NEW YORK (MainStreet) As the cost of federal student loans increase, with Stafford loan rates having jumped last month in a spiking interest rate and tuition environment, some state governments may help shoulder the burdeneven as the trend has been away from state funding of post-secondary education.
In the past three decades, college costs have risen faster than inflation and are now at roughly 25% of the average household's incomeand school fee sticker shock is not limited to private schools. According to "The Great Cost Shift," a 2012 report by public policy think tank Demos, tuition and fees at public, four-year universities more than doubled between 1990 and 2010, rising by 112%, while prices at two-year colleges rose 71%.
Demos found that states' disinvestment in public institutions during the past two decades has changed the face of higher education -- shifting it from being "a collectively-funded public good to that of an individually purchased private good."
The Pennsylvania Higher Education Assistance Agency (PHEAA) board of directors approved $363 million in additional aid to the state's post-secondary schools last Thursday, along with nearly $345 million in student aid grants made earlier this year that don't have to be repaid. A quasi-public agency, PHEAA dispenses grants to low-income students while running a profitable loan servicing business for student loans made by the federal government.
In addition to this year's state funding for the student grant program, the PHEAA board directed $75 million of the agency's earnings from its loan servicing business be used to supplement state education funding.