CNN's 'In The Money' Laments 'Soaring' College Costs with Extreme Example
College costs are on congressional Democrats’ “first 100 hours” agenda for their legislative control, starting in January. And on December 16, CNN’s “In the Money” hyped the issue in advance.
The segment was nothing but a blame game. Anchor Christine Romans invited John Strassburger, president of Ursinus College, to discuss his institution’s recent 18-percent tuition hike. Instead of questioning this unique cost jump, Romans speculated about the national state of financial aid and focused on alarming statistics about college pricing trends.
“[W]e have seen college tuition soar since 1980. I think it's tripled. Over the past five years, it's up some 30 percent overall,” she said. The Business & Media Institute recently looked at tuition increases in higher education, finding that tuition growth rates have declined for three straight years. Additionally, student aid increased by 3.7 percent to a total of $134.8 billion for the 2005-2006 academic year.
The Ursinus anecdote supported Romans’ suggestion that college costs are soaring, but that example was extreme. In contrast to Ursinus’ 18-percent hike, the College Board states that tuition at four-year private colleges increased 5.9 percent (2 percent after adjusting for inflation) in 2005-06.
Romans never asked why the tuition hike was necessary; instead, she focused on decreases in Pell Grants. Romans said that “the value of Pell Grants is declining even as the cost of college is going up.” Romans never mentioned that total funding for Pell Grants has increased by 80 percent in the last decade.
According to the College Board, the growth in funding allowed for increased award amounts and more student beneficiaries. During the 1995-96 academic year, 3.6 million students were awarded Pell Grants. For the 2005-06 academic year, 5.4 million individuals received assistance from the program.
The average Pell grant per recipient has decreased in the last academic year, but Romans never mentioned that the number of individuals participating in the program increased by 1.5 percent in that same period. Additionally, Romans never mentioned that the maximum Pell Grant was increased in 2003-04 to $4,050. Dr. Gary L. Wolfram, a professor of economics at Hillsdale College and a BMI adviser, recently discussed the potentially detrimental effects of increased Pell Grants.
Private student loans didn’t escape scrutiny by Romans. She claimed that students may hold private loans with “interest rates at 12 percent, 13 percent, 14 percent.” Romans didn’t mention that private student loans account for only 20 percent of all student borrowing, nor did she provide data on the percentage of students using alternate payment plans.
The 2002 National Student Loan Survey by loan provider Nellie Mae stated, “Students appear to be managing their monthly payments because of current low interest rates and because of participation in non-standard payment plans. Thirty-one percent of respondents are on alternate (graduated, income-sensitive, extended or consolidated) payment plans.” The percentage of respondents using alternate payment plans was only 17 percent in 1997.