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"A Benchmark for Making College Affordable: The Rule of 10" is Lumina's attempt to add clarity to the debate around college affordability. Without a clear understanding of what the ideal level of 'affordability' is...
"A Benchmark for Making College Affordable: The Rule of 10" is Lumina's attempt to add clarity to the debate around college affordability. Without a clear understanding of what the ideal level of 'affordability' is Lumina’s attempt to add some clarity to the debate around college affordability. Without a clear understanding of what the ideal level of 'affordability' is, it will be difficult, if not impossible, to achieve any national college affordability goal. With this in mind, Lumina set out to create a standard that could be the start of a conversation. An opening salvo for what affordability—student based affordability—would look like.
We convened experts in higher education and asked them to grapple with this issue. We also sought input from experts in other fields that have struggled with the issue of affordability; fields such as housing, health care, and retirement. We looked at trend data on consumer behavior and spending, and also examined current levels of investment in higher education. We reflected on some of the most oft-cited challenges with current levels of affordability, and sought out a method of defining affordability which would address these challenges.
The approach described below is not perfect. It leaves certain unanswered questions and raises new points of inquiry. It is a starting point. Our hope is that through collaboration over the next year, others will work with us to flesh out this idea; to clarify and strengthen it.
If you have feedback on the benchmark, or ideas about how to improve it, we would like to hear from you. Feel free to send us a note at AffordabilityBenchmark@LuminaFoundation.org to share your thoughts.
Though education beyond high school is more important than ever, it’s also become much more expensive. In fact, college prices have increased by 45% on average over the past decade, while household income has declined by 7%. Lumina Foundation maintains that to make post-high school education attainable, we must change the way we think about affordability.
Tuition, fees, and room and board (constant 2012 dollars) at 4-year undergraduate institutions.
The cost to students and families of attending college has been rising in real dollars for many years. At 2011-12 prices, students taking four years to complete a bachelor’s degree would pay a net price, on average, between $59,300 (if they started at a community college and transferred to a public four-year institution) to $111,600 (if attending a private non-profit institution).
As the price of secondary education continues to climb, so does the amount of student debt. Today, total student loan debt is more than $1 trillion. The proportion of graduates with significant levels of debt has also risen, with 29% of graduates owing more than $20,000, up from 9% in 1995-96.
Guess which number is the highest:
The increase in college prices has not only sent student debt soaring, but also affects whether and how students continue their education—an issue that is particularly hard-hitting among minority and low-income students.
Even when they have higher test scores, low-income students enroll in college at lower rates than their higher-income peers, have lower persistence rates, and are less likely to graduate.
To reach the goal of 60 percent of Americans with high-quality degrees, certificates, and other credentials—we must take a student-centric approach.
Simply, a new college affordability model should focus on what students can afford to pay, not what college should cost. This new model begins with what students are bringing to the table, and suggests that the system be built around their needs.
A new college affordability benchmark should
The Rule of 10 considers three major components to provide a general guideline for how affordable college SHOULD be.
The following are examples of how the Rule of 10 could be applied in different family and student lifestyle situations. In each scenario, a student might also expect to contribute an additional $14,500 ($3,625 per year) from work over the course of four years to the total cost of attendance (including living expenses) for an educational program.
The affordability benchmark is calculated based on the reasonable assumption that individuals and families making above 200% of the poverty rate can afford to save 10% of their income. The poverty rate differs by family size, so that larger families receive a larger income exclusion than smaller ones.
This draft merely provides an outline: the benchmark does not reflect any declaration of how current policy constructs should be changed—it does not seek to set loan limits, tuition structures, or state subsidy amounts, for example. Some people can’t afford to save anything for college, and it is our imperative as a society concerned with equity, to make sure that these individuals have access to high quality post-high school education options, despite these economic barriers.