MAKING COLLEGE AFFORDABLE.

• Author: Bell, Julie Davis

A college degree is invaluable in today's world. Making it affordable is the challenge.

New parents have a lot to worry about. So the immediate needs of a young child usually take precedence over future concerns. But with the price of college skyrocketing, many new parents should worry about how they're going to pay for their baby's college education.

Families have a number of investment options, such as college savings accounts and prepaid tuition programs. But no matter how they choose to save, the earlier they start the better. college today costs twice as much as it did 20 years ago--even after adjusting for inflation. Over the last decade alone college tuition has gone up 50 percent.

At the same time, college degrees are becoming more important. sixty-two percent of all parents believe that a college education is absolutely necessary for their children to be financially successful adults, according to a recent survey from Public Agenda.

"A college education is now the sine qua non of full participation in the economic and civic life of the nation," says Pat callan, president of the National center for Public Policy and Higher Education.

Once a high school degree was sufficient for economic success, but there are fewer jobs now available to those without a bachelor's degree. And in many fields--such as science and engineering--you may need an advanced degree just to get started.

Students today pay about $3,510 a year in tuition and about $5,000 in room and board to attend a state public university, according to the college Board. If they want to go to an Ivy League school, they'll pay 10 times that amount.

A record number of students--more than 5.4 million or one in every three--now need loans to attend college. They can expect to be paying back those loans for five, 10, even 20 years, especially if they've pursued an advanced degree. To avoid huge college debt, there's a trend to work full-time and attend college part-time. As a result, many students are taking longer and longer to graduate; finishing a degree in four years is almost an exception.

HOW DID WE GET HERE?

Legislators are working to solve this problem, but they also have helped to create it. Even though most legislatures do not directly set rates, state fiscal policy significantly affects tuition levels. As one of the few discretionary items in state budgets, lawmakers can cut higher education appropriations more easily than they can other items, Medicaid, for example, or corrections. And legislators often are more willing to do it since higher education funding, unlike other budget items, has other sources of revenue available to it--specifically tuition. This has been the pattern over the past 20 years.

Higher education budgets and tuition are intimately related to the state of the economy. In good times, higher education does well, and tuition remains stable. But during an economic downturn, states tend to reduce higher education funding, and tuition rises. This occurred in the late 1980s and early 1990s when states dramatically reduced state budget allotments to higher education from an average of 13 percent in 1988 to less than 9 percent in 1996.

Another way of looking at it is to compare how the sources of revenue to higher education have changed. Although states have spent more on higher education overall, the state piece of the pie has been getting smaller. State appropriations made up 40 percent of all higher education revenues in 1988. In 2000, it was only 30 percent. During the same time, tuition rose from 15 percent to nearly 20 percent.

"As a society, we are disinvesting in higher education," says Randy Hitz, dean of the college of Education at the University of Hawaii at Manoa. "Instead of viewing higher education as a common good and providing an affordable college education, we are transferring the responsibility to the individual, and that is unfortunate."

THE BENEFITS ARE GREAT

At one time people could be financially successful without going to college or a trade school, but today's economy and changing times now make it almost necessary to participate in some type of education or training beyond high school. People with bachelor's degrees earn 81 percent more than those with high school diplomas, according to College Board figures. Over a lifetime, the gap in earning potential exceeds $1 million. Students from families at the bottom of the economic ladder tend not to finish college and are more likely to be minorities. Some 70 percent of whites go on to college after high school, but only 58 percent of black and about 53 percent of Hispanic students do.

As demographics change and minorities make up a larger percentage of the population, the effects of this disparity will become more damaging. States benefit, both economically and socially, from an educated population. They spend about $61 billion annually on higher education. And until now, there has not been a way to measure how well states have done to ensure that anyone who wants to go to college can and will succeed once there.

Measuring Up 2000, the first-ever report card developed by the National Center for Public Policy and Higher Education, grades states on several dimensions of higher education: affordability, completion, preparation, participation and economic returns. Utah scores the highest for preparing students for college; Delaware does the best job of ensuring participation; California is the most affordable; New Hampshire scores the best on student completion; and Maryland...