Skip Navigation
Illustration/Logo View Quarterly by  This Issue  |  Volume and Issue  |  Topics
Education Statistics Quarterly
Vol 5, Issue 2, Topic: Note from NCES
Note from NCES
By: C. Dennis Carroll, Associate Commissioner, Postsecondary Studies Division
 

Finding Out How Students Pay for College

Learning how students pay for college is the primary purpose of the National Postsecondary Student Aid Study (NPSAS), which was conducted first in 1986–87 and repeated in 1989–90, 1992–93, 1995–96, and 1999–2000. The next NPSAS data collection is scheduled for 2003–04. NPSAS collects detailed enrollment, financial, and demographic information about a nationally representative sample of students enrolled at all types of public and private postsecondary institutions. This information is used to find out how much students pay for college and where they get the money needed to cover their expenses.

Actual Expenses Versus Student Budgets

To determine how much they paid, students responding in 1986–87, 1989–90, and 1992–93 were asked to report their actual expenses in a number of categories, such as tuition and fees, books, rent, food, transportation, and personal expenses. This approach may produce a reasonable approximation of the education expenses of students who live on campus and attend full time, because these students typically receive bills from their institution for tuition and room and board, which are their major expenses. However, it does not work nearly as well for older, part-time, or commuting students, whose non-tuition expenses are less clearly related to their education. Neither the student respondent nor the NPSAS analyst can easily calculate the education-related housing expenses of a 35-year-old part-time student who owns a house, for example, or of a younger student who lives at home.

Starting in 1995–96, NPSAS has relied on the student budgets determined by institutions, rather than on the expenditures reported by students, to measure how much students pay. An institutional budget represents the institution's best judgment about how much a student would need to spend on tuition and books as well as living expenses. Institutions develop a series of budgets to reflect different circumstances (such as living on campus or at home and attending full time or part time) and assign one of these budgets to each aid applicant. NPSAS assigns budgets to nonaided students in the same way. These budgets appear to be the best way to estimate expenses fairly and consistently, even though they may not accurately represent what any particular student spends. (To permit trend analyses, budgets have been added to the NPSAS analysis files for 1989–90 and 1992–93.)

Personal Financial Resources and Financial Aid

Understanding how students pay for college also involves identifying the sources of funds—either personal financial resources or financial aid—and how much students obtain from each source. Personal resources may include earnings from work while enrolled, savings, and contributions from parents, relatives, or friends. Just over half (55 percent) of all undergraduates received some type of financial aid in 1999–2000. The major forms of aid are grants and scholarships, which do not have to be repaid; loans, which must be repaid after the student graduates or leaves school; and work-study, which pays the student a stipend in return for work.

NPSAS obtains accurate financial aid information by merging several databases. The U.S. Department of Education databases provide detailed information about all Pell Grant awards and federal student loans. Institutional financial aid offices provide records of other federal aid, state aid, and institutional aid. They also provide records of scholarships from private organizations, such as foundations or unions, if the scholarship funds are disbursed to the student through the financial aid office. In the NPSAS telephone interview, students report on aid not administered by the financial aid office, such as employer assistance or grants from private organizations paid directly to the student. Because these types of aid come in discrete chunks, and typically only once a year or term, student reports are probably reasonably accurate.

The real challenge is learning about students' own financial resources. In contrast to the multiple sources of information about financial aid, the only source of information about personal financial resources is the telephone interview. The limited time available on the telephone and the reluctance of individuals to disclose the details of their financial circumstances constitute one set of barriers to obtaining accurate information. But even when students are willing to provide the information, they are likely to find it difficult to recall exactly how much they earned, saved, or were given by their parents or others over the course of a full academic year.

The parental contribution is the most elusive piece of the puzzle. When students receive a monthly allowance from their parents, they may be able to estimate the parental contribution reasonably accurately, but family financial arrangements are often less formal. Parents may pay some bills directly—tuition, room and board, or credit card bills, for example—and students may not know or remember the exact amounts. In addition, many parents routinely make in-kind contributions such as groceries, clothing, cars, and household items, which students may either forget or be unable to value, or which may not really be education-related. While policymakers want to know not only how much parents are contributing, but also where they are getting the money—from current income, savings, or borrowing, for example—students usually do not know the answer.

To learn about parental contributions in 1999–2000, students under 30 years of age were asked whether their parents or someone else paid some or all of their tuition, how much their parents gave them for school-related expenses other than tuition, and if they lived with their parents while enrolled. However, the numbers these students reported seem unrealistically low, especially for high-income students. For example, the average high-income dependent student attending a private not-for-profit institution full time—and having a nontuition budget of $9,100—reported earnings while enrolled of $2,000 and a parental contribution for nontuition expenses of just $1,000.

A Picture of Education Expenses and Resources

Although we may never be able to assemble a completely accurate picture of either education expenses or financial resources, each successive round of NPSAS has produced more reliable and consistent information about how much students pay for college and where the money comes from. This issue of the Quarterly features two reports that draw on NPSAS data to illuminate various aspects of this complex picture.

back to top