While a record amount of financial aid was granted to students last year, the amount of money students are borrowing to finance their educations is increasing, according to a College Board report released Wednesday.
The report, which surveyed more than 3,100 higher education institutions, also found that American college and university tuition costs grew slightly faster than the Consumer Price Index last year.
Mark Kantrowitz, publisher of the student-aid Web site FinAid, said although the College Board report clearly shows a trend of increased student borrowing and increased financial need, the fact that the report does not include data from the most recent months suggests that those trends may intensify in the near future. The current economic downturn could have possibly severe, negative ramifications for students as well, he said.
“We’re going to see with public colleges the same phenomenon there is every time we have a recession,” he said. “The first place the state cuts costs is higher education.”
Earlier this fall, the commonwealth reduced its funding for the University by $10.6 million. Colette Sheehy, University vice president for management and budget, said the University asked all schools and departments to plan for a reduced budget as a result.
To better offset the budget cuts, though, the University also submitted a plan to the governor’s office to raise the cost of tuition, Sheehy said. She also noted, however, that tuition increases are standard every year unless the government disallows it.
“In some years we’re able to [fund the costs of the University] with general fund dollars from the state and tuition,” Sheehy said. “Next year there [are] indications of no general fund dollars [meaning] we’ll have to rely more heavily on tuition than at other times.”
The only source of revenue directly under public universities’ control is tuition, Kantrowitz said. To make up for shortfalls in their budgets, many public universities will likely increase tuition, he added, noting that current and prospective students will then have to analyze the cost of attendance more closely and consider financial aid. Private colleges, he noted, are less dependent on tuition for revenue and thus will probably keep tuition increases to a minimum.
Although institutions of higher education may want to increase tuition to make up for the shortfalls in their budgets, Kantrowitz said these increased costs will harm students and their families.
“Right now is the worst time to increase tuition because it’s when families are hurting the most,” he said, noting that alternatives to raising tuition include increasing class size and cutting energy costs, he added.
Faced with rising tuition costs in a worsening economy, those families also become more likely to apply for financial aid, Kantrowitz said.
In the first six months of 2008, student applications for federal financial aid rose 16 percent compared to during the previous year, said Tony Pals, National Association for Independent Colleges and Universities spokesperson. He noted that this number surely has continued to rise in the past few months as the economic situation has worsened.
While overall college costs have increased in recent years, University Financial Aid Director Yvonne Hubbard said she feels that the increases at the University have been steady and appropriate. Students have always had to balance their families’ financial situations when choosing a university, she added, but this is one reason that the University is adamant about guaranteeing aid for any qualifying student. She noted that while the University has already seen a small increase in the number of applications for financial aid, it will not see the full effects of the economic crisis until next year.
The University also has no plans to cut merit-based or athletic scholarships, Hubbard noted. The University offers few merit-based scholarships, all of which are funded through the University’s endowment, which remains strong despite the current financial situation, Hubbard said.
Athletic Director Craig Littlepage, meanwhile, also noted that although the current economic conditions affect the entire University, including the athletic department, athletic scholarships funding will not be cut because the athletic department will instead control and cut costs in other areas. He noted, however, that tuition increases also increase the athletic department’s spending on scholarships and summer school.
Assoc. Dean of Admissions Greg Roberts said he has yet to see the current economy significantly affect the number of applications to the University but noted that the “yield” of students accepting admission offers could be impacted by the economic downturn. Students offered admission to multiple schools, including the University, may have to weigh financial aid offers and the cost of attendance before deciding on a school, Roberts said.
“It may come down to what happens in the spring,” Roberts said, adding that the University is “lucky” to have a strong financial aid program that can help students in need.
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