A college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home. Ironically, one of the reasons the price tag continues to climb is the abundance of loan dollars that discourages schools from keeping their costs in line.
While families are paying less out of pocket than in the past, they are relying on loans, scholarships and grants more than ever before.
Aid such as the income-based federal Pell grants covered 34 percent of college costs in 2015-16, up from 30 percent in the previous school year, according to a recent report by education lender Sallie Mae.
The second-highest proportion came from parent income and savings, which averaged $6,867, or 29 percent of total spending on college, followed by borrowed money, which covered 20 percent of college expenses in 2015-16. Overall, 2 in 5 families borrowed money to pay for college during this school year, Sallie Mae officials said.
Tuition has historically risen about 3 to 5 percent a year, according to the College Board. During the recession, declining public funds caused tuition to skyrocket. At private four-year schools, average tuition and fees rose 54 percent in the last decade. Tuition plus fees at four-year public schools, which were harder hit, jumped 71 percent over the same time period.
"One of the biggest things we have seen is the disinvestment from states and this has been particularly problematic for public institutions," said Megan McClean Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators.