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Tuesday, April 8th, 2014
A new study comparing college tuition with family income has found that tuition has more than doubled relative to income in the past four decades. More from Newsweek:
That cost includes tuition, fees, and room and board for full-time students at degree-granting institutions—for both public and private colleges and universities. Back then, the average cost came to $9,502 after adjusting for inflation, according to the National Center for Education Statistics. By 2012, the average was $19,339. With a typical family earning $51,017—the U.S. median income—college tuition for just one child will absorb almost 40 percent of their income. That surpasses housing as the single biggest household expense.
If college costs were rising along with family income, there wouldn’t be a problem. But college costs have risen way ahead of income. There are several reasons. For starters, administration costs have been growing rapidly on most campuses. In part this has to do with an explosion in applications and enrollments, which require more resources. But salaries of administrators, particularly those in charge, seem out of line with the rest of the institution. It’s not unheard of for compensation of the president of a large university to approach $1 million. Meanwhile, campuses have seen a boom in infrastructure spending to upgrade student facilities like gyms, student centers and dorms. Finally, many public universities have offset cuts in state aid by raising fees.
Of course, the price of college varies greatly depending on where you go, and whether the institution is public or private. Almost three-quarters of Americans attend public universities and colleges, where costs have been rising quickly but still remain far less than private institutions. In 1969, public colleges and universities charged an average of $7,206, compared with $14,292 in 2012, after adjusting for inflation. By contrast, private institutions averaged $15,329 back then, vs. $33,047 in 2012.
Today, the cost of a private college or university would be unattainable for most families if they didn’t get substantial financial aid. At elite colleges and universities, the cost is considerably more than what a typical family earns. Without financial aid, a single year at Princeton can set you back $58,965.
Image: Money, via Shutterstock
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Tuesday, December 31st, 2013
A growing number of young adults are stuck in what analysts are calling a “worst case scenario,” in which they are stifled by debt from college loans, but they never finished their degrees. More from NBC News:
According to a 2011 study by the Harvard Graduate School of Education, only 56 percent of students who enter four-year programs graduate within six years. That number plunges to 22 percent for for-profit colleges. Meanwhile, the percentage of incoming students relying on loans is growing—from 2001 to 2009, the number increased from 47 percent to 53 percent, according to a report by Education Sector. The same report also found that borrowers who drop out are four times more likely to default on their loans.
Some of these dropouts grew up middle class with an expectation of getting a degree, like [Christopher and Harmony] Glenn. Others are students from low-income backgrounds, perhaps the first in their families to go to college. Michelle Obama recently launched an effort to encourage these first-timers to pursue higher education, but the odds are stacked against them: Pell grants and funding for state and city universities continue to shrink. Forty percent of students at four-year colleges, and 60 percent at community colleges, are working 20 hours or more to make up for these gaps, according to the Pell Institute.
“A lot of these kids come up against this wall of bureaucracy,” said Jennifer Silva, author of Coming Up Short, a book about working-class young adults. “They lack mentors to help them navigate the system” of admissions, financial aid, and choosing classes. “It ends up leaving them feeling kind of betrayed.”
Image: College debt, via Shutterstock
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Friday, November 1st, 2013
In a study that is surprising many parents who worry about their children’s financial common sense, researchers have found “no compelling evidence” that young people are “bad borrowers” or at elevated risk for having credit problems. More from Today.com:
The key findings:
- Credit cardholders under the age of 21 are substantially less likely to experience a serious delinquency (90 days or more past due) or default than those who get one later in life.
- Someone age 40-44 is 12 percent more likely to have a serious default than a 19-year-old.
- Those who get a credit card in their teen years are also more likely to get a mortgage while young.
“There are some big benefits to getting a credit card early, so parents don’t need to freak out about it,” said study co-author Andra Ghent, assistant professor in the W.P. Carey School of Business at Arizona State. “They may well be able to manage it just fine.”
The authors reached that conclusion after studying nationwide credit card data collected by the New York Federal Reserve Bank for 2005 to 2008. To examine the cardholder’s behavior without the influence of a parent or guardian, anyone with a cosigned card was excluded from the analysis.
The data did show that young people are more likely to experience minor delinquencies (30 to 60 days past due) than older cardholders. But, as they learn from their mistakes and figure out how to make payments on time – such as setting up automatic bill pay – the frequency of these minor delinquencies drops.
Prof. Ghent believes making small mistakes with credit early in life can prevent major ones later on.
Plus: Curious about what career your child may have? Find out with our fun quiz!
Image: Teen with credit card, via Shutterstock
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Wednesday, July 18th, 2012
The financial crisis that has engulfed the nation over the past few years has had an additional negative consequence, according to a new study published in the journal Pediatrics: a rise in physical child abuse.
The study, which focused specifically on mortgage foreclosures, was conducted by researchers at the PolicyLab at The Children’s Hospital of Philadelphia. It found that every 1 percent increase in 90-day mortgage delinquencies over a one-year period was associated with a 3 percent increase in children’s hospital admissions for physical child abuse, and a 5 percent increase in children’s hospital admissions for traumatic brain injuries suspected to be caused by child abuse.
“What this research shows is that there’s a connection between child abuse and families in financial crisis,” said Bruce Lesley, president of the child advocacy group First Focus, in a statement. “Unfortunately, Congress may make the problem worse with cuts to child nutrition, children’s health, childcare, and family tax credits. If Congressional leaders don’t protect these investments today, the danger to kids will increase when parents are pushed into crisis. Lawmakers need to understand that decisions about nutrition, health, and poverty, are also decisions about child abuse and neglect.”
Image: Family finances design, via Shutterstock
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Friday, June 15th, 2012
In the space of a single year, the United States Department of Agriculture estimates that it will cost $8,000 more to raise a child for 17 years. As CNN Money reports, there are a number of factors that contribute to the $235,000 that middle-income families can expect to spend on children born in 2011, an $8,000 or 3.5 percent increase from the previous year’s USDA report:
So why do babies born in 2011 cost so much more?
In that one year alone, expenses for transportation, child care, education and food surged for middle-income families. Health care, clothing and housing costs also increased, but at a more gradual pace.
In the study, the government defined middle-income families as those with $59,000 to $103,000 in annual income before taxes.
Image: Family eating dinner, via Shutterstock.
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