The voices of Urban Institute's researchers and staff
April 14, 2014

College is expensive, but how do we know if it is "unaffordable"?

April 14, 2014

 Most Americans believe that higher education is important, that people who want to lead secure, comfortable lives should go to college—but that it is unaffordable for all but the wealthy.

We see headlines about college prices and we know that they keep going up, but do we know what it means for college to be affordable?

Most of the conversations about this issue focus on family incomes. Many families can and should help their children finance college, and we should think hard about how much parents in different circumstances can be expected to contribute. But other families are in no position to help, and many students are old enough not to even think about parental financing. Is college by definition unaffordable at any price for these students?

Clearly, a lot of students can and do pay for a big portion of college expenses on their own. We should really reframe the conversation to include the reality that students have to be able to pay for college. They may get help from their parents. They may get help from federal and state student aid. They may get help from other sources. But it is their investment in their futures and if the investment does not pay off, they will suffer the consequences.

This means that how much money people have before college is just a fraction of what matters. College carries lots of non-monetary benefits, improving and enriching students’ lives in ways that can’t be measured financially. But the earnings premium is a critical part of measuring college affordability. Will the earnings premium be high enough to pay the price of college—the price that remains after subsidies (including those from parents) are accounted for?

There are lots of colleges with a wide range of prices, and at most schools, students are paying very different prices to be there. Some students complete degrees and others don’t. Among those who do, there is a wide range of employment and earnings outcomes—even among those with degrees in similar fields.

So we can’t say for sure which options will end up being affordable for which students.

But we can ask the right questions. We can ask about available resources before, during, and after college. We can ask about which options are suitable for particular students. We can ask about the trade-offs involved in going to college instead of choosing alternative paths. And we can ask how the risks involved in this uncertain investment with a very high average rate of return should be shared between students and society at large.

Instead of asking whether college is or is not affordable, we should do a better job of tracking the many elements that go into college affordability and make that information widely available. We should know about sticker prices, net prices after aid, tuition and fees, living costs, books and supplies, parental incomes, student wages, household savings, the prices of other goods and services, and post-college earnings. And we should know not just averages, but about the variation in all of these metrics.

Reporting that prices are high and people are struggling is not enough to increase access to valuable postsecondary experiences. We need a more thoughtful approach to this vital issue.

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