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As College Costs Rise, Savings Shrink

Just as many parents are discovering their college savings have taken a hit, a report released today shows tuition costs continue to climb.


In-state tuition and fees at four-year public colleges for the school year beginning this fall rose by an average of 8.3% from last year, to $8,244, according to figures from the College Board, a nonprofit that conducts college research. At private colleges, tuition and fees rose by an average of 4.5% to $28,500.

The cost increases come as millions of parents are finding out that their college savings plans lost money in the third quarter. As we reported earlier this month, investments in 529 plans, which are state-sponsored tax-advantaged accounts for college savers, fell an average of about 9% in the third quarter, according to Morningstar. That was the most significant setback for these plans since early 2009.

The average college-savings plan is down about 6% for the year.

Longer term, college savings plans haven’t kept up with tuition increases. For the last five years, average tuition and fees have risen 41% for in-state public college students and 28% for private college students. Meanwhile, the average 529 plan has returned about 5% over the same period. “It’s part of an ongoing trend of decreasing college affordability,” says Mark Kantrowitz, publisher of and “[The] ability to pay continues to decrease.”

To be sure, parents are getting some help. Savings from tax credits have hit a record high, with the average annual tax savings per recipient totaling $1,329 in 2009, up 32% from 2008, according to the latest data from the College Board. Meanwhile, 35% of students received federal Pell Grants during the 2010-11 academic year, which provide a maximum of $5,500 to eligible students. That’s up from a maximum of $5,350 in 2009-10.

But for some higher income families this aid may be of little consolation. For example, less than 1% of families making $100,000 or more per year receive Pell grants, according to And while American Opportunity Tax Credit is available to families making up to $180,000, the maximum annual tax credit represents less than 10% of the average cost of attending a private college.


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    • Paying more is not a better university education. I love University of California (UC) having been student & lecturer. But today I am concerned that at times I do not recognize the UC I love. Like so many I am deeply disappointed by the pervasive failures of Regent Chairwoman Lansing, President Yudof, Chancellor Birgeneau from holding the line on rising costs & tuition increases. Paying more is not a better education.
      Californians are reeling from 19% unemployment (includes: those forced to work part time; those no longer searching), mortgage defaults, loss of unemployment benefits. And those who still have jobs are working longer for less. Faculty wages must reflect California’s ability to pay, not what others are paid.
      Current pay increases for generously paid University of California Faculty is arrogance. Instate tuition consumes 14% of Ca. Median Family Income!
      Paying more is not a better education. UC Berkeley(# 70 Forbes) tuition increases exceed the national average rate of increases. Chancellor Birgeneau has molded Cal. into the most expensive public university.
      UC President Yudof, Cal. Chancellor Birgeneau($450,000 salary) dismissed many much needed cost-cutting options. They did not consider freezing vacant faculty positions, increasing class size, requiring faculty to teach more classes, doubling the time between sabbaticals, cutting & freezing pay & benefits for chancellors & reforming pensions & the health benefits.
      They said such faculty reforms “would not be healthy for UC”. Exodus of faculty, administrators? Who can afford them and where would they go?
      We agree it is far from the ideal situation, but it is in the best interests of the university system & the state to stop cost increases. UC cannot expect to do business as usual: raising tuition; granting pay raises & huge bonuses during a weak economy that has sapped state revenues & individual Californians’ income.
      There is no question the necessary realignments with economic reality are painful. Regent Chairwoman Lansing can bridge the public trust gap with reassurances that salaries & costs reflect California’s economic reality. The sky above UC will not fall

      Opinions? Email the UC Board of Regents

    • West Texas A&M University is bucking the trend: next year all out of state students will pay Texas resident tuition + $30/per credit hour. And annual tuition is less than average at US universities according to the new College Board report. Info is at

    • Every qualified California student should get a place in University of California system. That’s a desirable goal for a public university. However, UC Berkeley Chancellor Robert Birgeneau displaces Californians qualified for education at Cal. with $50,600 tuition Foreigners.
      UC tuition increases exceed the national average rate of increase. The University of California Board Of Regents jeopardizes Californians attending higher education by making UC the most expensive public university in the United States.
      Self-serving tuition increases are used by UC President Mark Yudof to increase the pay of 80,000 eligible faculty and others. Payoffs like these point to higher operating costs and still higher tuition for Californians. Instate tuition consumes 14% of Ca. Median Family Income!
      I agree that faculty in higher education and senior management, like Yudof and Birgeneau, should consider the students’ welfare and put it high on their values.
      Deeds unfortunately do not bear out the students’ welfare values of campus senior management and the UC Board of Regents.
      Opinions to UC Board of Regents, email

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