Affordable College Doesn’t Exist for Low-Income Students Across the Country

Average Net Price for Low-Income Students Is Unaffordable in all 50 States at both Public Four-Year Colleges and Community Colleges

Across the political spectrum, there is widespread recognition that the rising price of college—particularly at public institutions that educate the majority of students—is a product of bad, or indifferent, public policy over a series of decades. Consequently, students are shouldering the burden by taking on greater and greater debt. While students, parents, and policymakers all know that we face major challenges in addressing college affordability, there is no agreed-upon definition of the term “affordable college.” Defining this challenge is a necessary step to determine the scope of the problem and to assess which policy proposals would make college truly affordable for America’s families.

In the new Demos report Out of Reach: How a Shared Definition of College Affordability Exposes a Crisis for Low-Income Students, Demos Senior Policy Analyst Mark Huelsman uses the Rule of 10, a benchmark developed by Lumina Foundation to define college affordability, to assess which states have affordable college and for which students. He finds that the average net price for low-income students—those from families making $30,000 or less—is unaffordable in all 50 states at both public four-year colleges and community colleges. The “affordability gap” varies from slightly over $10,000 for a four-year degree in Hawaii, to nearly $40,000 for students in New Hampshire.

“We know that a college degree is more important to basic financial security than ever, and that students will do anything, including taking on high amounts of debt, to attain it,” said Huelsman. “But the decades-long playbook of austerity and insufficient revenue, and a refusal to even
re-fund higher education at pre-recession levels, has gotten us to a point where no state can credibly claim that college is affordable for its low-income students. With no guidepost of what makes sense in terms of college financing, it’s no wonder that policymakers continue to allow price to spiral out of control.”

Developed by the Lumina Foundation, the Rule of 10 suggests that college is affordable if students can meet the total net price through 10 hours of work per week and 10 percent of a family’s discretionary income saved over 10 years. Using this benchmark, Hulsman examines the average net price for low-income students in every state at both public four-year colleges and community colleges. Huelsman also looks at two additional scenarios—a worker returning to college after 10 years in the labor force making median earnings by race, and a student paying the average net price nationally and taking on student debt—to see how this benchmark holds up for the average student, by race.

Other key findings include:

At community colleges, the affordability gap ranges from just over $1,000 in Mississippi to $23,000 in New Hampshire.

Black and Latino students making the median income by race cannot accrue enough savings to make a dent in the projected net cost of college. Black adult learners face an affordability gap of over $18,000 ($7,000 more than white adult learners), and Latino adult learners face an affordability gap nearly twice as large as white learners ($21,000 to $11,000).
Among students who take on loans and earn the expected median income for college graduates, all workers still see an affordability gap. However, black and Latino students in our scenario face larger affordability gaps (over $12,000 and $14,000 respectively), than white and Asian students.

Nevertheless, public policy created this problem and can address it. Necessary policy interventions include doubling the maximum Pell Grant, increasing the minimum wage, and reversing disinvestment of public colleges at the state level. Doubling the maximum Pell Grant, for example, could make college affordable in up to 26 states.