College tuition and the search for the easy answer

At the beginning of a Capitol rally in St. Paul today, Gov. Mark Dayton apologized to protesting higher education students for what his generation “did to financial aid.”

Presumably my colleague, Alex Friedrich, is going to jump into this on his excellent On Campus blog, but what exactly did Dayton’s generation do to financial aid?

Ronald Wirtz, the editor of Fedgazette from the Federal Reserve Bank of Minneapolis, answered that question in a 2009 study. The short answer: A lot. But, like so many statistical arguments, it all depends on how you look at the numbers.

Take grant aid, for example:

Most of these spigots have been pouring out much more–not less–money over time. From 1997 to 2007, inflation-adjusted grant aid to Minnesota students grew by 74 percent. Institutional grants and tuition discounts accounted for almost half of all grant aid in 2007, at about $417 million, with the other half made up of federal, state and private grant aid.

Institutional aid is doled out in many forms and programs. For example, at the University of Minnesota, the Founders Free Program promises grant and gift assistance equal to tuition and required fees for any state resident who has been admitted as a first-time, full-time student, completes the Federal Application for Financial Student Aid and is eligible for a Pell grant (which indicates financial need, though a student does not necessarily have to be low-income). Started in 2005 and fully implemented last year, the program provides free tuition for nearly 5,000 students–12 percent of undergrads there–according to the university.

And yet, it’s undeniable that more and more students are taking out bigger and bigger loans to pay for school, thus making higher education unaffordable.

In the UW System, average debt of resident undergraduates who completed a bachelor’s degree and who borrowed while in college hit $22,400 in 2008, according to system figures. That’s an 85 percent real increase from 1989. In the 2007 graduating class from Minnesota public universities, 77 percent carried student loans averaging $23,600, according to the Minnesota Office of Higher Education. Their monthly payment over 10 years was $270.

Overall, financial aid — a mishmash of programs varying from one institution to the next — has been rising:


But the cost of tuition has been rising faster, and only .3 percent of college students get their college costs paid for with scholarships and grants.

Ideally, a lot of this goes away with an economy that’s zipping along. Graduating students get great jobs that pay a fair amount of money (enough to make a dent in student loans, anyway). But that, obviously, is not the case. It’s a terrible time to be a graduating student, the economy being what it is.

Who’s got an easy fix they’d like to share?

  • ellie

    The quote seems to suggest that all state residents just starting college will get all tuition and fees paid for by the U.

    “the Founders Free Program promises grant and gift assistance equal to tuition and required fees for any state resident who has been admitted as a first-time, full-time student”

    Or does “first-time” really mean, first in the family?

  • CHS


    They also have to be Pell Grant eligible, which if I recall isn’t that inclusive or easy to get.

    The real question is why has tuition increased so dramatically in relation to inflation. I know that funding has remained flat at best or had cuts, but the increase in cost of education seems to be disproportional to inflation and funding.

  • BJ

    @CHS – I like your thinking.

  • bsimon

    “The real question is why has tuition increased so dramatically in relation to inflation.”

    Or the inverse: why haven’t wages & salaries kept up with inflation in tuition costs, healthcare costs, housing costs, etc?

  • Rick

    If public funding is going to stay flat or go down (especially if you account for inflation), the idea would be that we do not value the education or that it is something that can be cut. This is something that is just added onto the backs of the students every time that we cut funding of educational institutions.

    When talking about our future, many of the political figures talk about the debt that we are leaving behind in the government, but how much of the debt is being pushed to the individual.

    If we are worried about the future of our country, educating all of the children with a high quality affordable education should be something that is high on the list. Reducing debt is good, but putting the children in a place to compete with the world on an intellectual level should be much greater if we want the country to continue leading the world.

  • JS

    Two thoughts:

    1. The U.S. could join many of the other developed/western nations and make public higher education “free” (i.e. paid for with taxes, like public K-12 schools). Of course just like K-12, other costs like technology, housing, food, etc could be paid out of pocket with income-based free/reduced costs. Obviously, many many people in the US already complain about their tax rates despite the U.S. having one of the lowest average tax rates of western countries, so addressing peoples’ complaints about taxes would be the biggest hurdle to this option.

    2. Public forgiveness of outstanding student loan debt could potentially stimulate the economy … or at least leave a lot of people better-off than they are now. Any push that helps people pay off debts, make new purchases, save money for future large purchases like a house, or able to pursue their ideal job rather than one just to make a buck are good things to pursue, and forgiving student loan debt would free up a significant amount of capital for everyone that currently is in repayment.