Study Shows New England Families Paying a Third of Income on College

A new study co-authored by HGSE Associate Professor Bridget Terry Long says that New England families are spending 33 percent of their annual income on college tuition, required fees, and living expenses-a 7 percent increase since 1992-93.

The study, Paying for College: The Rising Cost of Higher Education, cosponsored by the Massachusetts Institute for New Commonwealth (MassINC) and Blue Cross Blue Shield of Massachusetts, points out that families are also spending more money to send students to the region's public four-year colleges and wracking up debt. In 2003-04, families spent 21 percent of their incomes to cover the cost of a public four-year college, up from 18 percent in 1992-93. Attending New England community college cost families 17 percent of their income, a slight increase from 16 percent in 1992-03.

"As the cost of higher education increases, it affects who goes to college," Long said. "While there are certainly benefits to a postsecondary degree, students and families have to find a way to cover the cost of college before the benefits can be realized."

Many students and families are paying for college with loans. At public four-year colleges, fourth-year students hold an average debt of $15,399, a 39 percent increase since 1992-93. The average debt for fourth-year students at the region's private colleges was $23,491, which is a 49 percent jump from the 1992-93 school year. The high debt loads of students at private colleges is particularly relevant for Massachusetts families since students from Massachusetts are much more likely than their national peers to attend private colleges. In 2004, 43.4 percent of first-time freshmen from Massachusetts attended a private college, compared with 26.4 percent of their peers nationally.

"Higher education is the gateway to the American Dream," said Ian Bowles, president and CEO of MassINC. "But its cost is accelerating much faster than incomes, even more so in New England than the nation. As a region that is struggling with a high cost of living and the out-migration of young families, we should make this challenge a priority."

As a result of increased cost and debt load, many students leave school without a degree. The six-year graduation rate at UMass-Amherst for the students who began in the fall of 1998 was 62 percent. At UMass-Dartmouth, it was 50 percent; at UMass-Lowell, 46 percent; and at UMass-Boston, 28 percent. At the public state colleges, less than half of students who entered college in 1998 (48 percent) had graduated six years later.

Families in New England have been hit especially hard and are likely spending a greater share of their incomes on college. In 2003-04, families with students attending a community college spent 17 percent of their income to cover the costs, compared with the national average of 13 percent. Families with students at the region's public four-year colleges spent 21 percent, the same as the national average. Although the current figure matches the national average for public four-year institutions, the decline in affordability in New England has been steeper, and if similar trends continue, the region's public four-year colleges will become less affordable in short order. Families with students attending private colleges in New England spent 33 percent of their annual income, compared with the national average of 30 percent.

The average costs of tuition and fees at public colleges in Massachusetts are higher than the national averages. In 2005-06, the average cost of state's private four-year colleges was $27,780, 31 percent higher than the national average. The average cost of the state's community colleges was $3,477, which is 59 percent higher than the national average. The average tuition and fees at the public four-year colleges was $7,340, 34 percent higher than the national average. In recent years, tuition and fees at the public four-year colleges in Massachusetts have risen much more rapidly than across the nation. From 2001-02 to 2005-06, tuition and fees increased, in real terms, by 69 percent at the UMass campuses and by 68 percent at the four-year state colleges in Massachusetts, compared with the national average of 33 percent at public four-year colleges during the same period.

"Our state depends on talented college graduates to drive its economy and bring depth to its civic life," said Peter Meade, executive vice president of Blue Cross Blue Shield of Massachusetts. "We must work on improving graduation rates while keeping a first-class public higher education affordable for everyone."

Paying for College research also revealed:

• In 2003-04, students at New England colleges were more likely than their national peers to take out a loan (44 percent vs. 35 percent). In 2003-04, 56 percent of students at private New England colleges took out loans. Since 1992-03, the share of students taking loans at the region's public four-year colleges nearly doubled from 25 percent to 48 percent. Only 7 percent of New England community college students took out a loan in 2003-04.
• The share of freshmen from Massachusetts who attended a Massachusetts public college in 2003-04 was lower than the national average (48.9 percent vs. 67.4 percent).
• In 2004, Massachusetts freshmen were more likely than their national peers to attend an out-of-state college (28.5 percent vs. 15.8 percent.) The majority of the state's freshmen students (86 percent) stay in New England.
• In 2004-05, the state of Massachusetts allocated $7,712 per full-time equivalent (FTE) student at public colleges, substantially higher than the national average of $5,833. While above average, the level of public funding has been volatile and declined in recent years. In contrast, the state spent $9,911 per FTE student during 2000-01.
• The amount of money that colleges spend per student has increased significantly. From 1990-91 to 2000-01, expenditures at public colleges per FTE student increased in real terms by 28 percent nationally and 29 percent in Massachusetts. Expenditures per student at public four-year colleges in Massachusetts during fiscal year 2004 were $24,020, slightly higher than the national average of $23,880. Expenditures per student at the state's community colleges were $9,775, also higher than the national average of $8,939.
• The public four-year colleges in Massachusetts are among the smallest in the nation, with an average size of 5,391 students. The national average is 8,527. Massachusetts ranks 41st in the nation, with number 1 representing the state with the largest public four-year colleges.

Long is a trained economist. She applies the theory and methods of economics to examine various aspects of the market for higher education. Long received her Ph.D. and M.A. in economics from Harvard University and her A.B. from Princeton University. She is a past recipient of the American Educational Research Association Dissertation Award and a National Science Foundation Graduate Studies Fellowship. In addition, she has received research grants from the Spencer Foundation, Lumina Foundation, and National Association of Student Financial Aid Administrators.