• Access to Postsecondary Education
• The Price of Attending a Postsecondary Institution
• Affordability
• Coping With the Price of Attending College
• Summary
• References

Federal and state governments encourage participation in postsecondary education and have tried to reduce price barriers so that postsecondary education is accessible. State subsidies to public institutions allow them to charge tuition that is substantially below the actual cost of education, while federal (and sometimes state) grant, loan, and work-study programs help provide financially needy students with the up-front money they need to invest in postsecondary education. Many institutions increase accessibility through their own financial aid and scholarship programs. The extent of public subsidies, the nature of the laws and regulations that determine who is eligible for financial aid, and the amount of funding provided for financial aid programs all greatly affect the affordability of postsecondary education for students from various income groups and, thus, their access to its benefits.

Reflecting the benefits of postsecondary education and the policies and programs that increase accessibility, high school completers are enrolling at record rates, and substantial numbers of older adults are enrolling as well.⁴Although interest in postsecondary education is growing, rising tuition and fees have generated considerable public concern.⁵This raises a series of important questions: to whom is postsecondary education accessible and to what extent is accessibility related to income? How much does attending postsecondary education cost students? How affordable is postsecondary education? How are students and their families coping with the price of attendance? What impact do their financing strategies have on their educational experiences? Some of the statistical evidence available to address these questions from a national perspective is summarized here.

This essay examines the extent to which the financial aid system promotes access to postsecondary education by equalizing income differences. It does not address the effects of other factors, such as low employment rates or a robust economy, on enrollment, nor does it examine the sensitivity of different income groups to price, the types of aid available, or differences in access by race/ethnicity. For information about trends of enrollment in higher education, see The Condition of Education 1998 (Wirt et al. 1998).

Increasingly, high school students are being advised to go to college, and growing numbers are taking that advice. However, not all high school completers have the same access. Some of the characteristics associated with higher rates of enrollment are related to income, suggesting that the price of attending is a barrier. However, certain attitudes and behaviors appear to be factors as well.

The proportions of high school sophomores whose teachers, counselors, and parents encouraged them to go to college increased dramatically between 1980 and 1990. High school sophomores in 1990 were twice as likely as their counterparts in 1980 to report that their teachers and guidance counselors recommended that they go to college (table 1). In 1990, more than half of even the lowest performing sophomores (those scoring in the lowest quartile on mathematics and reading tests) were advised to attend.

Table 1.—Percentage of high school sophomores who reported being advised to attend college by various adults: 1980 and 1990

Nearly all 1992 high school completers (97 percent) reported that they planned to continue their education at some time, and 71 percent expected to earn a bachelor's degree. Even among completers whose families had low incomes (less than $25,000) or whose parents had no more than a high school education, the vast majority (94 percent in each case) planned to continue their education at some time. Sixty-five percent of the 1992 high school completers enrolled in some type of postsecondary education immediately after high school. By 1994, 75 percent of this same group had enrolled (Berkner and Chavez 1997).

The proportion of high school completers who enrolled in an institution of higher education (a 2- or 4-year college or university) immediately following high school increased from 49 to 65 percent between 1976 and 1996, with growth throughout the 20-year period (figure 1). Of the overall gain of 16 percentage points, about half of the increase (7 percentage points) was in 2-year institutions and about half (9 percentage points) was in 4-year institutions (Wirt et al. 1998, 46).

Figure 1.—Percentage of high school completers who were enrolled in college the October after completing high school: 1976-96

Another indicator of the interest in higher education is the percentage of young adult high school completers enrolled at any given time. This percentage reflects not only the number of high school completers who enroll immediately after high school, but also the number who delay entry but enter within the next few years, and the amount of time both groups are enrolled. Between the late 1960s and the mid-1980s, about one-third (29 to 35 percent) of high school completers ages 18-24 were enrolled in higher education in any given year. After that, the proportion enrolled increased gradually to 43 percent in 1996 (Snyder, Hoffman, and Geddes 1997).

While the enrollment rate in higher education has increased for high school completers in the aggregate, not all segments of this population participate at the same rate. Because issues of affordability are the focus in this essay, income differences are given the most attention. However, differential participation rates extend to other characteristics, and some of these are discussed as well.

In 1996, high school completers from low-income families were less likely to go to a 2- or 4-year college or university immediately after high school (49 percent) than were their peers from middle-income families (63 percent), who, in turn, were less likely to enroll than completers from high-income families (78 percent) (figure 2).

Figure 2.—Percentage of high school completers who were enrolled in college the October after completing high school, by family income: 1976, 1986, and 1996

Students are much more likely to enroll in higher education immediately after high school if their parents have at least a bachelor's degree than if they have less education (Wirt et al. 1998, 46). Enrollment rates of 1996 high school completers immediately after high school ranged from 45 percent for those whose parents had less than a high school education to 85 percent for those whose parents had a bachelor's degree or higher (figure 3). These data provide evidence of the intergenerational effects of postsecondary education.

Figure 3.—Percentage of high school completers who were enrolled in college the October after completing high school, by parent's highest education level: 1996

Among financially dependent undergraduates (that is, most students under 24 years old) who enrolled in postsecondary education for the first time in 1995-96, students from families at all income levels were more likely to enroll in public 4-year institutions than they were to enroll in private, not-for-profit 4-year institutions (25 versus 15 percent) (Wirt et al. 1998, 52). Students from families with incomes of $60,000 or more were the most likely to enroll in private, not-for-profit 4-year institutions (25 percent did so, compared to 16 percent of students from families with incomes between $30,000 and $59,999 and 14 percent of students from families with incomes less than $30,000) (figure 4). Students from families with incomes of $60,000 or more were less likely than other students to enroll in public 2-year institutions (34 percent versus 47 percent of students from families with incomes between $30,000 and $59,999, and 43 percent of students from families with incomes less than $30,000).

Figure 4.—Percentage distribution of dependent, first-time beginning postsecondary students, by family income: 1995-96

One reason that low-income high school graduates go to 4-year institutions at lower rates than graduates from higher income families is that they are less prepared academically. The likelihood of being prepared increased with income: 53 percent of 1992 low-income graduates (less than $25,000), 68 percent of middle-income graduates ($25,000-74,999), and 86 percent of high school graduates from high-income families ($75,000 or more) had sufficient academic qualifications for admission to a 4-year college (table 2). In addition, among college-qualified 1992 high school graduates, there was a positive relationship between income and each of the following attitudes and behaviors that normally precede enrolling in a 4-year institution: expecting to complete a bachelor's degree; planning to enroll at a 4-year institution; taking steps toward admission (taking an entrance examination and applying); and gaining admission.

Table 2.—Percentage of 1992 high school graduates who were college qualified* and who pursued plans to attend college, by family income

In 1992, even when low-income high school graduates not only had the academic qualifications for admission to a 4-year college but also took the necessary steps toward admission, they were less likely than high-income graduates to enroll in a 4-year institution by 1994 (83 versus 92 percent) (table 3). However, they were just as likely as middle-income students to be accepted at a 4-year institution (94 versus 93 percent) and to enroll (83 versus 82 percent).

Table 3.—Percentage of college-qualified 1992 high school graduates taking steps toward admission at a 4-year institution who were accepted, and percentage who were enrolled by 1994, by family income

Among 1992 high school seniors in the highest achievement test quartile, students whose families were also in the highest socioeconomic status (SES) quartile were considerably more likely than those in the lowest SES quartile to attend a 4-year college within 2 years of their scheduled graduation (86 versus 58 percent) (table 4). In this sense, the access of low-SES students to 4-year colleges is less than the access of high-SES students. Among high school seniors in this same highest achievement quartile but in the lowest SES quartile, the likelihood of attending a 4-year college within 2 years of graduation increased from 48 percent in 1972 to 58 percent in 1992. Thus, the access of low-SES, high-achieving students has increased since 1972 (Smith 1997, 64).

Table 4.—Percentage of high school seniors who enrolled in a 4-year college within 2 years of scheduled graduation, by socioeconomic status: 1974, 1982, and 1994

The price of attending a postsecondary institution is of great concern to most students and their families. The amounts they have to pay affect students' initial access to postsecondary education and also their ability to remain enrolled long enough to complete a degree or certificate. The public is extremely anxious about rising prices, and many parents worry that college will be beyond their children's reach (National Commission on the Cost of Higher Education 1998). In reality, however, students have a range of options with widely varying price tags.

Financially dependent undergraduates who attended a postsecondary institution full time for the full year in 1995-96 paid average tuition and fees that ranged from $1,300 if they attended a public 2-year institution, to $3,900 at a public 4-year institution, to $13,300 at a private, not-for-profit 4-year institution (table 5). Although the price to students and their families (including living expenses as well as tuition and fees) averaged $20,000 for those who attended a private, not-for-profit 4-year institution, the average total price was about half that ($10,800) for those attending a public 4-year institution and even less ($6,800) for those attending a public 2-year institution.

Table 5.—Average price of attending a postsecondary institution for dependent full-time, full-year undergraduates, by type of institution: 1995-96

The amount of tuition and fees included in these prices varies widely, even among 4-year institutions. Although a small proportion (7 percent) of undergraduates (dependent and independent) who attended 4-year institutions full time, full year paid more than $18,000 in tuition and fees in 1995-96, about half (49 percent) paid less than $4,000 (figure 5).

Figure 5.—Percentage distribution of full-time, full-year undergraduates at 4-year colleges, by tuition and fees: 1995-96

The price of attending a 2- or 4-year college or university, adjusted for inflation, has risen substantially for both public and private institutions. Between 1986-87 and 1996-97, the average student charges (in 1997 constant dollars) for tuition, room, and board at higher education institutions increased by 20 percent at public institutions and 31 per-cent at private institutions (table 6).

Table 6.—Average prices for undergraduate higher education (in 1997 constant dollars), by type of institution: 1986-87 and 1996-97

Regardless of the price of postsecondary education, the important issue for students and their families is whether they can afford to pay. The record high enrollments in higher education (14.4 million in fall 1995) (Snyder, Hoffman and Geddes 1997) show that today college is affordable to millions of students. Since increasing access to postsecondary education is an important goal at the national, state, and institutional levels, it is necessary to consider its affordability to students at all income levels. This issue can be examined from a number of perspectives, including growth in prices relative to family income, the resources families need to manage college prices on their own, and the extent to which financial aid reduces the price of attending.

More important than the increase in inflation-adjusted prices is the fact that average charges for tuition, room, and board at 2- and 4-year colleges and universities have increased faster than family incomes, especially at private institutions (figure 6).

Figure 6.—Average undergraduate tuition, room, and board as a percentage of median family income: 1976-96

Average prices at public institutions increased from 13 percent of the median family income in 1986 to 15 percent in 1996, and at private institutions, from 32 to 42 percent during the same period (Smith 1997, 70). The increase was larger for low-income families than for high-income families. Between 1986 and 1996, charges at public institutions increased from 27 to 33 percent of family income for those at the 20th income percentile, compared to an increase from 7 to 9 percent for families at the 80th percentile. At private institutions, the corresponding increases in charges were from 69 to 90 percent of family income at the 20th percentile and from 19 to 24 percent at the 80th percentile (Smith 1997).

Postsecondary education would be beyond the reach of many families without financial assistance. Financial aid eligibility rules specify an expected family contribution (EFC) that is based on financial circumstances (mainly family income and assets). This amount is a rough measure of what families can afford on their own. Therefore, comparing the amounts families at different income levels are expected to pay toward the price of attending provides an indicator of the affordability of various types of institutions. In 1995-96, for example, families with incomes of $50,000-59,999 had an average EFC of $7,400, enough to cover the average price of attending a public 2-year institution without financial aid. Families with incomes of $70,000-79,999 had an average EFC of $12,300, enough to cover the price of attending a public 4-year institution without aid. Families with incomes of $100,000-124,000 had an average EFC of $20,100, about equal to the average cost of attending a private, not-for-profit 4-year institution (figure 7).

Figure 7.—Average expected family contribution (EFC) for dependent students by family income: 1995-96

Half of all undergraduates received some type of financial aid from federal, state, institutional, or other sources in 1995-96 (table 7). Thirty-nine percent received grants, and 26 percent took out loans. Among financially dependent students, about two-thirds (66 percent) of those from families with incomes less than $20,000 received grants, as did 51 percent of those with incomes between $20,000 and $39,999. As family income rises above $40,000, students are less likely to be eligible for need-based grants and scholarships. When grants are not sufficient, students qualifying for federal financial aid may take out low-interest, subsidized loans through the Stafford loan program. Students ineligible for subsidized loans because their incomes are too high can take out unsubsidized Stafford loans if they are otherwise eligible. Some states and institutions have their own loan programs, but most undergraduate borrowing is through the Stafford loan program (Berkner 1998).

For undergraduates from families in the lowest income quartile, student aid covered, on average, more than half the price of attending a 4-year institution in 1995-96. It covered 54 percent at public institutions and 60 percent at private, not-for-profit institutions (table 8). Because of the criteria for awarding student aid, the percentage of total price covered by aid at public 4-year institutions declined as family income increased. The same was generally true at private, not-for-profit 4-year institutions, except that lower and lower-middle-income students had similar amounts covered (60 and 58 percent). At public 2-year institutions, aid covered an average of 38 percent of the total price for low-income students and smaller proportions for students with higher incomes.

Table 7.—Percentage of undergraduates with student financial aid from any source in 1995-96, by family income and type of aid

Table 8.—Total aid as a percentage of total price, for dependent full-time, full-year undergraduates, by family income quartile and type of institution attended: 1995-96

The net amount that students actually pay to attend college is the total price charged by the institution minus any financial aid they are awarded. This price includes tuition, fees, and a budgeted amount of living costs. In 1995-96, the average net price of attending college (price minus aid received) for a dependent, full-year undergraduate (including aided and unaided students in the average) was $7,300 at a public 4-year institution; $11,200 at a private, not-for-profit 4-year institution; and $5,700 at a public 2-year institution (table 9). Because financial aid reduces the net price for low-income students, it increases the affordability of postsecondary education for them.

Table 9.—Average net price and unmet need for dependent full-time, full-year undergraduates, by type of institution attended and family income quartile: 1995-96

The average unmet need (net price minus the EFC) for low-income full-time, full-year dependent undergraduates attending public 4-year institutions was about $3,800 (table 9). For those attending public 2-year institutions, the amount was similar ($3,200). Average unmet need for their counterparts at private, not-for-profit 4-year institutions was much higher ($6,200). These are the amounts above and beyond the EFC that must be covered by students and their families by borrowing more, working, reducing their living costs, or some other means.

In addition to the fact that lower income students have higher unmet need than higher income students, lower income students have also been found to be more sensitive to a given level of unmet need than high-income students. That is, for a certain level of unmet need, low-income students are more likely to be deterred from attending higher education than higher income students are (Kane 1994). Generally, it has been found that for each $150 increase in the net price of college attendance, the enrollments of students in the lowest income group decrease by about 1.8 percent (McPherson and Shapiro 1998).

Students pay for their postsecondary education with a combination of savings, help from families and friends, financial aid, and work. Their use of work and borrowing are of particular interest because working may affect their academic opportunities and performance while enrolled, and borrowing may result in a substantial debt burden after they graduate.

A large majority of undergraduates (79 percent, including both dependent and independent students) worked while enrolled during the 1995-96 academic year (figure 8). Among students who considered themselves primarily students working to pay their education expenses (50 percent of all students), the average number of hours worked per week was 25. Among students who considered themselves primarily employees taking classes (29 percent of all students), the average was 39 hours.

Figure 8.—Percentage of undergraduate students who worked while enrolled: 1995-96

In 1995-96, among undergraduates who considered themselves primarily students working to pay school expenses, the more they worked the more likely they were to report that their working limited their class schedule, reduced their choice of classes, and limited the number of classes they could take (table 10). Among those who worked full time while enrolled (35 or more hours per week), at least half reported each of these effects. In addition, 55 percent of dependent undergraduates who considered themselves primarily students and who worked full time reported that working negatively affected their grades.

Table 10.—Percentage of undergraduates who worked to help pay for school expenses and various effects of work on their studies, by average hours worked: 1995-96

Since unsubsidized Stafford loans were introduced in 1993-94, many students whose family income was too high to qualify for a subsidized loan have taken advantage of this opportunity to borrow to finance their education. In 1992-93, the last year before the eligibility rules changed, 41 percent of all seniors enrolled at public 4-year institutions had ever borrowed through a federal loan program; in 1995-96, 52 percent had done so (table 11). At private, not-for-profit 4-year institutions, the percentage of seniors who had ever borrowed increased from 49 to 56 percent.

Table 11.—Percentage of students who borrowed during the academic year and whoever borrowed, by type of institution: 1992-93 and 1995-96

Among dependent undergraduates at both public and private, not-for-profit 4-year institutions, the increase in borrowing was concentrated among students from families with incomes greater than about $30,000 (figure 9). Although some have linked the increased borrowing to rising tuitions,⁶there is no way to verify whether the increased borrowing represents more investment in postsecondary education or if middle and upper income families have simply shifted from using savings or work to borrowing. Overall, 52 percent of the seniors at public 4-year colleges in 1995-96 had ever borrowed from federal loan programs, and they carried an average of $11,000 in debt. For seniors at private, not-for-profit 4-year colleges, about 56 percent had ever borrowed and their average debt was $13,200 (Wirt et al., 62).

Figure 9.—Percentage of dependent, undergraduate students who ever borrowed from federal loan programs: 1992-93 and 1995-96

Students from higher income families do not appear to have used the increased borrowing opportunities to shift from public institutions to private, not-for-profit 4-year institutions. The percentage of dependent beginning postsecondary students from families with incomes of $60,000 or more attending private, not-for-profit institutions was about the same in 1989-90 (24 percent) and 1995-96 (25 percent) (Wirt et al. forthcoming, table 10-1).

An analysis of persistence and attainment by 1989-90 beginning postsecondary students that controlled for a variety of factors showed that working 1-14 hours per week while enrolled was positively associated with persistence and attainment 5 years later, but that working full time was negatively associated with it. Borrowing was positively associated with persistence and attainment as well (Cuccaro-Alamin and Choy 1998 ). Students who borrowed were more likely than those who did not borrow to persist or attain within 5 years at each level of work considered except 1-14 hours (figure 10).

Figure 10.—Percentage of 1989-90 first-time beginning postsecondary students who attained a degree or were still enrolled as of spring 1994

Findings from an analysis of 1995-96 undergraduates were similar, although outcome data are available only for 1 year so far. Among those seeking a bachelor's or associate's degree who considered themselves primarily students working to pay their expenses, those who worked 15 or fewer hours were more likely than students who worked more to attend for the full year, suggesting that working more than 15 hours may negatively affect persistence.

The students who considered themselves primarily students and worked 15 hours or fewer were also more likely to borrow and to borrow larger amounts, suggesting that students may substitute working for borrowing (Horn and Berktold 1998).

Enrollment in postsecondary education continues to rise, with increasing proportions of high school graduates going directly to college, and almost all expecting to enroll at some time in their lives. Low-income high school graduates are less likely to attend postsecondary education than their higher income peers. One reason is that they tend to be less well prepared, but even among the highest achieving high school students, low-income students are less likely to enroll, suggesting that finances may be a barrier for some. However, aspirations and expectations are important factors. When college-qualified low-income students take the necessary steps toward admission to a 4-year institution, they are just as likely as middle-income students to be accepted and to enroll.

College prices are rising faster than median family income. However, about half of all full-time, full-year undergraduates at 4-year institutions face tuition and fees of less than $4,000 per year, largely because of the subsidies that are provided to public institutions. Although financial aid reduces net prices for low-income students, substantial unmet need remains.

Students and their families cope with the price of attending college using savings, income, borrowing, and work. While some work experience while enrolled may complement students' academic experiences and improve their employment prospects after graduation, full-time work appears to have some negative consequences. In addition, there is some evidence that borrowing to reduce the number of hours a student needs to work to no more than 15 hours per week may increase a student's chance of completing a degree.