A Federal-State Partnership for True College Affordability


Date:   June 7, 2017

Contact:   George Pernsteiner, President, (303-541-1605) (gpernsteiner@sheeo.org)  or
David Tandberg, Principal Policy Analyst, (303-541-1627) (dtandberg@sheeo.org)


Link to publication

Boulder, Colorado — SHEEO estimates that true college affordability for all students could cost an additional $34 billion per year in state and federal support for higher education. On average, if federal matching funds can be secured, states would need to increase total educational appropriations five percent each year for four years to meet the SHEEO affordability threshold.

In the United States, the increasing cost of higher education has become an acute problem for many families, while at the same time, a postsecondary credential of value is increasingly required to succeed in today’s economy. The high cost limits opportunity, keeping entire segments of the population from receiving the benefits of a postsecondary education. In order to significantly increase educational attainment rates, reducing the cost of higher education for students and their families must be addressed in new and systemic ways.

With funding from Lumina Foundation, SHEEO developed a proposal for a new federal-state college finance partnership designed to meet established affordability thresholds for low-income students. SHEEO applies this affordability model not only for full-time and traditional age students but to adult and part-time students—two populations commonly left out of traditional college affordability proposals.

Our high-level results include:

• In order for each state to meet the affordability threshold of the SHEEO model (where graduates devote no more than 10% of their discretionary income toward student loan repayment) in the fourth year of implementation, the total cost nationally is projected to be just under $12 billion for full-time, first-time traditional students (with the cost estimated to be $4 billion, half from states and half from the federal government, in the first year).

• Extending the SHEEO model to part-time and adult students is estimated to cost an additional $21.8 billion nationally to meet the affordability threshold (again, with half covered by the states and half covered by the federal government).

• On average, states would need to invest an additional five percent investment each year to reach the affordability threshold established in the model (two percent for traditional students, three percent for adult and part-time students).

Sophia Laderman, a major contributor to the report, said, “Our findings demonstrate the severity of the affordability crisis. We found that students in the lowest-income quintile are expected to spend more than half of their income on college each year. To remedy this, states need to contribute, on average, an additional $4,500 per student to reach the affordability threshold. While the cost may seem high, we argue that true college affordability is necessary to make sure that we don’t price out entire portions of our population, whose success is critical for our nation’s prosperity.”

Under the proposed SHEEO model, federal funds would match any additional funding the states provide to support low-income students, with the goal of each state eventually meeting an affordability threshold of graduates devoting no more than ten percent of their discretionary income toward student loan repayment.

“States don’t have to wait for the federal government to act to tackle college affordability and student success,” said George Pernsteiner, SHEEO’s president. “Students are paying the price now, and for many, the cost is too high. Although each state will approach affordability in a way that reflects its population and budget, our estimates show that nearly every state must do more to ensure that students are not priced out of postsecondary education.”

David Tandberg, the primary author of the report, noted that, “This proposal and the associated models and data are presented to guide policymakers’ thinking in regard to how they might approach college affordability in ways that leave no students out. While there are likely a number of ways of accomplishing that goal, this report should help focus our thinking by providing clear evidence of the extent of the affordability crisis in each state, and by providing actual estimates of the potential costs associated with addressing this crisis.”




Publication Date: 
Wednesday, June 7, 2017
David Tandberg, Sophia Laderman, and Andy Carlson