Containing the rising cost of college: unless we take action, we run the risk of only the wealthy enjoying the fruits of a college education. (The Admissions Angle).

It is the best of times, it is the worst of times--for families considering higher education. Today, more than ever, parents and students are seeking the security and stability a college education promises in an uncertain world. But paying for a college education continues to be one of the major concerns of families considering their options. The federal government now estimates that fewer than 20 percent of American families can afford to pay college costs out of annual earned income. After several years of minimal tuition increases by both public and private universities (in response to the public's howl over double-digit annual increases), families are once again confronted with a return to tuition, room, and board increases that are more than double the cost of living index.

SOME UNCOMFORTABLE STATISTICS

According to the College Board (www.collegeboard.com), average public university tuition rose 7.7 percent in 2001, while the average private college tuition increased 5.5 percent (the Consumer Price Index rose only 2.6 percent for the same year, ending September 1). Room and board costs also grew substantially (4.7 percent at four-year private and 6.6 percent at four-year public colleges). The College Board reports that the average price of a four-year private college was $17,123. For a four-year public institution: $3,754. Out-of-state students at four-wear public colleges paid an additional surcharge of $5,764. Given additional state budget cuts and the poor performance of endowment investments, tuition increases are expected to compound in the next couple of years, while pressure on financial aid budgets will continue to mount. More students than ever are relying on loans to help finance their college education.

But there is disagreement among researchers about what level of debt is too great for college graduates, with the American Council on Education (www.acenet.edu) and the State Public Interest Research Groups arguing that some 39 percent of borrowers are graduating with "unmanageable levels of student loan debt," defined as payments over 8 percent of a borrower's monthly salary. The State Public Interest Research Groups reported that average debt has almost doubled from 1992 to 2000, to $16,928. And the proportion of students borrowing to pay for college rose from 42 percent in 1992 to 64 percent in 2000. The National Center for Education Statistics (www.nces.ed.gov) estimates that in 1999-2000, 55 percent of undergraduates received some form of financial aid, averaging $6,265. Twenty-nine percent of aid recipients received loans. In good economic times, default rates dropped on student loan debt. But what will happen to those default rates if the job market continues to sour?

IHES: SPREAD THE FINANCIAL AID WORD

In our conversations with families, we strongly encourage them to begin saving and planning for college expenses as early as possible. Fortunately, they have more and better options available, such as the Section 529 state savings programs, tuition prepayment plans, and other secure, long-term investment strategies. We tell students that they should always apply for aid if needed, and should never not apply to a college they think is beyond their financial capacity.

The truth is, there is a great amount of aid available as well as work-study and service opportunities to defray college costs. But unfortunately, the public is not always aware of the resources the government and individual institutions have allocated to help students with true need. Is your institution an unwitting partner to this information deficiency? It is essential that colleges and universities help families on several fronts:

Educate early. First, IHEs need to actively educate their constituents--parents, students, high school guidance counselors, accountants, financial planners--about ways to save and pay for college expenses. And, they need to start this process early, because it is too late to start saving for college in high school.

Proactive financial aid office. Second, colleges can emphasize the openness of their financial aid processes, and encourage financial aid officers to be proactive in their dealings with families. Families respond positively to the message of "First get in, and then we'll talk about how to make this education possible. We can make this work." In fact, families are getting ever more savvy about comparing financial aid offers, and "shopping" from school to school.

High school outreach. To fulfill their goals of filling their entering classes with strong students, balancing their budgets, and serving their communities, college administrators need to significantly increase their outreach to high school students across the nation if they wish to attract a population of talented, motivated, and diverse young men and women of all socio-economic and racial backgrounds.

September 11, combined with the weakened economy, have not just heightened concerns about the costs of attending college, but have increased concerns about travel distances and expenses in general. Families are now less likely to encourage their children to enroll in a college too far away. And we believe it is likely--at least for the next couple of years--that visits to campuses will decrease and that cortege choices will be determined more than ever by the cost factors. Clearly, if they are to maintain, let alone increase, selective enrollment, admissions and faculty representatives will have to be more proactive in reaching out to high schools with on-site visits, college nights, and correspondence. They need to explain merit- and need-based financial aid to families, discuss provisions for covering travel costs, and not penalize students who are unable to make it to the campus for a visit prior to applying. Colleges also need to took to their home area, a 0-500 mile radius, as the primary source of their applicant pool--and that change in demographics may mean shifts in the financial profile of college applicants.

LOOK AT MERIT-BASED AID AND TARGETED DISCOUNTING

Ironically, families that are offered merit-based aid often proceed to devalue the cortege making the offer--an example of the unintended consequences of targeted discounting. Simply put, emphasizing and giving too much merit aid can have dramatically bad effects on the availability of need-based aid for those students who have real financial, need, and who may be more likely to attend a particular institution if a reasonable need-based offer is made.

Each institution interested or engaged in the practice of "discounting" its tuition (and continuing a merit-based-aid arms race) should research the outcomes of their program. Ask these questions: Does the allocation of merit awards in fact attract more talented and diverse students? Is the institution's income flow greater by discounting tuitions this way? Is its academic reputation affected positively or negatively by dispensing merit-based scholarships too aggressively?

ENDOWMENTS, STATE FUNDING, AND FINANCIAL AID

Fundraising for aid. Corteges and universities need to emphasize in their current and future fundraising campaigns the importance of endowment income for the provision of financial aid and the maintenance of a balanced, diverse, and talented student body. Alumni, too, need to understand the connections between their contributing and the openness of their institution for future generations. According to the Council for Aid to Education (www.cae.org), private giving to higher education increased by 4.3 percent in 2000-2001, reaching a record $24.2 billion for the year ending June 30. That's a greater increase than one might expect, but stilt less than a third of the 14 percent growth the year before. What's more, the outlook for 2001-2002 may be no better, and may be worse, post 9/11: The Association of Fundraising Professionals (www.nsfre.org) reports that giving to educational organizations (mostly colleges) was down 37 percent in October 2001, compared to October 2000.

But a number of institutions have recently instituted targeted giving campaigns, whereby donors can specifically indicate they would like their dollars dedicated to scholarship and financial aid funding. This type of fundraising is particularly effective when accompanied by a solid marketing campaign describing the now-critical importance of scholarship and need-based aid donations. Because colleges are fast approaching what may be an inelastic ceiling for tuition charges, capital giving to build scholarship endowments is a must.

Pressure for state funding. Equally important is continued pressure on state and federal governments to increase, rather than decrease, funding for financial aid. According to the Center for the Study of Education Policy at Illinois State University, in the 2001-2002 fiscal year, state spending on higher education grew by the smallest rate in five years--4.6 percent--and failed to keep pace with inflation in 13 states. This has led to tuition hikes and cuts in academic, athletic, and other extracurricular programs. Very few private colleges or universities will be able to meet the ever-rising costs of higher education without putting even more pressure on students via higher tuition, which even now usually does not cover the cost of educating an individual student.

REACHING THE TUITION CEILING

Without all of the aforementioned measures in place, we are certain to see continued and increasing imbalances in the choices available to students of differing socio-economic backgrounds. Frankly, we could run the risk of reverting to the pre-World War II era, when only the wealthy, irrespective of ability, enjoyed the fruits of a college education. Would that end result meet anyone's vision of "open" education? We don't think so.

Howard Greene and Matthew Greene, independent education consultants (www.greenesguide.com), are the authors of the Greenes' Guides to Educational Planning.