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 tax liability during the years you are paying for college. This means that the class of 2005 may have greater ability to manage the price of college with contributions from current income. The current average tuition at different types of institutions is provided in the following table.
Financial aid appears, however, to be keeping up.
This is part of the reason millions of students and their families continue to manage the financial barrier to higher education. Note that both loan and grant aid are increasing. This is comparable to the 12 to 18 percent increases in tuition experienced at different types of colleges. In addition to increases in financial aid, new federal tax credits have been established that allow many families to claim federal income tax credits. Recent changes in the federal tax laws have also made it easier to save for college by establishing education IRAs 16 and allowing parents to use funds in their retirement accounts to help pay for college.