College Costs Too High Even for Some Families Who Save
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
For millions of Americans, the good news is your son or daughter has gotten into college. The bad news is now you have to figure out how to pay for it. There are lots of options: Stafford loans, Perkins Loans, Pell grants, merit scholarships. But it's a tall order. The average total cost of a four-year degree at a public school is more than $35,000. All week on the program we'll hear from families wondering where the money to pay for college will come from. We begin today in Kansas with NPR's Claudio Sanchez.
CLAUDIO SANCHEZ reporting:
With the senior prom and graduation just days away, 18-year-old Lauren Smith(ph) and her mom Pat have spent an entire afternoon shopping for shoes in Kansas City, an hour's drive from their home in Lawrence, Kansas.
(Soundbite of door slamming)
SANCHEZ: At dusk, their Volvo station wagon pulls up to their elegant, ranch-style house. They unload several shopping bags on the dining room table. Lauren can't wait to show off her beaded, four-inch-heel black shoes.
Mr. ERIC SMITH (Lauren's Father): Oh, my gosh. Look at that.
Mrs. SMITH(ph) (Lauren's Mother): Aren't they gorgeous?
SANCHEZ: For Lauren's parents, Eric and Pat, it's hard to believe that their little girl will soon be off to college. It's just as hard to believe that over the next four to five years they're going to spend well over $50,000 on her education.
Mrs. SMITH: Well, I know that when we first started saving for college when Lauren was quite young, there was a computer program we looked at. And it said, `In-state tuition, you'll want to save this much per month to get to $50,000' or whatever it was. I can't recall. And then if you wanted a private school, then you needed to be saving this much per month. But, again, that was a projection based on some crystal ball that said this was true.
Mr. SMITH: Well, I think you can always say that in terms of predicting what it's going to be, I--it's a moving target. It's not going down; it's going up.
SANCHEZ: And up and up and up. In fact, since way before Lauren was born, undergraduate tuition at most public institutions in Kansas and across the country has consistently outpaced the inflation rate and household income. What's happened in Kansas is typical. Twenty years ago the state provided 3 out of every $4 that public institutions here spent. Now it provides half that. To make up for the drop in state aid, the University of Kansas, the state's flagship institution, has raised tuition and fees for room and board. The Smiths thought they were doing their part by planning and saving, then saving some more, first in regular saving accounts, then in mutual funds.
Mr. SMITH: We just tried to put money in places away as we could do it. And now we're putting it more regularly.
Mrs. SMITH: Yeah, we...
Mr. SMITH: Some in our 401(k), some here.
SANCHEZ: But their return on their savings have simply not kept up with tuition increases. The Smiths will have to come up with $12,000 a year to pay for their daughter's education at the University of Kansas, where she'll enroll this fall. And that'll only cover the basics, says Pat.
Mrs. SMITH: We really don't have enough for in-state tuition totally because of the changes in the tuition. I mean, the cost is higher than when we started saving. We didn't adjust at all. You know, should we have saved more? Probably. I don't know.
SANCHEZ: That's what's so puzzling, says Pat. She's still not really sure how they could have planned better. Now the Smith family lives quite comfortably, mind you, so $12,000 a year isn't going to break them. Eric is an architect, and Pat is the head administrator at a local mental health center. They own their own home, three cars and carry very little debt. Because of their income, their daughter Lauren isn't eligible for any need-based government aid. They could borrow money for college, but Eric hates the idea of borrowing.
Mr. SMITH: Well, I grew up in a family--my father believed in the time-tested virtue that you do not borrow money for anything that's not going to make you money. And I think that's one thing that's really changed in our culture. Borrowing is just a way of life.
SANCHEZ: Lauren, who's been pretty quiet until now, says she's tried not to think about how her parents are paying for college.
Ms. LAUREN SMITH (Future College Student): I wasn't even sure how much we had saved up. I had asked my mom earlier this afternoon, and I wasn't sure. But we live a nice lifestyle, and I just always assumed that we would be able to be saving a little bit at least.
SANCHEZ: What's distressing, says Pat, is that they've been priced out of the most selective out-of-state and private colleges, where tuition room and board is anywhere from 30 to $40,000 a year these days.
Mrs. SMITH: That's pretty incredible. What made me sad about that is, you know, like anybody, I want my daughter to have everything that she can have. I want the world to be open to her. But how much did we want to compromise to make that happen? We could make it happen, but we'd have sacrifices.
SANCHEZ: The Smiths are not alone. But what do middle-income families consider sacrifices? At this all-day family orientation at the University of Kansas, parents like Roxanne Thulin from Wichita talked about giving up things they used to take for granted.
Ms. ROXANNE THULIN (Parent): As an example, shoppingwise, you know, I'm from the Kansas City area and very used to the nicest of clothing. I've scaled way down. I've gone to, `Hey, it's OK to walk into Wal-Mart.'
SANCHEZ: Roxanne and her husband, Ted, say they're looking at $20,000 a year, almost all of which they'll have to borrow, if their son Devon(ph) enrolls in the premed program. Many parents here say they've been blindsided by the cost of college.
Ms. JAMI CLARK (Parent): Financially, I mean, this is all new to us.
SANCHEZ: Jami Clark and her daughter Courtney(ph) are from Wichita.
Ms. CLARK: I mean, we're--you know, I don't know what we'll do. First, she's going to try for scholarships, and we'll go from there.
SANCHEZ: Clark's friend Donna Strolley(ph) says the University of Kansas is a good buy.
Ms. DONNA STROLLEY (Parent): I'm looking at about 12,000 a year.
SANCHEZ: But it's going to be pay as you go, says Ms. Strolley. Couldn't you have started saving for college a lot earlier, I asked. `No way,' says Ms. Strolley.
Ms. STROLLEY: You're working and you're paying day care. I couldn't--I mean, there was no extra money. I mean no extra money. I mean, you don't have the money to put away when you're raising kids.
SANCHEZ: Nearly half of the families that send their children to the University of Kansas earn $80,000 or more a year, and yet most could not afford college without government loans. According to the US Census, the percentage of middle-income families who rely on federal aid skyrocketed from 8 percent in 1992 to about 45 percent in 2000. And that percentage is growing, not to mention low-income families who can't send their kids to a four-year college because financial aid has not kept up with rising college costs.
States have been under so much pressure to lessen the burden on families, they created all kinds of savings plans: 529 plans, prepay tuition plans, state tax credits. The University of Kansas, for example, is proposing a tuition freeze that would allow every new student to pay the same tuition for four years, no surprises. This, of course, would be welcome news for Eric and Pat Smith. They never thought paying for college would be such a big headache. Tonight at dinner they'd rather talk about their daughter's career plans. With her parents' encouragement, Lauren has thought about psychology and medical school.
Ms. SMITH: And then I just kind of realized I'm just totally obsessed with music, and that's just the perfect thing for me to do. And I love just, like, finding new bands on the Internet and doing whatever. And so...
Mrs. SMITH: Well, I was just glad that she chose something. I was afraid that she wouldn't have a major. And Lauren is a counterculture sort of person, and I say that in the best sense of the word. Again, if it's her passion, I'm really supportive of it.
SANCHEZ: And if it costs 50 to $60,000 for their daughter to chase her dream, a career in the music industry, her parents would like to believe it's all worth it. Claudio Sanchez, NPR News.
SIEGEL: And you can find some advice on paying for college and also check out the debate on high college costs at NPR's opinion page, Taking Issue. It's on our Web site, npr.org.