What’s New in the World of Higher Education

Unknown

Whether your child is expecting college decisions any day now or you’re planning ahead for future years, here’s what’s new in the world of higher education.

Costs for 2013/2014

The reasons are many and varied, but suffice it to say that this year, like every year, college costs increased yet again.

For the 2013/2014 school year, the average cost at a 4-year public university is $22,826, while the average cost at a private college is $44,750, though many private colleges charge over $60,000 per year*

Now required on all college websites, net price calculators can help families estimate how much grant aid a student might be eligible for at a particular college based on his or her individual academic and financial profile and the school’s criteria for awarding individual aid. Run numbers on different net price calculators to see how schools stack up against one another.

New rates on federal student loans

New legislation changed the way interest rates are set for federal Stafford and PLUS Loans. Rates are now tied to the 10-year Treasury note, instead of being artificially set by Congress. For July 1, 2013 through June 30, 2014, the rates are:

  • 3.8% for undergraduate students borrowing subsidized and unsubsidized Stafford Loans
  • 5.4% for graduate students borrowing unsubsidized Stafford Loans
  • 6.4% for parents borrowing PLUS Loans

Income based repayment

Federal student loans are the preferred way to borrow for college because they offer a unique repayment option called “income based repayment,” (IBR). Under IBR, a borrower’s monthly student loan payment is based on income and family size and is equal to 10% of discretionary income. After 20 years of on-time payments, all remaining debt is generally forgiven. (Loans are forgiven after 10 years for those in qualified public service).

Push for information

President Obama recently announced a proposal that would require colleges to report the average debt load and earnings of graduates, with the availability of financial aid being linked to those ratings. Most colleges have responded with the argument that average debt is not a valid indicator of affordability, because colleges have different endowments and abilities to award aid, and that post-graduation salaries depend on variables outside the college’s control. No reporting requirement has been finalized, but the trend is toward the government requiring colleges to make their costs and return on investment transparent so families can make more informed choices.

The growth of MOOCs

MOOCs, or “massive open online courses,” have the potential to revolutionize higher education. Today, hundreds of MOOCs are offered free of charge by many well-known universities. What credit or degree will be given when courses are completed, and how pricing will work has yet to be determined, but the combination of quality courses, robust online learning technology, and the high cost of a traditional college education, makes it likely that the popularity of MOOCs will grow in the future.

*Source: “The College Board, Trends in College Pricing 2013.” Cost figures include tuition, fees, room and board, books, and a sum for transportation and personal expenses.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

Speak Your Mind

*