Rising aid helps students beat college 'sticker price'

Students walk through the center of campus at the University of Tennessee at Chattanooga in this file photo.

While college tuition rates have risen steadily over the past decade, the amount students actually have to pay on average has not grown as fast.

After factoring in grants and scholarships, which have outpaced tuition increases, most of the area's four colleges and universities' net costs - students' true out-of-pocket expenses - are well below the published tuition and fee increases.

At Cleveland State Community College, students' net cost actually shrank. Only the University of Tennessee at Chattanooga saw its net price rise, but school officials said recent data show they are closing the gap.

More and more, government and school officials are asking families to focus on the net cost of attending college rather than the "sticker price" - the tuition and fees that make headlines every year.

Last year, Congress required schools participating in federal student aid programs to post on their websites net-price calculators so families can figure how much they have to come up with after scholarships and grants. The price includes living arrangements, books and supplies and other expenses, but doesn't take student loans into account.

"One of the untold stories is about how higher education finance has changed," said Russ Deaton with the Tennessee Higher Education Commission.

"There has been a fairly dramatic increase in grant aid, whether it is from federal Pell grants, lottery scholarships and a significant increase in the state's need-based programs," Deaton said.

"While tuition has been going up in large part due to state divestment, there has been concurrent increases in grant aid, which is lowering the net price for many students," he said.

However, if the tuition trend continues, grants and scholarships won't be able to keep up, analysts say.

Defining net price

Latest figures on the average net price calculated by the federal government are from 2010-11, and most campuses have increased tuition and fees since then.

Over the past 25 years, average tuition and fees nationwide have increased faster than inflation, per capita personal income and prescription health care.

Out of 250,000 Tennessee public higher education students, more than 106,000 received federal Pell grants and nearly 82,000 got lottery scholarships in 2009-10, THEC figures show. That year, public institutions in the state collected $1 billion in gross tuition revenue, offset by $643 million in federal and state grants.

At its annual meeting last week in Knoxville, the UT system reported that its budget for scholarships and fellowships has grown 45 percent since 2008, far more than any other category. Tuition and fees went up 36 percent at UTC, including a 6 percent tuition increase trustees approved Thursday.

Nationwide, only about one-third of full-time students pay the full published tuition price with no grant or assistance, according to "Trends in College Pricing" by the College Board, a research and testing organization.

Among public two-year colleges, for instance, tuition and fees actually decreased over the last 15 years after adjusting for inflation, said Jennifer Ma, an independent policy analyst with the College Board.

"Even when you look at other sectors, net tuition and fees have been growing at a much lower pace than published tuition and fees," she said.

The local picture

At Chattanooga State Community College, tuition and fees increased 18 percent from 2008-09 to 2010-11, but the average net price increased 8 percent, according to data from the U.S. Department of Education.

Cleveland State's average net price was 9 percent lower in 2010-11 than it was three years earlier, figures show. Total financial aid awarded to Cleveland State students, not including loans, more than doubled during that time.

At Dalton State College, tuition and fees increased by almost 40 percent from 2008 to 2010 while the amount of federal and state grants basically doubled, from $8 million to about $16 million, and total aid rose from about $12 million to $24 million.

For the second year in a row, Dalton State is one of the nation's most affordable four-year colleges on the Education Department's College Affordability and Transparency list.

Overall, more students are receiving federal financial aid because of the weak economy, said Michael Stokes, vice president for student services at Cleveland State.

"We've worked really hard to maintain and expand our institutional dollars, too," he said. "We know cost determines where a student goes to school for a lot of families, and we work hard to maintain our cost to the lowest level as possible."

Although the average net price increase at UTC was slightly higher than the tuition and fees change from 2008-09 to 2010-11, students with income levels below $30,000 were actually paying 23 percent less.

"I don't think we are too far out of line," said Richard Brown, chief financial officer at UTC.

The average amount of grants and scholarships at UTC increased 13 percent during the period, from $6,441 to $7,264.

But Brown said the government needs to help universities find a sustainable financial model.

"We are still a good value," he said, "but moving forward we'll have to find a way to have some degree of state subsidy along with input from families. Finding that financial 'sweet spot' will be the challenge."

Many students still find paying for college difficult. Financial aid covers only about 20 percent of the total cost of college, according to 2007-08 data from the College Board, and loans are often part of the solution.

Student-loan debt reached a record $1 trillion earlier this year, and the average debt for a Tennessee university graduate, both in public and private schools, was $19,957 in 2010 -- the ninth-lowest across the nation.

The federal government's share of college aid has increased, too.

In 2010-11, 51 percent of undergraduate grants came from the federal government, compared with 34 percent 10 years earlier, according to "Trends in Financial Aid" from the College Board. The number of Pell grants, which are awarded based on need, grew from 4 million to 9 million in a decade.

The current pattern is not sustainable, said THEC's Deaton.

"The [HOPE] lottery scholarship is a fully matured program; it is not going to grow. The federal Pell grant has a lot of issues. There are significant needs over and above where current levels are," he said.

"It's highly unlikely that the next 10 years of financial aid will look like the last 10 years. Somewhere in the future there will be a tipping point where the stable net prices we've seen change," he added.