NCPA - National Center for Policy Analysis

COLLEGE'S "STICKER PRICE"

August 19, 2004

Although the price of a college education has gone up, the average student pays less than ever for a public university education -- thanks to an explosion in federal grants, state aid and tax credits.

According to Adrienne Aldredge, a research associate with the National Center for Policy Analysis, in recent years the federal and many state governments have legislated substantial tax breaks and grants for middle-class families:

  • A record $105 billion in financial aid (including loans) is available to students and their families, an increase of 12 percent over last year.
  • States awarded $6.9 billion in aid last year -- an average of $467 per student.
  • Almost 60 percent of undergraduate students receive some form of financial aid.
  • Federal Pell grants, which target low-income students, have doubled to $12 billion since 1998.

Middle-class families also reap the greatest rewards from seven new college tax credits and deductions and plenty of financial aid based on both need and merit. Among them:

  • The Hope Scholarship Credit, started in 1998, reduces federal income taxes by up to $1,500 per year of college for each college student in a family.
  • The Lifetime Learning Credit reduces taxes by up to $2,000 per family and can be taken for an unlimited number of years; however, it cannot be used along with the Hope credit.
  • In 2003, 6.5 million families received tuition tax credits that reduced taxes an average of $1,350 per return.

With the recent expansion of federal, state and private aid, a college education is well within financial reach for most low-income students, says Aldrege.

Source: Adrienne Aldrege, "Is College Too Expensive, Or More Affordable Than Ever?" Brief Analysis No. 482, National Center for Policy Analysis, August 19, 2004.

For text http://www.ncpa.org/pub/ba482/

 

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