Breaking down the devastating price of California college education: Why it's soul-crushing
The landscape of higher education has evolved drastically from the days of our grandparents and even parents. Back then, it was possible for a Baby Boomer from California to complete their college education without any debt and emerge with a clear path towards homeownership and a decent living. This was made possible by the post-war economic boom and the state's investment in public higher education.
Fast forward to today, it is a different story. California college graduates currently shoulder an average of over $20,000 in student debt. While the state does offer more financial aid than most, the days of free college are long gone. Research studies have shown that many students are struggling to afford food and housing.
So why have college costs skyrocketed, and what actions are policymakers proposing to resolve it? Keep reading to find out.
It may surprise you to know that "free college" is not a modern concept. The University of California's charter, established as early as 1868, promised that admission and tuition fees will be free for all residents of the State. In 1960, California lawmakers devised the Master Plan that would shape the future of the country's most distinguished public higher education system. At the time, students enrolled at UC were paying only per semester in incidental fees.
However, in the late 1960s, politicians started advocating for increased student contributions towards financing their higher education. Their reasons were both ideological and financial. Governor Ronald Reagan wanted to reduce government spending and believed that subsidizing intellectual curiosity was not a priority. Later on, the dot-com bust in the early 2000s resulted in tuition hikes under both Democratic and Republican administrations.
Between 1977 and 2018, undergraduate fees at UC grew nearly five times more than the inflation rate. In one year, during the recent recession, the university increased tuition by 32%. At the same time, tuition for California State University has increased by roughly 900% in the last four decades, even after accounting for inflation and additional campus fees.
After the 2008 financial crisis, California, like other states, had to make budget cuts. This affected higher education, leading to deferred building maintenance, larger classes, and increased student contributions. Moreover, per-student spending had been on the decline since the turn of the millennium.
The good news is that California's higher education budget has bounced back more than its peer states. For instance, the state is now spending more per student on community colleges than ever before. However, tuition fees continue to rise, and the cost of living is still increasing.
Over the past 30 years, private, non-profit educational institutions throughout the United States have more than doubled their average yearly tuition rates, according to recent data from the College Board.
While academics and policy experts have debated the root causes of these rising costs, some attribute the price hikes to increased demand for a college degree and enhanced student amenities. Others suggest that growth in federal financial aid may inadvertently encourage price inflation by pushing colleges to increase their tuition rates based on the availability of grants and other forms of aid. This trend tends to be more prevalent among for-profit colleges that lean heavily on government funding.
Selective non-profit schools can leverage their endowments to provide scholarship subsidies, allowing them to offer reduced tuition rates to students who might not otherwise be able to afford the cost of admission. However, low-income students may be less aware of this type of support available at these types of institutions, leading to a phenomenon known as "undermatching."
In recent years, some smaller liberal arts colleges have tried to differentiate themselves by cutting tuition fees to promote accessibility. Mills College in Oakland, California, for example, recently lowered its tuition rate from $44,765 to $28,765 in 2017 to make higher education more affordable.
While California colleges were once an affordable option for students seeking a higher education, the state's current housing crisis has significantly impacted the ability of today's learners to pursue an education in the Golden State. The state's UC, Cal State and community colleges are facing a situation where housing and non-tuition expenses now represent a growing proportion of the total cost of attendance, with some students facing similar expenses to those of their UC peers but with fewer and smaller grants to offset those costs.
Today’s college students are more diverse and come from a wider range of socio-economic backgrounds than their counterparts two decades ago, presenting unique challenges for California financial planners as they need to consider a broader spectrum of financial aid recipients. Compared to the past, policymakers can no longer assume that students are receiving support from their parents for books and transportation.
Recent student surveys conducted over the past few years have discovered a number of alarming trends, such as widespread food insecurity and homelessness, occurring among college students in California public institutions. These challenges only underscore the difficulties faced by students as they seek to obtain a higher education in a rapidly changing socio-economic landscape.
Researchers have been debating the accuracy of survey estimates concerning food insecurity among college students. Nevertheless, it is evident that hunger and homelessness are increasingly problematic on California campuses. With the high cost of housing in the state, this issue is contributing to a national trend.
California has a significant amount of the nation's $1.5 trillion in student loan debt, which has doubled in the past ten years. Students who wish to avoid debt or have exhausted their loan options often increase their working hours to bridge the gap between financial aid and the attendance cost. Studies show that working up to a maximum of 15 hours per week can help improve academic performance. However, low-income students who work beyond that receive lower grades and are unlikely to graduate in six years compared to their peers who work fewer hours.
This graduation gap is critical because California's State University and community colleges, which serve most of the state's students, already have poor graduation rates. Although these rates are improving at CSU, projections show that the California economy will face a shortage of one million college graduates by 2030, and policymakers are pushing for action to address attendance costs. Unfortunately, there is no consensus on how to tackle the issue.
According to a 2019 PACE/USC Rossier poll, voters are concerned about the cost of college, placing it second only to gun violence in schools as California's most important education issue. More than 50% of California adults believe community college should be tuition-free. The state already outspends every other state on financial aid, providing $2 billion in grants and scholarships in 2018.
The Cal Grant is California's primary scholarship program, which pays for full tuition at the University of California and California State University. The neediest students can receive a little over ,000 per year at private California colleges. This scholarship is a "first dollar" program that allows students to combine it with federal and other grants to save as much as possible. Students at community colleges from families earning 150% or less of the federal poverty level qualify for waived fees.
To be eligible for a Cal Grant, students must have recently graduated from high school, with low to middle-income students required to achieve a minimum of 3.0 GPA. However, very low-income students can qualify with a 2.0 GPA, and students who transfer from community college to a four-year school have separate requirements. Students with the right GPA but have been out of school for more than two years must apply for "competitive" Cal Grants, but the state only funds a certain number of them each year.
Numerous students face hardships in fulfilling their basic needs of food, housing, transportation, and mental health, as evidenced by student activism and research. Academic institutions have instituted emergency housing beds and food pantries, but legislators are still grappling with feasible solutions. The proposals range from radical revamps of the Cal Grant system, which encompasses the total cost of attendance, to the more modest adjustments like permitting homeless students to park overnight in community college lots.
In 2017, California Governor Jerry Brown enacted the California College Promise package, proclaiming "Free College in California." However, the program stands eligible only for the first-time, full-time community college students participating in specified campuses. Additionally, around 67% of community college students are part-time and fail to qualify. Some of the colleges reinvest the funds reserved for College Promise to provide meal plans and acquire books for destitute students.
The concept of free college emerged in the limelight in response to the campaign of Senator Bernie Sanders in the 2016 presidential election. Congress leaders and presidential candidates for 2020 have evolved a plan encompassing the feasibility of college affordability. A few campaigns propose financing schemes involving states and the federal government's financial contribution; however, this tactic might not render the same benefits to states that spent less on higher education and might dismiss federal help.
A debate exists among policymakers about the extension of free college programs to a more comprehensive or strategic pool of students. Although offering benefits to the entire populace garners widespread political favor, financial help should be prioritized for the neediest students instead of families who can afford to pay independently.
Several countries like France, Germany, and Scandinavia provide nearly free tuition until the bachelor's level. Some countries like Germany also provide financial help for living expenditures. Remarkably, students inside these countries bear significantly lesser debts as compared to those in the US. For instance, the majority of Germans graduate without any debts. Yet, European countries have increased taxes for graduates. Furthermore, the average student debtor in Sweden infers severe charges for their living costs during their studies at tuition-free institutions.
In England, students are now forced to pay the highest tuition fees in the OECD, but their American counterparts have to start repaying their loans once they begin earning an income of around $33,000 per year. Payments are tied to their income, and any remaining outstanding loan balance is waived after 30 years.
As we all know, there is no such thing as a completely free education. Providing quality education requires significant resources which must be generated from somewhere. Covering the cost of tuition and expenses for every student would require a massive investment, with Sen. Elizabeth Warren's debt-free college plan estimated to cost $1.25 trillion. Free college proponents have focused their attention on the wealthy, primarily aiming to raise funds by imposing taxes on stock transfers or surcharges on millionaires.
However, supporters of free college are not limited to progressive Democrats. Both moderate Republicans and Democrats, state and federal, support affordable college options like waiving community college fees. Conservatives favor income-share agreements, which allow investors and schools to fund a student's education in exchange for a fixed percentage of their future income.
Nevertheless, the US is currently experiencing a populist political climate, and California appears poised to tackle the higher education affordability crisis due to its budget surplus, Democrat-controlled legislature, and longstanding support for tertiary education. In Spring 2020, the California Assembly passed a debt-free college bill that would have represented the most significant expansion of state financial aid in 20 years. Though unsuccessful, its author has pledged to reintroduce it next year, while calls for action remain persistent. This year has seen a series of legislative bills aimed at reducing college costs in the state, with one such example being AB 1314 by Assemblyman Jose Medina of Riverside. The bill sought to redesign the financial aid system to account for a student's estimated total expenses, such as housing, food, and books. It did not pass in the Senate, but it is expected to return next year. SB 291, introduced by Sen. Connie Leyva of Chino, is another major college affordability bill that would have offered much-needed financial aid to community college students, who are disproportionately affected by the existing support system, which only covers tuition fees. The author has also vowed to continue working toward expanding financial aid next year. Assemblyman Miguel Santiago of Los Angeles proposed AB 2, which passed and will modestly benefit low-income students by extending the tuition-free community college initiative to cover the cost of a second year.
To learn more about this year's college affordability bills in California, including those on student housing and administrative salaries, see our tracker.
Think you can attend college debt-free? Play our interactive game and find out.
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