michael

12

Family income

level

Below $20,000

$20,000-40,000

$40,000-60,000

$60,000-80,000

$80,000-100,000

Above $100,000

Percent of

students

who

received

any type

of

financial

aid

83%

76%

56%

54%

40%

. 32%

For those students

who received

financial aid:

Most got

between

$3,200

$2,800

$2,300

$2,000

$1,500

$2,250

O

U

U

U

U

11

$6,500

$6,550

$5,500

$5,100

$4,950

$6,000

SOURCE: U.S. Department of Education, National Center

for Education Statistics, National Postsecondary Student

Aid Study: 1995-96.
How People Manage to Pay for College

Assuming Sharon receives financial aid, she might expect to

receive between $2,800 and $6,550. Note that this range is rather wide; it extends over $3,000. If Michael is among the college

students in his family's income category to receive aid, the total

assistance typically received by families like his recently ranged

from $1,500 to $4,950. This is also a wide range. Where Michael and Sharon fall within this range, or if they fall outside of it,

depends on other factors that are typically considered when

awarding financial aid. Some of these factors are presented in the

section Additional Factors (page 18).

Will Financial Aid Meet My Needs?

How far do typical aid awards go in meeting the expenses

associated with going to college? The next two columns in the

table address this question by showing the percentage of aid

recipients who receive enough financial aid to pay all of their

tuition bill, and the typical ranges of financial aid left over to cover other educational and living expenses.

Financial aid remaining after paying tuition according to family income group

Family income

level

Percent of

students

who

received

any

type of

financial

aid

For those students who received financial aid:

Most got

b -tween:

Percent

whose

tuition

was

fully

covered

Below $20.000 83% $3,200 $6,500 87%

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

$800 $4.200 Sharon' $20,000-40,000 76% $2,800 $6,550 83% $600 $4,350

$40,000-60,000 56% $2,300 $5,500 76% $50 $3,550

$60,000-80,000 54% $2,000 $5,100 71% 0 $3,050

Michael $80,000-100,000 40% $1,500 $4,950 64% 0 $2,600

Above $100.000 32% $2.250 $6.000 84% $300 $3.550

SOURCE: U.S. Department of Education, National Center for Education Statistics, National

Postsecondary Student Aid Study: 1995-96.

When looking across the correct income row, Sharon can see

that 83 percent of students with a similar income background who

received aid, received enough to completely pay for tuition. Sharon

can see that aid in excess of tuition typically ranged from $600 to

$4,350. This extra money can be used to pay for books, supplies,

room, board, and other living expenses. Michael sees that 64

percent of aid recipients in his family income category received aid

that fully covered tuition charges. While most students in his

income category received no aid at all, among those who did, this

19 13
How People Manage to Pay for College

14

aid played a substantial role. Financial aid awards, when they were

received, were sufficient to cover the tuition payments of the

majority of aid recipients in Michael's relatively high-income

category.

What Kind of Aid Might I Get?

Sharon and Michael are also interested in knowing the form

of any financial aid they might receive. They know that loans must

be paid back with interest and work-study dollars are earned by

taking a part-time job, usually on campus. Therefore, grant aid is

the most attractive because it does not have to be repaid. Most

often students get a mix of different kinds of aid. The next table

indicates the percentage of students who received various types of

financial aid packages according to their family income group.

Combinations of financial aid that students received

Family

Income level

Percent

No

aid

of students

Grants

only

who

Loans

only

received

Grants

and

loans

Work

study

Grants,

loans,

and work

study

Below $20,000 17% 28 4 39 3 8

Sharon $20,000-40,000 24% 22 8 33 5 8

$40,000-60,000 44% 18 19 14 3 2

$60,000-80,000 47% 23 19 7 4 1 Michael $80,000-100,000 61% 14 14 8 3 0

Above $100,000 69% 19 5 5 2 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Looking at the row that includes her family's income,

Sharon sees that a combination of grant and loan aid was the most

common aid package received by those attending a public 4-year

college in a lower-priced state. One-third of the students in Sharon's

situation received this type of aid package. Over a fifth (22 percent)

received only grants, and an additional 8 percent received grants,

loans, and work study. Grants, either alone or combined with other

forms of financial aid, play a prominent role in the aid packages for

students like Sharon. Only 8 percent of students like Sharon

received an aid package that consisted only of loans.

Most students in Michael's situation received no financial

aid. For those who received assistance, the two most common

packages were either grants (14 percent) or loans (14 percent) only.

Approximately half as many students (8 percent) combined both

20
How People Manage to Pay for College

loans and grants and a small number (3 percent) received an aid

package involving work study.

How Much Aid Might I Get From Each Type of Aid?

Finally Sharon and Michael need to know, "How much

money did students like me receive from these different kinds of

aidgrants, loans, and work study?" The last set of tables provides

this information. Again, the percentage of students who received

each type of aid and the typical range of dollar amounts are shown

by family income category. And again, the ranges presented in the

tables are defined by the middle 50 percent of students who

received a given type of aid; that is, one-quarter received less and

one-quarter received more.

Average amounts of grant, loan, and work-study aid received

Family income

level

Grant

Percent who

got grants

Aid

Students who got grants received

between:

Sharon $20,000-40,000 66% p $1,000 & $2,850

Michael $80 000-100 000 22% s $500 & $2 250

Loan Aid

Family income Percent who Students who got loans

level got loans received between.

. $20 000 40,000 49% s $2,600 & $5,250

. $80 000-100 000 21% p $2 600 & $5 000

Work-Study Aid

Family income Percent who Students who got work study

level clot work study received between:

Sharon $20,000-40,000 13% w $600 I & I $1,650

Michael $80,000-100,000 3% Ili insufficient information"

SOURCE: U.S. Department of Education, National Center for Education

Statistics, National Postsecondary Student Aid Study: 1995-96.

Sharon sees in these tables that among college students like her, 66 percent received grants, 49 percent took out loans, and 13

percent received work study. She notes the typical range of grant awards ($1,000 to $2,850) was smaller than the typical loan

amounts ($2,600 to $5,250). Students like Sharon were more likely

to receive a grant than take out a loan, but the typical amount borrowed exceeded the typical grant. A smaller percentage, but still

11 Figures in this handbook are based on national surveys. In some cases, not enough people fall into a particular category of interest to provide reliable estimates.

15

21
How People Manage to Pay for College

a substantial number of people like Sharon received work study and

the amount received typically ranged from $600 to $1,650.

Michael sees that college students in his situation were

equally likely to receive grants (22 percent) and loans (21 percent).

Just as was the case for Sharon, loan amounts ($2,600 to $5,000)

tended to be higher than grants ($500 to $2,250) among people in

Michael's family income group.' Only a small fraction (3 percent)

of college students in Michael's situation received work-study

awards. 13

12 Note that the range for loans for both Michael and Sharon are

approximately equal. In fact, the ranges are similar for all income groups.

This is because the limit on what you can borrow each year from the student

aid programs is the same for all students. In addition to annual limits, college

students face lifetime limits on the amount of federal education debt they

may accumulate. See page 49, The Student Guide: Financial Aid 1999-2000,

U.S. Department of Education, if you want more details.

13 The data on which these tables are based do not contain a sufficient

number of cases to support an accurate estimate of dollar amounts.

22

16
Information Tables on

Prices and Aid

Now let's look at the tables that you can use to compare

your family's situation with a similar group of families. The tables

that you will use are set up just like those in the examples. To find

the right information in these tables, you need to know the type of

college you plan on applying to and your family's income. Separate

tables are provided for seven categories of colleges.

To compare your prospects for financial aid with this recent

group of students, you need to know your family income!' You

should look at the row corresponding to your family's income level

in the tables for each type of college you are considering. As you

now know, financial aid eligibility calculations consider other

factors in addition to income. Family income, however, provides a

good rule-of-thumb. But remember that the numbers reported here

are not price quotes. They are the actual prices and aid amounts

faced by people like you in a particular year (1995-96).

Before reading the tables, take a look at the next section,

About Percentages and Ranges. This section will help you

understand why student financial aid is different for people with

similar incomes.

About Percentages and Ranges

When you look up information based on your family's

income, you will see that not all people in your income group got

aid. The percentage for each group is listed in the second column

under the heading "Percent of students who received any type of

financial aid." In the example below, the figure was 76 percent.

" 4 If you want to look up your income on your income tax form, look at the

line titled "gross income."

17

23
Information Tables on Prices and Aid

18

Percent of

students

For those students who received financial aid:

After paying

tuition, aid

was used for

who Percent living expenses

received whose and other

any type of tuition educational needs.

Family income financial Most got was fully Such aid

level aid between: covered ran s ed between:

$20,000-40,000 76% $2,800 $6,550 83% $600 $4,350

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Does this mean that everyone with family incomes between

$20,000 and $40,000 has exactly a 76 percent chance of receiving

aid, and that actually receiving aid is determined by chance? No. It

means that within this income range, 76 out of 100 people got aid

in a recent year. We can't be more exact without knowing more.

That's because income is not the only thing taken into

consideration when awarding financial aid.

The same is true for the amount of aid people get. The tables

show a range for the amount of aid people got in a recent year.

Figures are shown in the column labeled, "Most got between." In

this example, the range is pretty wide, between $2,800 and $6,550.

Again, to be more exact than this requires more information than

just a family's income.

Additional Factors

To get a more precise idea if you are likely to get aid and if

so, how much, see if the following factors apply to you and your

family. If many of these factors describe your family's

circumstances, then you are more likely to be among those who get

aid. And if you get aid, you are more likely to be on the higher end

of the range of awards.

You are closer to the lower end of the income range in

the table. In the example above, if your income were

closer to $20,000 than it is to $40,000, you are more

likely to get aid.

You attend an expensive college. Generally, the more

expensive your college, the more financial aid you can

qualify for. In some cases, if you decide to go to a more

expensive college, you may actually end up paying less.

This is because many expensive colleges have more funds

24
Information Tables on Prices and Aid

to help students. So don't automatically assume you can't

afford the more expensive college.

You have sisters or brothers in college at the same time.

Here too, if circumstances make it harder for your family

to pay, financial aid often helps make up the difference.

For most families, putting two children through college

simultaneously without more financial aid would be

much harder.

You come from a large family. If you have a large number

of sisters or brothers who remain dependent on the

family for support, the financial aid system will take that

into account.

You pay above average state or local taxes. Some places

have higher taxes than others do. This too is taken into

account when awarding aid.

You have little accumulated wealth or savings. The

/financial aid system assumes that some of your savings

ought to be used to pay for college. But if you have not

managed to save much money or accumulate other assets

(stocks and bonds for example), you may be more likely

to qualify for aid or receive more aid.

You have unusual expenses, such as medical bills. The

financial aid system will take into account your

increased need for aid if you have been faced with

unusually large medical bills.

You do not work while attending college. Students often

find they can work part time when attending college full

time. If you do, you will be expected to contribute some

of your earnings to pay for college. But if you do not earn

much money while in college, you may get some more

financial aid to help you pay for college.

You are willing to borrow. Loans are a big part of the

financial aid package offered to many students. But you

don't have to accept loansyou can substitute your own

money for the loan amount you may be offered. The

tables in this handbook show the amount actually

borrowed, not the amount that could have been

borrowed.

25 19
Information Tables on Prices and Aid

If many of these factors apply to you and your family, then

your chances of getting aid are higher than average for

your income group. And the amount of aid you get will

either be like those people near the top of the range

who got aidin this example $6,550or you may get

even more than the top figure in the range. Remember

that the ranges show the average award for the middle

half of a recent group of families. About one-fourth of

them got more than the stated range. About one-fourth

got less.

If few of these factors apply to you and your

family, the reverse is truelower chances for aid and

lower aid awards would be more typical.

26

20
Information Tables on Prices and Aid

List of Tables Showing

College Prices and Aid

PUBLIC 4-YEAR COLLEGES AND UNIVERSITIES IN LOWER-PRICED STATES

(UNDER $2,100) PAGE 22

PUBLIC 4-YEAR COLLEGES AND UNIVERSITIES IN MEDIUM-PRICED STATES

(BETWEEN $2,100 AND $3,100) PAGE 24

PUBLIC 4-YEAR COLLEGES AND UNIVERSITIES IN HIGHER - PRICED STATES

(OVER $3,100) PAGE 26

PRIVATE 4-YEAR COLLEGES AND UNIVERSITIESWITH LOWER TUITION

(UNDER $10,000) PAGE 28

PRIVATE 4-YEAR COLLEGES AND UNIVERSITIES WITH MEDIUM TUITION

(BETWEEN $10,000 AND $15,000) PAGE 30

PRIVATE 4-YEAR COLLEGES WITH HIGHER TUITION

(OVER $15,000) PAGE 32

PUBLIC 2-YEAR COLLEGES. PAGE 34

2 4 21
Information Tables on Prices and Aid

AVERAGE IN-STATE

TUITION: $2,350

AVERAGE TOTAL

PRICE INCLUDING

LIVING AND OTHER

EXPENSES: $9,050

Arizona

Arkansas

District of Columbia

Florida

Georgia

Hawaii

Idaho

Kentucky

Louisiana

New Mexico

North Carolina

Oklahoma

Tennessee

Texas

West Virginia

Wyoming

22

Public Four-Year Colleges and

Universities: Lower-Priced States

Who received aid, how much aid they received, and

how much aid was left over for other expenses

For those students who received financial aid:

Family income

level

Percent of

students

who

received

any

type of

financial

aid

Most

between:

got

Percent

whose

tuition

was

fully

covered

After paying

aid was

living expenses

other educational

needs.

ra ged

used

Such

between:

tuition,

for

and

aid

Below $20,000 83% $3,200 $6,500 87% $800 $4,200

$20,000-40,000 76% $2,800 $6,550 83% $600 $4,350

$40,000-60,000 56% $2,300 $5,500 76% $50 $3,550

$60,000-80,000 54% $2,000 $5,100 71% 0 $3,050

$80,000-100,000 40% $1,500 $4,950 64% 0 $2,600

Above $100,000 32% $2,250 $6,000 84% $300 $3,550

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

Percent

No aid

of students

Grants

only

who received

Grants

and loans

Work

study

Grants,

loans,

and workLoans only study

Below $20,000 17% 28 4 39 3 8

$20,000-40,000 24% 22 8 33 5 8

$40,000-60,000 44% 18 19 14 3 2

$60,000-80,000 47% 23 19 7 4

$80,000-100,000 61% 14 14 8 3 0

Above $100,000 69% 19 5 5 2 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

28
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Percent who got

grants

Students who got grants

received between:

Below $20,000 51% $2,600 & $4,800

$20,000-40,000 49%

"

$2,600 & $5,250

$40,000-60,000 35% io $2,600 & $5,500

$60,000-80,000 27% 1" $2,600 & $5,500

$80,000-100,000 21%

"

$2,600 & $5,000

Above $100 000 10%

"

insufficient information*

Loan Aid

Family income level Percent who got

loans

Students who got loans received

between:

Below $20,000 77%

"

$2,050 & $3,700

$20,000-40,000 66%

"

$1,000 & $2,850

$40,000-60,000 35% wo $850 & $3,200

$60,000-80,000 32%

"

$1,000 & $2,650

$80,000-100,000 22%

"$500 & $2,250

Above $100 000 25%

"$1 900 & $2 900

Work-study Aid

Family income level Percent who got

work-study

Students who got work-study

received between:

Below $20,000 11%

"

$500 & $1,800

$20,000-40,000 13% a+ $600 & $1,650

$40,000-60,000 5% .6 insufficient information*

$60,000-80,000 4%

"

insufficient information*

$80,000-100,000 3%

"

insufficient information*

Above $100,000 2% insufficient information*

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

* Figures in this handbook are based on national surveys. In some cases, not enough

people fall into a particular category of interest to provide reliable estimates.

29 23
Information Tables on Prices and Aid

AVERAGE IN-STATE

TUITION: $3,250

AVERAGE TOTAL

PRICE INCLUDING

LIVING AND OTHER

EXPENSES: $10,400

Alabama

Alaska

California

Colorado

Illinois

Indiana

Iowa

Kansas

Minnesota

Mississippi

Missouri

Montana

Nebraska

New York

North Dakota

Oregon

South Dakota

Utah

Washington

Wisconsin

24

Public Four-Year Colleges and

Universities: Medium-Priced States

Who received aid, how much aid they received, and

how much aid was left over for other expenses

For those students who received financial aid:

Family income

level

Percent of

students

who

received

any

type of

financial

aid Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

Below $20,000 90% $4,100 $9,000 89% $1,550 $5,500

$20,000-40,000 82% $3,550 $7,800 82% $550 $4,750

$40,000-60,000 65% $2,550 $6,250 67% 0 $3,400

$60,000-80,000 52% $2,000 $5,500 58% 0 $2,250

$80,000-100,000 38% $2,600 $5,500 59% 0 $2,400

Above $100,000 25% $1,000 $5,500 42% 0 $2,500

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

Percent

No aid

of students

Grants

only

who received

Loans

only

Grants

and

loans

Work

study

Grants,

loans, and

work

study

Below $20,000 10% 32 3 39 6 9

$20,000-40,000 18% 22 10 41 2 6

$40,000-60,000 36% 17 22 18 3 4

$60,000-80,000 48% 17 24 8 3 0

$80,000-100,000 63% 8 22 6 1 0

Above $100,000 77% 12 8 1 2 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

v0
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Percent who got

grants

Students who got grants

received between:

Below $20,000 86% wo $2,350 & $5,900

$20,000-40,000 70%

"

$1,200 & $3,800

$40,000-60,000 40%

"

$500 & $2,500

$60,000-80,000 25% 114 $900 & $2,400

$80,000-100,000 14% wo $500 & $2,700

Above $100,000 13% D* $400 & $2 450

Loan Aid

Family income level Percent who got

loans

Students who got

between:

loans received

Below $20,000 52% I" $2,600 & $4,900

$20,000-40,000 58% P $3,000 & $5,500

$40,000-60,000 46%

''

$2,600 & $5,500

$60,000-80,000 34% s $2,600 & $5,500

$80,000-100,000 27% s+ $3,500 & $5,650

Above $100 000 10%

'

$3 050 & $10 500

Work-study Aid

Family income level Percent who got

work-study

Students who got work-study

received between:

Below $20,000 15% s $1,000 & $1,750

$20,000-40,000 8% D. $850 & $1,800

$40,000-60,000 7% "' $850 & $1,500

$60,000-80,000 3% "

insufficient information*

$80,000-100,000 1% a+ insufficient information*

Above $100,000 2% S. insufficient information*

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

* Figures in this handbook are based on national surveys. In some cases, not enough

people fall into a particular category of interest to provide reliable estimates.

31 25
Information Tables on Prices and Aid

AVERAGE IN-STATE

TUITION: $4,400

AVERAGE TOTAL

PRICE INCLUDING

LIVING AND

OTHER EXPENSES:

$11,050

Connecticut

Delaware

Maine

Maryland

Massachusetts

Michigan

Nevada

New Hampshire

New Jersey

Ohio

Pennsylvania

Rhode Island

South Carolina

Vermont

Virginia

26

Public Four-Year Colleges and

Universities: Higher-Priced States

Who received aid, how much aid they received, and

how much aid was left over for other expenses

For those students who received financial aid:

Family income

level

Percent of

students

who

received

any

type of

financial

aid Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

Below $20,000 87% $5,350 $10,000 85% $1,350 $5,650

$20,000-40,000 82% $4,400 $8,500 76% $150 $4,450

$40,000-60,000 69% $3,000 $7,000 62% 0 $2,550

$60,000-80,000 54% $2,600 $6,100 44% 0 $1,700

$80,000-100,000 50% $2,600 $7,000 46% 0 $2,500

Above $100,000 28% $2,600 $5,000 36% 0 $700

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

Percent

No aid

of students

Grants

only

who received

Loans

only

Grants

and

loans

Work

study

Grants,

loans, and

workstudy

Below $20,000 13% 18 4 47 6 12

$20,000-40,000 18% 13 7 44 2 16

$40,000-60,000 31% 10 23 24 5 7

$60,000-80,000 47% 11 28 9 4 2

$80,000-100,000 50% 12 27 5 6 0

Above $100,000 74% 6 14 2 4 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

32
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Percent who got

grants

Students who got grants

received between:

Below $20,000 82% 304 $2,500 & $5,750

$20,000-40,000 74%

"$1,400 & $4,150

$40,000-60,000 41% D. $750 & $2,700

$60,000-80,000 22%

"

$600 & $2,550

.$80,000-100,000 17%"

$500 & $3,750

Above $100 000 8% 34 insufficient information*

Loan Aid

Family income level Percent who got

loans

Students who got loans received

between:

Below $20,000 63%

"$2,600 & $5,450

$20,000-40,000 67%

"$2,600 & $5,500

$40,000-60,000 56%

"$2,600 & $5,500

$60,000-80,000 39% "

$2,600 & $6,100

$80,000-100,000 34%

"$2,600 & $7,600

Above $100 000 18% *4 $2 600 & $5 000

Work-study Aid

Family income level

Percent who got

work-study Students who got work-study

received between:

Below $20,000 18%

"

$650 & $1,500

$20,000-40,000 18%

"

$650 & $1,550

$40,000-60,000 12%

"

$800 & $2,000

$60,000-80,000 5% insufficient information*

$80,000-100,000 6% *4 'insufficient information*

Above $100,000 4% w. insufficient information*

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

* Figures in this handbook are based on national surveys. In some cases, not enough

people fall into a particular category of interest to provide reliable estimates.

33 27
Information Tables on Prices and Aid

AVERAGE TUITION:

$6,400

AVERAGE TOTAL

PRICE INCLUDING

LIVING AND

OTHER EXPENSES:

$13,000

28

Private Four-Year Colleges and

Universities: Lower-Tuition

(Below $10,000)

Who received aid, how much aid they received, and

how much aid was left over for other expenses

Family income

level

Percent of

students

who

received

any

type of

financial

aid

For those students who received financial aid:

Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

Below $20,000 96% $3,250 $10,000 66% & $3,400

$20,000-40,000 93% $3,150 &. $10,900 54% & $3,550

$40,000-60,000 84% $3,500 $10,100 50% 0 & $2,800

$60,000-80,000 76% $3,500 $10,000 43% 0 & $1,500

$80,000-100,000 60% $1,800 $8,600 30% 0 & $1,400

Above $100,000 51% $1,500 $7,600 26% 0 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

Percent

No aid

of students

Grants

only

who received

Loans only

Grants

and loans

Work

study

Grants,

loans,

and workstudy

Below $20,000 4% 26 1 40 11 19

$20,000-40,000 7% 27 8 35 4 19

$40,000-60,000 16% 27 13 24 6 14

$60,000-80,000 24% 33 13 19 1 10

$80,000-100,000 42% 23 12 19 2 4

Above $100,000 50% 33 7 9 0 1 SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Percent who got

grants

Students who got grants

received between:

Below $20,000 95%

"$2,350 & $5,450

$20,000-40,000 84%

"$1,800 & $6,000

$40,000-60,000 70%

"

$2,000 & $6,250

$60,000-80,000 63%

"$1,250 & $5,900

$80,000-100,000 45%

"$1,000 & $3,500

Above $100 000 41%

"

$1 000 & $3 000

Loan Aid

Family income level Percent who got

loans

Students who got loans received

between:

Below $20,000 59%

"

$2,600 & $4,600

$20,000-40,000 62%

"

$2,600 & $5,500

$40,000-60,000 52%

"

$2,600 & $5,500

$60,000-80,000 42%

"$3,300 & $7,500

$80,000-100,000 34%

"$3,500 & $7,600

Above $100 000 16% s* insufficient information*

Work-study Aid

Family income level Percent who got

work study

Students who got work study

received between:

Below $20,000 29% P. $400 & $1,150

$20,000-40,000 23% w $750 & $1,500

$40,000-60,000 20% . $900 & $1,800

$60,000-80,000 11% DS insufficient information*

$80,000-100,000 6% v. insufficient information*

Above $100,000 1% 111* insufficient information*

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

* Figures in this handbook are based on national surveys. In some cases, not enough

people fall into a particular category of interest to provide reliable estimates.

35 29
Information Tables on Prices and Aid

AVERAGE TUITION:

$12,800

AVERAGE TOTAL

PRICE INCLUDING

LIVING AND

OTHER

EXPENSES:

$19,200

30

Private Four-Year Colleges and

Universities: Medium-Tuition

(Between $10,000 and $14,999)

Who received aid, how much aid they received, and

how much aid was left over for other expenses

Family income

level

Percent of

students

who

received

any

type of

financial

aid

For those students who received financial aid:

Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

Below $20,000 91% $10,350 $16,250 58%

$20,000-40,000 96% $9,500 $16,250 55%

$40,000-60,000 92% $7,800 $15,150 39%

$60,000-80,000 87% $6,000 $12,400 21%

$80,000-100,000 79% $4,050 $11,700 21%

Above $100,000 62% $2,000 $9,500 16%

0 $3,900

0 $3,350

0 $2,050

0 0

0 0

0 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

Percent

No aid

of students who received

Loans only

Grants

and loans

Work

study

Grants,

loans,

and workstudy Grants

only

Below $20,000 9% 15 5 35 4 32

$20,000-40,000 5% 15 2 35 5 40

$40,000-60,000 8% 15 4 29 5 38

$60,000-80,000 13% 20 9 32 4 23

$80,000-100,000 21% 23 9 26 7 15

Above $100,000 39% 24 10 19 3 5

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

0

t..)
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Percent who got

grants

Students who got grants

received between:

Below $20,000 84%

"

$5,850 & $11,500

$10,300 $20,000-40,000 92% i $4,600 &

$40,000-60,000 85%

"

$3,600 & $8,500

$60,000-80,000 75% I" $3,000 & $7,000

$80,000-100,000 66%

"

$2,250 & $6,500

Above $100 000 51%

"

$1 100 & $4 500

Loan Aid

Family income level Percent who got

loans

Students who got

between:

loans received

Below $20,000 70%

"

$3,500 & $5,500

$20,000-40,000 76% a $3,500 & $6,250

$40,000-60,000 73% a. $3,500 & $6,750

$60,000-80,000 63%

"

$3,500 & $5,950

$80,000-100,000 50%

"

$2,600 & $6,350

Above $100 000 33% : $3 500 & $7 500

Work-study Aid

Family income level Percent who got

work study

Students who got work study

received between:

Below $20,000 36% ** $1,000 & $2,000

$20,000-40,000 44% .4 $1,000 & $1,800

$40,000-60,000 43% w) $1,000 & $1,500

$60,000-80,000 26% = $1,000 & $1,500

$80,000-100,000 22% . $800 & $1,800

Above $100,000 8%

"

insufficient information*

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

* Figures in this handbook are based on national surveys. In some cases, not enough

people fall into a particular category of interest to provide reliable estimates.

37 31
Information Tables on Prices and Aid

AVERAGE TUITION:

$18,500

AVERAGE TOTAL

PRICE

INCLUDING

LIVING AND

OTHER

EXPENSES:

$26,250

32

Private Four-Year Colleges and

Universities: Higher-Tuition

(Above $15,000)

Who received aid, how much aid they received, and

how much aid was left over for other expenses

Family income

level

Percent

of

students

who

received

any

type of

financial

aid

For those students who received financial aid:

Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

Below $20,000 80% $14,300 $23,750 59%

$20,000-40,000 92% $13,900 $23,400 58%

$40,000-60,000 80% $10,500 $19,750 43%

$60,000-80,000 63% $8,200 $19,400 27%

$80,000100,000 62% $5,900 $17,000 16%

Above $100,000 41% $3,250 $15,500 20%

0 $5,400

0 $4,650

0 $2,400

0 $250

0 0

0 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

Percent

No aid

of students who received

Loans only

Grants

and loans

Work

study

Grants,

loans,

and workstudy Grants

only

Below $20,000 20% 12 2 25 4 36

$20,000-40,000 9% 12 3 24 3 50

$40,000-60,000 21% 12 4 24 3 37

$60,000-80,000 37% 9 4 23 3 24

$80,000-100,000 39% 13 6 19 3 20

Above $100,000 59% 15 10 7 3 6

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

38
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Percent who got

grants

Students who got grants

received between:

Below $20,000 76% P. $8,650 & $17,950

$20,000-40,000 88%"

$7,850 & $18,050

$40,000-60,000 74% 1 $5,900 & $13,400

$60,000-80,000 57% $5,000 & $10,750

$80,000-100,000 52% I" $2,600 & $8,300

Above $100 000 30% IP. $2 000 & $8 750

Loan Aid

Family income level Percent who got

loans

Students who got

between:

loans received

Below $20,000 63% P. $3,600 & $6,100

$20,000-40,000 76% a. $3,500 & $6,400

$40,000-60,000 65% P. $3,500 & $6,500

$60,000-80,000 52% P. $3,500 & $7,100

$80,000-100,000 46% a. $3,500 & $5,600

Above $100 000 24%

"

$3 500 & $15 500

Work-study Aid

Family income level Percent who got

work-study

Students who got work-study

received between:

Below $20,000 40% D4 $1,300 & $2,000

$20,000-40,000 52%"

$1,200 & $1,800

$40,000-60,000 39% = $1,000 & $1,800

$60,000-80,000 26% I" $1,000 & $1,800

$80,000-100,000 23% P. $950 & $1,800

Above $100,000 9% P. $1,000 & $2,000

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

39 33
Information Tables on Prices and Aid

AVERAGE TUITION:

$1,300

AVERAGE TOTAL

PRICE

INCLUDING

LIVING AND

OTHER

EXPENSES:

$6,800

34

Public Two-Year Colleges

Who received aid, how much aid they received, and

how much aid was left over for other expenses

Family income

level

Percent of

students

who

received

any

type of

financial

aid

For those students who received financial aid:

Most got

between:

Percent

whose

tuition

was

fully

covered

After paying tuition,

aid was used for

living expenses and

other educational

needs. Such aid

ranged between:

Below $20,000 .81% $2,100 $3,900 94% $700 $2,500

$20,000-40,000 49% $1,400 $3,100 78% 0 $2,000

$40,000-60,000 35% $800 $2,600 63% 0 $1,150

Above $60,000 21% $600 $2,600 43% 0 $550

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

Combinations of financial aid that students received

Family

income level

No

aid

Percent of students who received

Grants

only

Loans

only

Work

study

only

Grants

and

loans

Grants

and

work

study

Loans

and

work

study

Grants,

loans,

and

work

study

Below $20,000 19% 54 3 0 12 11 0 0

$20,000-40,000 52% 33 3 0 9 3 0 1 $40,000-60,000 66% 20 9 0 5 0 0

Above 60,000 80% 13 5 0 2 0 0 0

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96..

40
Information Tables on Prices and Aid

Average amounts of grant, loan, and work-study aid received

Family income level

Grant Aid

Students who got grants

received between:

Percent who got

grants

Below $20,000 77% '4 $2,000 & $2,800

$20,000-40,000 44% "4 $950 & $2,450

$40,000-60,000 24% 1 $450 & $1,500

Above $60 000 15% s. $500 & $1 050

Loan Aid

Family income level Percent who got

loans

Students who got loans received

between:

Below $20,000 16% D+ insufficient information*

$20,000-40,000 13%

"

insufficient information*

$40,000-60,000 14% 7 insufficient information*

Above $60 000 8% 1 insufficient information*

Work-study Aid

Family income level Percent who got

work study

Students who got work study

received between:

Below $20,000 12% s insufficient information*

$20,000-40,000 4% w insufficient information*

$40,000-60,000 Below 1% S4 insufficient information*

Above $60,000 Below 1% s insufficient information*

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

*Figures in this handbook are based on national surveys. In some cases, not enough

people fall into a particular category of interest to provide reliable estimates.

4 1. 35
Information Tables on Prices and Aid

36

What Has Changed Since 1995-96

The data used in this handbook were 4 years old at the time

this handbook was prepared. In these 4 years, college prices have

continued to increase. While increases in tuition are a legitimate

concern for you and your family as you approach college, you

should be aware that the amount of financial aid available to

students in general is also increasing. Furthermore, federal tax

credits were established in 1997 that may allow you or your parents

to substantially reduce your income tax during the years you are

paying for college. Finally, family income has also increased

substantially since the 1995-96 school year.

Tuition Increases

Since the academic year of 1995-96, tuition has increased

substantially. Between 1995-96 and 1999-2000, tuition increased

17 percent at public 2-year and 4-year colleges. During the same

time period, tuition increased 24 percent at private 4-year colleges.

The current average tuition at different types of institutions is

provided in the following table.

Average College Tuition by Type of Institution, 1999-2000

Public 4-year (in state) $3,356

Public 2-year (in state) $1,627

Private 4-year $15,380

SOURCE: College Board, Trends in College Pricing 1999.

Financial Aid Increases

In terms of tuition alone, college is certainly more expensive

than it was in 1995-96. Financial aid appears, however, to be

keeping up. This is part of the reason millions of students and their

families continue to find higher education financially manageable.

The most recent financial aid estimates are for the 1998-99

academic year. Since 1995-96, financial aid per student' has been

increasing at roughly the same rate as college tuition. Note that

both loan and grant aid are increasing. As indicated in the graph

below, the amount of financial aid per college student increased 15

percent between 1995-96 and 1998-99. This is comparable to the

12 to 18 percent increases in tuition experienced at different types

of colleges.

15 Full-time equivalent (FTE) students are used in this calculation. This takes

into account part-time students by equating each full-time student with a

given number, usually three, part-time students.

49
Information Tables on Prices and Aid

Percentage Increase in Financial Aid and College Tuition 1995-96 to 1998-99

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

15%

16%.

14% 14%

12%

18%

Financial Gran Loan Public Public Private

Aid per Aid per Aid per Four- Two- FourStudent Student Student year year year

Tuition Tuition Tuition

(in State) (in State) (in State)

SOURCE: College Board, Trends in Student Financial Aid 1999 and Trends in College Pricing 1999.

NOTE: Aid data calculated on a full-time equivalent basis.

Tax Changes

In addition to increases in financial aid, new federal tax

credits have been established that allow many families to claim

federal income tax credits. The Hope Credit allows families to

claim up to $1,500 in a nonrefundable tax credit to offset the

expenses associated with the first 2 years of college. The Lifetime

Learning Credit allows for a credit of up to $1,000 for subsequent

years of college. These education credits are gradually reduced if your modified adjusted gross income is between $40,000 and

$50,000 ($80,000 and $100,000 in the case of a joint return).

Recent changes in the federal tax laws have also made it

easier to save for college by establishing education IRAs16 and

allowing parents to use funds in their retirement accounts to help

pay for college. Many individual states are also establishing assisted

savings or prepaid tuition programs that help families better prepare

for college.

Family Income

Families with higher incomes may have more money

available to help pay for college. Between 1995 and 1998, median

16 IRAs are "Independent Retirement Accounts" and they allow individuals to

save money without having to pay current income taxes. This makes it easier

to save.

43 37
Information Tables on Prices and Aid

38

family income increased from $40,611 to $46,737, a 15 percent

increase."

Working While Going to College

The majority of college students work to earn money while

attending college. The following table shows the percentage of fulltime, full-year college students in different types of colleges who

work different numbers of hours.'

Hours typically worked per week while enrolled full-time in college

None 1 to 10 11 to 20 21 to 39 40 or more

Public 4-year (in state) 26% 12% 34% 21% 6%

Public 2-year (in state) 17% 6% 29% 35% 13%

Private 4-year 28% 10% 33% 26% 8%

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

While a substantial number of college students do not work

at all, the majority of students in all types of colleges work to some

extent while in school. In deciding how much work to combine

with your studies, you need to strike your own balance between the

extra income and experience employment provides and a potentially

harmful loss of study time. A recent study found that students who

worked up to 20 hours a week were no less likely to finish their

bachelor's degree than students who did not work at all, but those

working more than 20 hours were less likely to finish their degree

within 5 years.' Most 4-year college students who work, work less

than 20 hours.

17 U.S. Census Bureau, Current Population Reports, P60-206, Money Income

in the United States: 1998, U.S. Government Printing Office, Washington,

DC, 1999.

'These figures are like most in this handbook; they are for students who are

dependent on their parents and who study full time for the full academic

year. Many students who do not enroll in school full time work much more.

19 U.S. Department of Education, National Center for Education Statistics,

The Condition of Education 1997: Postsecondary Persistence and

Employment. (NCES 97-984.) Washington, DC, 1998.

4
Other Things

You Should Know

Understanding Student Financial Aid

The major federal programs providing financial assistance to

students fall into three categories: grants, loans, and tax incentives

of various kinds. Most of these are directed to low- and middleincome students with financial need."

Grants and Work-Study

The Pell Grant Program provided a maximum of $3,125

during the academic year of 1999-00. The amount of money

available each year varies, depending on the funding allocated to

this program in the federal budget. Pell Grants are targeted toward

low-income students, most of whom are from families with annual

incomes below $20,000.

The Federal Supplemental Educational Opportunity Grant

Program (FSEOG) provides additional grant aid to students from

extremely low-income families.

The Federal Work-Study Program helps to pay for jobs on and

off campus as part of need-based financial aid packages. Unlike the

Pell Grant and the FSEOG program, which are available only to

undergraduate students, Federal Work-Study aid also assists

graduate and professional students.

Loan Programs

A variety of loan programs exist to help cover college tuition

and other expenses. Many of these programs are quite helpful; they

2° This section is based on the National Commission on the Cost of Higher

Education final report (1998).

45 39
Other Things You Should Know

40

have very low interest rates and allow payments to be put off until

you leave college.

The Perkins Loan Program (formerly the National Defense

Loan Program) provides low-interest loans to low-income students.

Stafford Loans are available to students from all income

levels. Students who demonstrate financial need are eligible for

interest subsidies; students who do not demonstrate financial need,

while not eligible for interest subsidies, may defer loan and interest

payments while in school and under certain special circumstances.

PLUS loans provide assistance to parents of students or dependent

undergraduate students in an amount up to the cost of college

attendance, minus other financial aid. Both the Stafford and PLUS

loan. programs are available through banks (called the Federal

Financial Education Loan Program) or directly through the federal

government (called the William D. Ford Direct Loan Program).

Tax Incentives

The budget reached by Congress and the White House in

August 1997 provided about $40 billion over 5 years in tax breaks to

help students pay for higher education. These tax breaks are

described below.

Hope Scholarships provide a dollar for dollar tax credit for

100 percent of the first $1,000 of tuition and fees and 50 percent of

the second $1,000. This credit phases out for joint filers with

incomes between $80,000 and $100,000 and for single filers with

incomes between $40,000 and $50,000. Tax credits are

nonrefundable, meaning that if you don't pay enough income tax to

take advantage of the credit, you do not get the benefit.

College juniors, seniors, and graduate students may receive a

nonrefundable 20 percent tax credit on the first $5,000 of tuition

and .fees through 2002 (and the first $10,000 thereafter). To

encourage lifelong learning, the credit is also available to working

Americans. The credit is phased out at the same income levels as

the Hope Scholarship. Unlike the Hope Scholarship, the Lifetime

Learning Credit is calculated on a per family, rather than a per

student, basis.

Education and Retirement Savings Accounts allow penaltyfree IRA withdrawals for undergraduate and graduate programs and

postsecondary vocational programs. In addition, eligible taxpayers

can deposit $500 annually into an education IRA which will

accumulate earnings tax-free, with no taxes due until withdrawal

for approved purposes.

4 6
Other Things You Should Know

Other Major Provisions: Workers can exclude $5,250 of

employer provided education benefits from taxable incomes;

eligible taxpayers can deduct up to $2,500 per year of interest paid

on education loans and exclude from taxable income loan amounts

forgiven for participating in community service jobs; and taxpayers are exempt from taxation on some earnings on prepaid tuition

plans.

In addition to these federal sources of financial aid, many

students receive financial assistance from non-federal aid sources.

Other Sources

Grants from colleges themselves are available at most

private and many public colleges. These awards are made on both a

need and non-need basis. Need-based awards at private colleges can

dramatically reduce or even eliminate the price difference between

the public and private sectors of higher education. Many 4-year colleges and universities compete for the best students by awarding Merit Scholarships that may not consider a student's financial need

at all.

Many states have their own state grant programs. The nature of these programs varies. Some states offer need-based grants for students attending public colleges only. These grants often help

offset relatively high public tuition levels. Other states make grant funds available to state residents attending private colleges within

their boundaries.

A number of private community organizations and

businesses also offer grants (scholarships) to students based on a

number of criteria. These criteria could range from outstanding

citizenship activities while in high school to being the child of an

organization's member.

In addition to federal loan programs, there are private loan

sources. Many banks, savings and loans, and credit unions offer

unsubsidized loans for college to families with good credit. Furthermore, families who own their homes can often get a home

equity loan to finance a child's college education. Such

unsubsidized loans must be paid back at regular rates of interest. That could make them more expensive in the long run.

A Note on Borrowing

Over the last 20 years, loans have replaced grants as the primary source of financial aid to college students. Loans make going to college more manageable financially, but you do have to

repay them with interest after leaving school. Loans must be paid

41
Other Things You Should Know

42

back even if an individual decides not to complete school or obtain

a degree. For many college students, the decision regarding how

much to borrow plays a central role in determining which college

they can afford. How much debt individuals are willing to incur to

finance their college education is an extremely important and

necessarily individual decision. Many people are concerned about

borrowing too much.

To give you an idea of what you will face, we provide

information concerning the amount of debt a recent group of

college students had built up by their final year in school. This is

broken down according to the type of school they attended. You

will also find information about the amount of income (before

taxes) that would probably be sufficient to comfortably repay

varying levels of total educational debt. The sufficiency of any

income, of course, depends on what other expenses you have.

Therefore, these figures are only rough estimates.

The table below shows the percent of students in their final

year at college who borrowed money to attend college. Note that

slightly less than a third of public 2-year students were in debt,

while over half of all students at 4-year colleges were. Typical debt

amounts varied quite a bit depending on the type of college

attended. For example, for seniors with loans who attended public

4-year colleges, the typical debt range was between $5,000 and

$14,500. Remember 49 percent of seniors at this type of school

owed nothing.

Total indebtedness among final-year full-time students at different types of

colleges

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96.

The next table shows the monthly payments required to

repay various levels of student loan debt over the typical repayment

period of 10 years. We assume that a current interest rate on a

major loan program (Stafford Loans) remains in place (8.25 percent).

Lenders often assume that payments that constitute between 5 to

15 percent of a new college graduate's income are manageable. The

amount of money individuals can comfortably devote to student

48
Other Things You Should Know

loan payments again depends on what other expenses they face. We

have chosen an 8 percent payment to income ratio to estimate

sufficient income levels.

Based on this ratio of payments to income, students

borrowing $2,500 each year during a 4-year college career, for a total

of $10,000 in loans, will need to find employment with an income

of at least $18,400 in order to be able to comfortably manage

repayment. In this case you have to pay $123 every month for 10

years to repay this debt after you complete your studies.

Amount borrowed, projected monthly payment, and sufficient annual income

Amount Borrowed

Projected Monthly

Payment Sufficient Annual Income

$5.000 ($61) $9200

$7.500 ($92) $13.800

$10,000 ($123) $18.400

$12.500 ($153) $23.000

$15.000 ($184) $27.600

$17.500 ($215) $32.200

$20,000 ($245) $36.800

SOURCE: Tabulations by the American Institutes for Research assuming an interest rate

of 8.25 percent, 10-year repayment plan, and defining income as "sufficient" if monthly

payments constitute 8 percent or less of monthly income.

EFC: The Expected Family Contribution

The Expected Family Contribution (EFC) is the way a

family's ability to pay for college is calculated. The formula for

determining eligibility for federal aid programs is the same across

all colleges. When you apply for financial aid, expect to answer

questions about your family's income and savings. Most of this

information is readily available from your tax returns, paycheck

stubs, and bank and other financial account statements. Remember

that this formula does not consider the actual price of attending a

given college or universityyour EFC is the same regardless of

whether you attend a public college with tuition of $5,000 or a

private college that charges $22,000.

49

The EFC formula considers:

family income;

accumulated savings,

the amount of taxes paid;

family size;

the number of children

simultaneously enrolled in

college;

the age of the older parent

and how close they may

be to retirement; and

the student's own financial

resources.

43
Other Things You Should Know

44

Expected family contribution (EFC)

Family , income level Typical EFC range

B -I. ',20 '0' IMINIMILSWE 800

'.20 000-40 000 $900 & $3,400

'.40 000-60 000 $4,100 & $7,650

'.60 000-80 000 $8,950 & $12,850

'.80 000-100 000 $12,000 & $16,850

v 1 00 .17800 & '.33800

SOURCE: U.S. Department of Education, National Center for Education Statistics,

National Postsecondary Student Aid Study: 1995-96

The above table provides a range of typical EFCs for students

attending college full time and for the full year during the 1995-96

academic year by family income. By "typical" we mean that onehalf of the college students from families with the specified income

have EFCs within the indicated interval; one-quarter were expected

to contribute less and one-quarter were expected to pay more.

Therefore, the above table provides a general idea of what EFC

prospective students can expect to face.

The EFC table shows that families of modest economic

means are expected to contribute less to their children's college

education than wealthier families. Most families with incomesless

than $20,000 are expected to pay less than $800, while most

families with incomes greater than $100,000 are expected to

contribute more than $18,000. The table shows that a family's

ability to pay (EFC) varies quite a bit within many of the family

income groups. This is due to the factors other than income that are

considered when determining a family's ability to pay.

To figure out your own EFC, you have to fill out the Free

Application for Federal Student Aid (FAFSA) form and submit it to

the financial aid office of the colleges you are applying to. Or you

can make the calculation yourself using computer software that

will provide personalized EFC estimates for prospective college

students!' Does this calculation mean that this is what you will

have to pay, regardless of other factors? No.

What you end up paying for college may turn out to be quite

different than the EFC for a number of reasons. There are factors in

addition to financial need that come into play in determining how

much you will have to pay. These factors include:

Sallie Maewww.Salliemae.com and College Boardwww.collegeboard.org

0
Other Things You Should Know

non-need-based financial aid (merit scholarships);

attending colleges that are priced less than your EFC;

rejecting a portion of your financial aid awards (especially

loans);

colleges being unable to meet the financial need of all

their aid applicants; and,

potential financial aid recipients deciding not to apply for

financial aid.

Non-need-based financial aid. Financial aid is also available

without regard to financial need. This aid ranges from unsubsidized

loans (you pay the money back and you pay the interest on the loan while in school) to merit scholarships (you don't repay anything).

Many students do not get aid, because they fail to apply. The

table below indicates the percentage of full-time college students

who applied for financial aid by family income, and the percent of

those who applied who received some form of financial aid. Note

that the vast majority of all aid applicants receive financial aid.

Applying for and Receiving Financial Aid

Family income level

Below 2 i 000

Applied for aid

90%

Applicant received aid

96%

$20,000-40,000 83% 93%

$40,000-60,000 72% 88%

$60,000-80,000 64% 87%

$80,000-100,000 59% 84%

Above 100 000 42°0 82%

In 1995-96, approximately one-third of all financial aid

received by full-time, dependent students was distributed without

regard to financial need. The majority of this aid was in the form of

loans where the borrower incurs interest charges while in school.

51 45
Technical Notes

These notes provide a description of the primary data sources

used in this handbook. A listing of the analysis conventions used is

also provided.

National Postsecondary Student Aid

Study (NPSAS96)

The detailed student level information provided in this

handbook is based on the most recent National Postsecondary

Student Aid Study (NPSAS96), released in 1998. The 1995-96

NPSAS survey provides information on the cost of postsecondary

education, the distribution of financial aid, and the characteristics

of both aided and non-aided students and their families. The study

provides a nationally representative sample of all students enrolled

in postsecondary education institutions. This handbook uses

information from undergraduate students only.

College Board

The College Board's Annual Survey of Colleges for the

academic year of 1995-96 was used to determine the average

college tuition in each of the 50 states and the District of

Columbia. Together with state aid figures, the average tuition at public 4-year institutions was used to group states for the

presentation of detailed financial aid information by family income

level. The College Board's most recent Annual Survey for the 1999- 00 academic year was used to update the text, but the state

groupings are based on 1995-96 data in order to correspond with the NPSAS96 information.

National Association of State Student

Grant and Aid Programs

In addition to differences in college tuition, states differ in

the size of their state scholarship programs. Data from the National

Association of State Student Grant and Aid Programs (NASSGAP)

27' Annual Report (covering the academic year of 1995-96) were

52 47
Technical Notes

used to determine the amount of state grant funding available to

undergraduate students attending public colleges and universities

in each of the 50 states and the District of Columbia.

The tables that show aid amounts by family income organize

public college students based on their state of residence. State

groups were determined by net tuition. State net tuition groups

reflect both average in-state tuition charges and the size of state

grant programs. NASSGAP data were used to determine the total

amount of state grants going to undergraduate students attending a

public college in a given state. This was divided by the full-timeequivalent enrollment at public institutions of higher education in

each state. This "average state grant" was subtracted from the

average state tuition estimated with College Board data. The

resulting "net tuition" figure was used in grouping the states.

Analysis Conventions

Unless otherwise noted, the tables in this handbook:

present information only for dependent, undergraduate

students attending a single institution full time for the

entire academic year;

include information for all full-time, full-year

undergraduate students attending a specified type of

school. In other words, freshmen, sophomores, juniors,

and seniors are all combined;22

do not adjust dollar amounts (family income, financial

aid, and tuition) for inflation;

group states when analyzing public 4-year colleges based

on College Board data from 1995-96; and'3

do not present information for figures based on the

experiences of less than 30 people in the sample. In such

cases "insufficient information" is indicated.

zz While there are some minor differences between first-year students and

subsequent year enrollees in terms of financial aid, these differences tend to

be minor and not statistically significant. The main difference in terms of the

information in this handbook is the amount of loan aid first-year students

receive if they borrow to finance college. Loans to first-year students were

significantly smaller than those to upperclassmen.

Ideally, separate analysis would have been carried out for each state.

However, NPSAS was not designed to support analysis at the state level.

First, there are simply not enough cases to support the detailed analysis at the

state level. Second, the survey design used by NPSAS ensures national (not

necessarily within state) representativeness.

48 5 3
ns7 O©urces of

lEaDTIMEA 11

Futlidcmgrono

Considerable information about going to college is available

to students and their families. There are a number of publications

that you can order at no cost while supplies last from the U.S.

Department of Education or download from the Internet. Some of

these are listed below.

Think College? Me? Now? A Handbook for Students in

Middle School and Junior High School: Think College Early

1-877-4ED-PUBS (1-877-433-7827)

http://ed.gov/pubs/CollegeMeNow/

Getting Ready for College Early: A Handbook for Parents

of Students in the Middle and Junior High School Years

1-877-4ED-PUBS (1-877-433-7827

http://www.ed.gov/pubs/GettingReadyCollegeEarly/

Preparing Your Child for College

1-877-4ED-PUBS (1-877-433-7827)

http://www.ed.gov/pubs/Prepare/index.html

A publication that you may find particularly useful is:

The Student Guide: Financial Aid 1999-2000

1-800-4-FED-AID (1-800-433-3243)

http://www.ed.gov/proginfo/SFA/StudentGuide/

Einterfneg Eszo Ives

The Internet is a particularly bountiful resource for obtaining

information about going to college and getting financial assistance. Below are a few general sources that you may find useful. In many

49
Other Sources of Information

cases they will lead you to other sites that provide more specific

types of information.

http://www.ed.gov/offices/OSFAP/Students/

This site is maintained by the Office of Student Financial

Assistance Programs of the U.S. Department of Education. You can

access an application for student financial aid through this Web

site, as well as obtain useful information about different types of

federal financial aid.

http://easi.ed.gov

Project EASI provides information on the funding of education

beyond high school. The areas covered include: (1) planning for

college; (2) applying to college and for financial aid; and (3)

managing your financial aid resources. Links to other U.S.

Department of Education resources are included, as well as other

potentially useful Internet and print resources.

http://www.collegeispossible.org

The American Council on Education sponsors and maintains a

general resource guide for parents and students. College Is Possible

provides answers to a variety of questions such as: How does the

application process work? What sort of college is right for me? How

much will college cost? Like Project EASI, this site also provides

links to many other sources.

http://www.collegeboard.org

In addition to providing information on taking and registering for

the SATs, the College Board Web site provides a number of services

including a "college search" component that provides you with a

list of colleges meeting desired criteria that you specify; a step-bystep guide to the college application process; and information on

financial aid and paying for college.

http://fafsa.ed.gov

The Free Application for Federal Student Aid is available online and

walks you through the information you need to provide on your

application. You can apply for financial aid over the Internet and

receive feedback on whether your application is complete.

http://www.salliemae.com

This Web site provides useful information on planning and paying

for college. There are also resources for high school guidance

counselors and college financial aid professionals.

Almost all colleges have Web sites these days that provide a

lot of information about their institutions. In many cases, the

college's application is also available online.

55

50
References

The College Board.

Board.

The College Board.

Board.

The College Board.

Board.

1995. Annual Survey of Colleges 1995-96. New York: The College

1999. Annual Survey of Colleges 1999-2000. New York: The College

1999. Trends in College Pricing, 1999. Washington, DC: The College

The College Board. 1999. Trends in Student Aid, 1999. Washington, DC: The College Board.

The National Commission on the Cost of Higher Education. 1998. Straight Talk about College Costs and Prices. Phoenix, AZ: The Oryx Press.

The National Association of State Student Grant and Aid Programs. 27th Annual Report.

http://www.nassgap.org/researchsurveys/26threport.htm.

Se lingo, Jeffery. "For Fans of State Merit Scholarships, a Cautionary Tale From

Louisiana After its First Year." Chronicle of Higher Education, April 16, 1999.

Schmidt, Peter. "States Rush to Set Up Programs to Help Families Save for College Costs." Chronicle of Higher Education, February 19, 1999.

U.S. Census Bureau. 1999. Current Population Reports, P60-206. Money Income in the United States: 1998, U.S. Government Printing Office, Washington, DC.

U.S. Department of Education. National Center for Education Statistics. 1998. The

Digest of Education Statistics 1998. Washington, DC.

U.S. Department of Education. National Center for Education Statistics. 1995. National

Postsecondary Student Aid Study 1995-96 (NPSAS:96). Washington, DC.

U.S. Department of Education. 1999. The Student Guide: Financial Aid 1999-2000. Washington, DC.

U.S. Department of Education. National Center for Education Statistics. 1997. The

Condition of Education 1997: Postsecondary Persistence and Employment. (NCES 97- 984.) Washington, DC.

U.S. Department of the Treasury. 1999. Internal Revenue Service. (Publication 970.) Tax Benefits for Higher Education. Washington, DC.

51
Acknowledgments

Authors

Senior

Consultants

Reviewers

Design and

Production Team

Gregory Henschel, U.S. Department of Education

Rita J. Kirshstein, American Institutes for Research

Amy O'Malley, American Institutes for Research

David Rhodes, American Institutes for Research

Sandra Garcia, U.S. Department of Education

Michael McPherson, Macalester College

Clifford Adelman, U.S. Department of Education

Daniel Goldenberg, U.S. Department of Education

Daniel Madzelan, U.S. Department of Education

Andrew Malizio, U.S. Department of Education

Jay Noell, U.S. Department of Education

Duc-Le To, U.S. Department of Education

Mariel Escudero, American Institutes for Research

Sterlina Harper, American Institutes for Research

Elina Hartwell, American Institutes for Research

Qiwu Liu, American Institutes for Research

Jennifer Thompson, American Institutes for Research

5'i

53
United States

Department of Education

ED Pubs

8242B Sandy Court

Jessup, MD 20794-1398

Official Business

Penalty for Private Use, $300

ti Postage and Fees Paid

U.S. Department of Education

Permit No. G-17

1..1,111,..1.111,.11,..1..1,111.1111,11..111,.,11.1..1.1

xx<AUTOxxxxxxxKA(3D G I T 207

82909 ERIC PROCESSING & REFERENCE FACILITY

4483A FORBES BLUE) LANHAM MD 20706-4354

PLLI 2000-8003

Standard Mail (A)
U.S. Department of Education

Office of Educational Research and Improvement (OERI)

National Library of Education (NLE)

Educational Resources Information Center (ERIC)

NOTICE

Reproduction Basis

ERIC

This -document is covered by a signed "Reproduction Release

(Blanket)" form (on file within the ERIC system), encompassing all

or classes of documents from its source organization and, therefore,

does not require a "Specific Document" Release form.

This document is Federally-funded, or carries its own permission to

reproduce, or is otherwise in the public domain and, therefore, may

be reproduced by ERIC without a signed Reproduction Release form

(either "Specific Document" or "Blanket").

EFF-089 (3/2000)