Daily Progress, Jacksonville, TX

Opinion

May 10, 2014

What’s new in the world of higher education?

JACKSONVILLE — For the 2013-2014 school year, the average cost at a 4-year public college is $22,826.

 The average cost at a private college is $44,750, although many private colleges charge over $60,000 per year (Source: The College Board, Trends in College Pricing 2013). Cost figures include tuition, fees, room and board, books, and a sum for transportation and personal expenses.

What's a parent to do? For starters, check out net price calculators. Now required on all college websites, net price calculators can help families estimate how much grant aid a student might be eligible for at a particular college based on his or her individual academic and financial profile and the school's own criteria for awarding institutional aid.

You'll definitely want to spend some time running numbers on different net price calculators to see how schools stack up against one another on the generosity scale.

Two things changed in the summer of 2013.

First, new legislation changed the way interest rates are set for federal Stafford and PLUS Loans. Rates are now tied to the 10-year Treasury note, instead of being artificially set by Congress.

For the current academic year (July 1, 2013, through June 30, 2014), the rates are 3.8% for undergraduate students borrowing subsidized and unsubsidized Stafford Loans.

It’s 5.4% for graduate students borrowing unsubsidized Stafford Loans. And, it’s 6.4% for parents borrowing PLUS Loans. Be aware that rates are determined as of June 1 each year and are locked in for the life of the loan.

Federal student loans are the preferred way to borrow for college because they offer a unique repayment option called "income based repayment," or IBR. Under IBR, a borrower's monthly student loan payment is based on income and family size and is equal to 10% of discretionary income.

After 20 years of on-time payments, all remaining debt is generally forgiven (loans are forgiven after 10 years for those in qualified public service).

Enrollment in the program has been relatively modest, but last fall, the Department of Education contacted borrowers who were having difficulty repaying their student loans to let them know about IBR.

The department also put the IBR application online and has made it possible for applicants to import information from their tax returns.

The second change is President Obama announced a proposal that would require colleges to report the average debt load and earnings of graduates (in addition to the information on tuition costs and graduation rates that they already report), with the availability of federal financial aid being linked to those ratings.

In response, most colleges have cried foul, claiming that average debt is not a valid indicator of affordability because colleges have vastly different endowments and abilities to award institutional aid, and that post-graduation salaries can depend on variables outside of a college's control.

No reporting requirement has been finalized yet, but the trend is clearly toward the government requiring colleges to make their costs and return on investment as transparent as possible so families can make more informed choices.

Finally, you will probably hear more about MOOCs which stands for "massive open online courses." These large-scale, online classes have the potential to revolutionize higher education. Today, hundreds of MOOCs are offered free of charge by many well-known, leading universities.

The piece of the puzzle that has yet to be solved is what credit or degree will be given when courses are completed and how pricing will work. But the combination of quality courses, robust online learning technology, and the wide availability of broadband, coupled with the very high cost of a traditional college education, makes it likely that the popularity of MOOCs will only grow in the future, whether people enroll to earn serious credentials or simply for their own enjoyment and curiosity.

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