College is not as unaffordable as you think

Affording a good college education has always been a challenge. Parents dream of giving their children the best American higher education has to offer - not the best they can afford, but the best, period.

But a scan of the mainstream media would have you believe this most American of dreams has morphed into nightmare. In state after state, budget crises are forcing up tuition rates and slashing aid to students at public colleges and universities. And the private ones ... well, they were never affordable in the first place, right?

There's no question that the cost of a college education - in absolute terms - has gone up. There's no question that, for middle-class American families - particularly those uninformed about the financial tools available to them - putting even one child through school can be a tremendous burden.

But it's not as bad as some make it out to be. Contrary to the alarmist reports of higher-ed "sticker shock," there is plenty of hard data to indicate that even the best college education is within reach of meritorious students whatever their socioeconomic status. Perhaps the most well-publicized research is that of Harvard economist Caroline Hoxby, who studied federal Department of Education data and testified before Congress that tuition at America's least expensive colleges and universities, when adjusted for inflation, had actually dropped 15 percent between 1970 and 1990. Dr. Hoxby concluded that there was no evidence to suggest that students were being forced to enroll in schools "inappropriate to their level of preparedness" because of rising costs.

True, that research is now dated, and it didn't answer the burning question on the minds of the most qualified students and their parents: Can I afford to attend one of America's elite, and most expensive, schools? That question is addressed in a report released in January by researchers with the Williams Project on the Economics of Higher Education. The Williams College study measured the affordability of a college degree from highly selective private colleges by comparing actual net cost - not the "sticker price" - paid by students with those students' family incomes.

Surprise! While the average sticker price at the 28 schools studied was 66 percent of median family income, the Williams researchers found that the average student's family in fact paid only 23 percent of its income. The researchers didn't have sufficient data on all 28 elite schools to look at cost trends over time. But for the 10 schools they were able to track, the researchers found that, while the average sticker price went up 9 percent between 1998 and 2003, the actual price paidafter aid and self-help (loans and campus jobs) actually fell in all but the highest of five family income categories.

Granted, we're talking about 10 elite schools. But the Williams research illuminates a couple of important points about college affordability.

First, while the cost of a college degree has certainly increased substantially, so has the amount of aid available. True, much of that increase has been in the form of loans rather than outright grants, but it is aid nonetheless. Despite the negative press about the value of a college degree today, the increased lifetime earning potential of a college graduate clearly makes even unsubsidized student loans one of the best deals going.

Second, the study helps debunk the myth that private colleges are out of reach of many students. Indeed, the research found that net prices paid - as a percentage of family income - were roughly proportional across the board, with the exception of the wealthiest families. With a mix of private funding from endowments and state-funded tuition assistance, plus federally subsidized grants and loans, private colleges and universities can often be as affordable as even in-state public institutions.

Affordability is and will continue to be an equation many of whose factors are outside a student's or parent's power to influence - financial aid formulas, grant or loan terms and conditions, and scholarship decisions. At the same time, however, there are many steps parents and students can take to cut the college bill. Look into dual-enrollment classes in high school. Declare your major early and prepare a plan to graduate on time.

Shorter average duration to graduation is one reason private colleges can often match publics in affordability. At Hollins University in Roanoke, Va., for example, the typical student graduates in 4.1 years, compared with an average of 5 years for most of Virginia's public colleges and universities. Graduating just one semester early can save a Hollins student almost $8,000. Also, a surprising number of parents concerned about the high costs of tuition fail to claim legitimate tax credits with the IRS. This could potentially mean a $1,000 to $1,500 savings on their tax bill.

But college-financing tips somehow got left out of the parenting manual. Parents need help navigating the labyrinth of financial-aid rules, grant programs, and sundry other vagaries of funding a child's education.

The best advice is to start early (10th grade isn't too soon), don't assume you won't qualify for need-based aid, and get to know financial-aid officials at your child's top picks very, very well.

• Rebecca Eckstein is director of financial aid and scholarships for Hollins University in Roanoke, Va., which ranked No. 2 in the Princeton Review's 2003 ranking of student satisfaction with financial aid.