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Home / Press / News Releases

New IHEP Report Reveals How Widespread College Unaffordability Is in America

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WASHINGTON, D.C. – March 23, 2017. The Institute for Higher Education Policy (IHEP) today released new analysis detailing just how unaffordable college remains for low-income, working-class and middle-class Americans. The report, Limited Means, Limited Options, urges federal, state, and institutional policymakers to double down on efforts to address inequities in college affordability for 21st-century students, and offers several key policy recommendations to keep students with limited resources from shouldering the burden of increasing costs. Increased affordability creates a real chance for Americans to transform their lives through a college education.

“This analysis sheds light on the bleak college cost realities facing many of today’s students,” said IHEP President Michelle Asha Cooper, Ph.D. “High prices are keeping the promise of higher education out of reach for so many Americans. Policymakers must act now. Students—and our nation’s economic and social vitality—depend on it.”

The analysis used Lumina Foundation’s Affordability Benchmark as a framework to establish what ten typical 21st-century students should be able to pay for college when accounting for such factors as annual household income. In a first-of-its-kind analysis, IHEP used net price calculator data retrieved by College Abacus to calculate and compare net prices for over 2,000 colleges nationwide to determine what each student can afford.

“Vague notions of affordability are meaningless without some sort of north star as a guide,” said Zakiya Smith, strategy director for finance and federal policy at Lumina Foundation. “This analysis paints a clearer picture of the challenge based on a guide for what ‘affordable’ looks like in practice. It offers solutions that would help us reach the goal.” 

Within IHEP’s analysis, the student with the highest household income—over $160,000—could afford to attend about 90 percent of colleges included in the sample. Yet among the students with household incomes less than $69,000, only 1 to 5 percent of colleges were affordable.

"Today, more than ever, Americans need more investments in student aid, not cuts,” said Cooper. “Americans who earn college credentials invigorate our economy, which makes every increase to student aid a commonsense investment. Policymakers at all levels must craft budgets that reflect a shared commitment to helping more Americans reach their full potential by participating and succeeding in higher education.”

The report includes five recommendations for federal, state and institutional policymakers. To increase college affordability for more Americans, IHEP urges:

  • Federal policymakers to protect and strengthen the value of the Pell Grant; 
  • States to strengthen investments in higher education and need-based aid programs;
  • Colleges to concentrate expenditures on students;
  • Colleges with wealth at their disposal—either through large endowments or profits—to keep prices low for needy students; and 
  • Congress to pass legislation to improve consumer information to help prospective students make informed choices.

Other key findings offer important insights about financing and affordability proposals. Most notably, doubling the maximum Pell Grant would increase the number of affordable colleges for students with the fewest affordable options, creating even more pathways to higher education and upward social mobility.

Loans do not have the same impact. When factoring in both Subsidized and Unsubsidized Stafford Loans, most needy students would still struggle to find affordable colleges. And last-dollar “free-college” proposals that rely on existing aid sources to cover tuition and fees at public colleges simply make college less expensive for students with a household income greater than $100,000 while leaving the landscape relatively unaltered for students with the greatest financial need.

The surest methods to expand affordability require managing college costs and targeting financial aid toward the students who need it the most. 

To access the full report, please visit: www.ihep.org/limited-means-limited-options

About the Institute for Higher Education Policy

The Institute for Higher Education Policy (IHEP) is a nonpartisan, nonprofit organization committed to promoting access to and success in higher education for all students. Based in Washington, D.C., IHEP develops innovative policy- and practice-oriented research to guide policymakers and education leaders, who develop high-impact policies that will address our nation’s most pressing education challenges.

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