4 charts that show how college costs, student loan borrowing and grant aid have changed over time

By Katie Lobosco and Nicholas Anastacio, CNN

The cost of college is not skyrocketing — at least for now, when factoring in the average amount of grant aid students receive.

Most schools offer grants, money that students don’t have to pay back, making the actual amount they pay for college, known as the “net cost,” lower than the published sticker price.

A combination of factors — including an increase in grant aid, pandemic-related tuition freezes and soaring inflation — mean that the average net cost has been declining for the last six years.

The average net cost for one year at a public, four-year college is $3,090 less than it was during the 2016-2017 school year when adjusting for inflation, according to The College Board’s latest report on college pricing and student aid.

After peaking at $22,340 during the 2016-2017 school year, the average net cost of attendance at public, four-year schools has declined to $19,250 for the current school year, in 2022 dollars.

This is the lowest the average annual net cost has been since the 2006-2007 school year.

Private, nonprofit four-year colleges tend to be more expensive than public, four-year schools, but the average cost for private schools is also on the decline. The average net cost of attendance for private schools is currently $32,800.

One big factor is that many schools froze tuition during the Covid-19 pandemic. Some schools didn’t raise the cost because classes were moved online, and others may have lowered it to attract students as enrollment declined, said Jennifer Ma, a senior policy research scientist at The College Board and co-author of the annual “Trends in College Pricing and Student Aid” report.

Another reason the net cost of college has gone down is because the amount of grant aid students are getting from their schools and the government has increased. This increase predates the pandemic.

Overall, the current average grant aid per student at a four-year public college, at $8,690, is nearly $4,000 bigger than it was during the 2006-2007 school year, after adjusting for inflation.

The increase in grant aid is largely driven by grants provided by the schools, Ma said. Total federal grant aid decreased by 32% in inflation-adjusted dollars between 2011-2012 and 2021-2022.

A third reason college is costing less, relatively speaking, is because the cost of everything else has gone up even faster, rising 7.7% over the past year.

Pell grants for low-income students are covering less of the cost

The fact that college is costing less than it used to may surprise many Americans, especially those for whom an education is out of reach without taking on student debt.

Pell grants, a key federal student aid program for low-income families, are covering a smaller share of the cost of college. That means that students with the most financial need may be paying more for their degrees if the difference isn’t made up by grant aid from other places.

At its peak in the 1970s, the maximum Pell grant award covered nearly 80% of the average cost of tuition, fees, and room and board. Now, the maximum Pell grant — which is worth $6,895 — covers just 30% of the average annual cost, according to a CNN analysis of data from The College Board and the Department of Education.

About 6.1 million students received a Pell grant last academic year.

Pell grants are solely based on financial need, which is determined based on a student’s family’s income, family size, the number of family members enrolled in college and the cost of attendance. Not every recipient receives the full amount. The value of the grant shrinks for families with a smaller estimated need. Unlike loans, the Pell grant does not have to be paid back.

A majority of Pell grant recipients had a family income of less than $40,000 during the 2019-2020 award year, the latest data available.

Earlier this year, Congress passed a significant $400 increase to the Pell grant — but still fell short of Biden’s campaign pledge to double the value.

If Biden’s one-time student debt cancellation plan is allowed by the courts to move forward, Pell grant recipients will be eligible for up to $20,000 of debt relief — up from the $10,000 of relief that other qualifying borrowers can receive.

Families are borrowing less

While the amount of outstanding student loan debt has topped $1.6 trillion, overall borrowing for college declined for the 11th consecutive year in the 2021-2022 academic year, according to The College Board.

That may mean good news for some families, but there are some nuances when you look at the type of loan borrowed over time, warned Ma.

While annual borrowing of federal undergraduate loans has remained fairly level over the past 15 years, the amount of money borrowed by parents and graduate students from the federal PLUS loan program has risen consistently, even after adjusting for inflation.

The PLUS loans come with a higher interest rate, currently set at 7.54%, and are typically borrowed after a student has tapped out the amount of subsidized and unsubsidized loans a borrower is allowed.

Limits on PLUS loans are less restrictive. Generally, a parent or graduate student can borrow up to the cost of attendance minus any other financial aid received.

If the cost of attendance increases, a bigger PLUS loan can be borrowed.

Student loans continue to make up nearly 10% of all US household debt

Americans hold more student loan debt than they do auto debt or credit card debt, according to the New York Federal Reserve.

As a share of US household debt, student debt steadily rose between 2004 and 2021, jumping from just over 3% to 10.8% — before dipping down again to 9.5% in July 2022.

At about $1.6 trillion, overall student loan debt remains well below the more than $11 trillion Americans owe in mortgage debt.

Since the beginning of the pandemic, the household share of student debt has fallen — in part because the growth in mortgage debt has outpaced the growth in student loan debt since the beginning of the pandemic. Also, the growth in student loan balances has slowed, largely because college enrollment has declined and interest on federal student loans has been frozen since March 2020, thanks to a pandemic-related pause, according to New York Fed researchers.

It’s worth nothing that compared with other kinds of debt, it’s historically been extremely difficult to discharge student loans in bankruptcy, though the Biden administration recently issued new guidance to simplify the process. Prior to the pandemic, thousands of borrowers had their Social Security checks garnished because their student loans were in default.

The share of US household debt that student loans take up could shrink if Biden’s student loan program survives its legal challenges and takes effect. It’s estimated to cancel roughly $525 billion of federal student loan debt, according to the Committee for a Responsible Federal Budget.

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