1. Defining Affordability: The Impact of Tuition and Student Aid on College Access, Choice, and Success Sandy Baum The College Board and Skidmore College Center for Enrollment Research, Policy, and Practice University of Southern California August 2008

2. Is College Affordable? Common question Answer usually negative No good definition Focus on ease / difficulty

3. Factors to Consider Sticker prices Net prices Forms and levels of student aid Incomes Return to education

4. Consumer Price Index, 1998 to 2008 % change Jan 1998 to Jan 2008 Coffee, 100%, ground roast, all sizes, per lb. (453.6 gm)-18.3% Apparel-10.8% Food and beverages30.3% Housing34.1% Medical care51.4% Child care59.9% Tuition and fees (CPI)85.0% Elementary / Secondary Tuition85.5% Eggs, grade A, large, per doz.94.2% Cigarettes and Tobacco Products130.2% Gasoline, unleaded reg, per gallon169.4% Source: U.S. Department of Labor, Bureau of Labor Statistics

5. Share of total expenditures on specific items Share of total expenditures 20002006% change Cigarettes0.80%0.70%-19% Education1.70%1.80%10% Gas and motor oil3.40%4.60%36% Source: The Consumer Expenditure Survey

6. Growth in Tuition and Fees Tuition and Fees - Constant (2007) Dollars PrivatePublic Four-Year Two-Year 1990-91 $14,755$3,014$1,431 1995-96 $16,610$3,822$1,808 2000-01 $19,337$4,221$1,976 2005-06 $22,208$5,814$2,310 2007-08 $23,712$6,185$2,361 annual growth 1990-20002.70%3.50%3.30% annual growth 2000-20073.00%5.60%2.60% annual growth 1990-2000$458$121$54 annual growth 2000-2007$625$281$55 Source: The College Board, Trends in College Pricing 2007

7. Growth in Grant Aid per Student, Constant 2006 Dollars Grant Aid per FTE Federal Grant per FTE State Grant per FTE Institution Grant per FTE Private and Emplo yer Grant per FTE Education Tax Benefi ts per FTE Total Grant and Tax Benefi ts per FTE 1990-91$2,539$1,011$284$936$308$0$2,539 1995-96$3,121$1,039$384$1,335$363$0$3,121 2000-01$3,869$1,135$485$1,654$596$424$4,293 2005-06$4,461$1,397$524$1,829$711$440$4,901 2006-07$4,648$1,429$563$1,916$740$428$5,076 Average annual rate of growth 1990-20004.30%1.20%5.50%5.90%6.80% 5.40% 2000-20063.10%3.90%2.50% 3.70%0.20%2.80% 1990-2000$133$12$20$72$29$42$175 2000-2006$130$49$13$44$24$1$131 Source: The College Board, Trends in Student Aid 2007

8. Affordability Focus on all factors affecting demand Price or net price / median income Changes in distribution of aid Changes in distribution of income All goods and services more affordable for rich, less affordable for others

9. Distribution of Family Income 19802005 Lowest 20%4.2%3.4% Middle 20%16.8%14.6% Top 20%44.1%50.4% Top 5%16.50%22.20% Source: Statistical Abstract of the United States 2007

10. Net Tuition and Fees and Total Cost of Attendance as Percentage of Income Source: The College Board, Trends in College Pricing 2006

11. Is College Affordable? Rising enrollment rates over time at all income levels Can it be unaffordable for those who are enrolled (unmet need)? Archibald and Feldman: $ change in income vs. $ change in price of college Is rising share of income a good measure?

12. Questions What percentage of discretionary income can / should be devoted to education? Priorities: social / individual Multiple years of college and of income Family income and post-college earnings Concern over affordability because of doors opened by college.

13. Solutions? Simpler more predictable – and more generous – student aid Moderation in price increases Better concepts of affordability Changing income patterns Prices of other goods and services Priorities