Shifting Burdens: How Changes in Financial Aid Affected What Students and Families Paid for College from 1996 to 2012

By Nicholas Brock

Evaluating the various sources of college financing, a recent report published by New America examines how different types of students (e.g. low income, dependent) paid for higher education from 1996 to 2012. Preliminary findings display significant variation in the share of college costs (defined as tuition plus living expenses) students and families paid out of pocket, related to students’ dependency status, income classification and type of institution (public, private, etc).

Key findings include:

  • Students at community colleges and independent students at public four-year colleges did not see an increase in their “share” of college costs from 1996 to 2012.
    • Even though dependent students at public four year colleges did see an increase in their share, those increases were correlated with their families’ rising income, minimizing the impact.
  • State and local government subsidies to public institutions declined from 1996 to 2012, which is a well-known trend. The report reveals how this impacted higher and lower-income families differently.
    • Higher-income families saw a large reduction in the share of college costs covered by state and local governments and lower-income families saw a small reduction in the share of college costs covered by these subsidies.
  • While overall state and local subsidies decreased, increases in federal student aid to low-income and independent students nearly off-set the reductions.
    • For some students, including those at community colleges and independent students at public four-year colleges, increases in federal aid were large enough to fully offset declines in other aid.
  • In general, families borrowed more money to pay for college in 2012 than they did in 1996, meaning they technically paid less “out of pocket” in 2012 than in 1996 and relied on loans to finance a college education.
    • Unfortunately, students who did not see an increase in how much they were expected to pay for college, still increased their debt load to finance their education.