College prices up again as states slash budgets (AP)

As President Obama prepared to announce new measures Wednesday to help ease the burden of student loan debt, new figures painted a demoralizing picture of college costs for students and parents: Average in-state tuition and fees at four-year public colleges rose an additional $631 this fall, or 8.3 percent, compared with a year ago.

Nationally, the cost of a full credit load has passed $8,000, an all-time high. Throw in room and board, and the average list price for a state school now runs more than $17,000 a year, according to the twin annual reports on college costs and student aid published Wednesday by the College Board.

The large increase in federal grants and tax credits for students, on top of stimulus dollars that prevented greater state cuts, helped keep the average tuition-and-fees that families actually pay much lower: about $2,490, or just $170 more than five years ago. But the days of states and families relying on budget relief from Washington appear numbered. And some argue that while Washington's largesse may have helped some students, it did little to hold down prices.

"The states cut budgets, the price goes up, and the (federal) money goes to that," said Patrick Callan, president of the National Center for Public Policy and Higher Education. "For 25 years we've been putting more and more money into financial aid, and tuition keeps going up. We're on a national treadmill."

Nonetheless, President Obama planned to announce a series of steps to help with one of the consequences of rising college prices: student debt. This year total outstanding student loan debt has passed $1 trillion, now exceeding credit card debt. And concerns about student loan debt have been front and center with many of the Occupy Wall Street protesters.

Obama will use executive authority for two loan-relief measures. First, he will move up the start date — from 2014 to 2012 — of a plan Congress already passed that reduces the maximum repayment on federal student loans from 15 percent of discretionary incomes to 10 percent. The White House says about 1.6 million borrowers could be affected, and that remaining debt would be forgiven after 20 years, instead of 25.

The administration also will allow 5.8 million borrowers with outstanding loans from two federal programs — direct lending the Family Education Loan Program — to consolidate into a direct loan, potentially saving some borrowers hundreds of dollars per month.

Those changes may not help new borrowers much, but they could put cash in the pockets of millions still paying back their loans. They also could encourage more borrowers to take advantage of the income repayment options that are already in place, but not widely known. Finally, by consolidating into direct lending, more could qualify for that program's public service loan forgiveness, which can forgive debts after just 10 years of repayments for people working in nonprofit or public service jobs.

In the College Board's latest price report, some of the increase was driven by huge increases at public universities in California, which enrolls 10 percent of public four-year college students and whose 21 percent tuition increase this year was the largest of any state.

But even without California, prices would have increased 7 percent on average nationally — an exceptional burden at a time of high unemployment and stagnant family incomes.

Terry Hartle, senior vice president at the American Council on Education, which represents colleges in Washington, said the cause of the price increases for the 80 percent of college students who attend public institutions is clear. State appropriations to higher education declined 18 percent per student over the last three years, the College Board found, the sharpest fall on record.

"To see increases of 20 percent, as we saw in California, to see gains of 15 percent in other states, is simply unprecedented," Hartle said. "Tuition is simply being used as a revenue substitute in many states."

The College Board reports roughly 56 percent of 2009-2010 bachelor's degree recipients at public four-years graduated with debt, averaging about $22,000. At private nonprofit universities, the figures were higher — 65 percent and around $28,000. Those figures are likely to rise, though private borrowing — usually more dangerous than government loans — has been falling.

"Psychologically, practically, it's a big number, and it will inform important choices, like when and whether you buy a home, start a family, save for retirement or take the risk of starting a new business," said Lauren Asher, president of The Institute for College Access and Success, who also applauded the Obama announcement.

And Asher and other experts emphasize that the types of loans students take out can be as important as the amount. In general, a college degree remains a good investment.

Other slivers of what passes for good news: While several states had double-digit percentage increases, there were wide variations, and Connecticut and South Carolina held under 3 percent. Roughly half of students are enrolled in nonprofit colleges attend institutions charging under $10,000, and fewer than 1 in 10 attend institutions listing prices over $36,000.

Meanwhile, both community colleges and private four-year colleges reported lower tuition inflation than public universities.

At nonprofit private four-year colleges, tuition and fees were up 4.5 percent to $28,500. Factoring in aid, the average total net cost, including room and board, was about $22,970 — lower than five years ago. At community colleges, where list prices rose 8.7 percent nationally to just under $3,000, net costs also are lower than five years ago, and aid generally covers the whole price.

Still, while net costs are important to note, they don't tell the whole story. They don't cover living costs, which for many students are a higher obstacle than tuition, especially if they can't work as much while enrolled.

And the aid dollars that help lower the average net price don't always go to the neediest students.

Colleges award merit scholarships. Federal Pell Grants do support the neediest, and spending on them has nearly doubled in the last two years to around $35 billion (9.1 million students got grants averaging $3,828).

But the latest College Board figures highlight a rapid recent increase in indirect government support through tuition and other tax credits, which have reached almost $15 billion. Around 12 million people are now taking advantage of tax benefits averaging more than $1,200. And while recent changes make low-income families better able to take advantage of those credits, a growing proportion of the benefit goes to families earning more than $100,000.

The tax credit program, dramatically expanded in 2009, "really changes the story of how the federal government subsidizes students," said Sandy Baum, the economist who directs the College Board's reports. The credit is "not so much a middle-income benefit as we're used to thinking about it."

Some states are not only cutting their appropriations but not even paying what they've promised. Illinois is late on payments worth $500 million to nine campuses this year.

The percentage increases in California, once widely considered to have the best-value public universities in the world, are so high in part because the base prices of past years were low. Prices there still aren't high by national standards, but this year for the first time, California's tuition and fee rates were above the national average. That in 2011 California's public universities would be cost more than the national average would have been unimaginable to most experts a decade ago.

Hartle and others say this year's sharp increases came despite the last chunks of stimulus dollars from Washington used to plug holes in education spending. Looking forward, state budgets remain broken and there's little indication Washington will come riding to the rescue.

"I'm not exactly sure where higher education in the United States is going," he said. "But I have a feeling California is going to get there first."

Also, on Tuesday, an Education Department official testified to a House subcommittee that personal details of as many as 5,000 college students were temporarily visible to other students on the departments' direct loan web site earlier this month.

The episode lasted six or seven minutes on Oct. 12 and happened during a reconfiguration of data on 11.5 million borrowers to improve website performance times, said James Runcie, the Education Department's federal student aid chief operating officer. Students who logged on during that window saw other students' personal details. Those who were exposed were notified and offered credit monitoring services. The department said it had no reason to believe any students' information was misused.

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On the Net:

www.collegeboard.org

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Justin Pope covers higher education for The Associated Press. You can reach him at twitter.com/jnn_pope9. AP Education Writer Kimberly Hefling contributed to this report from Washington, D.C.

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Recession hits transit budgets despite rising need (AP)

BOSTON – Cash-strapped and debt-ridden, public transit systems across the nation are trimming service, raising fares and postponing badly needed upgrades just to maintain daily operations, even as rising gas prices increase demand and experts call modernization critical to cities' futures.

The economic downturn and cuts in government support have forced transit agencies to pare down, complicating the daily lives of commuters who depend on trains, trolleys and buses. Frustration comes easily.

"I can't rely on it at all," said Frank Summers, who has been commuting to Boston from suburban Ashland on commuter rail for about seven years and believes service is declining. "It's always jammed-packed and rarely on time."

The trains, operated by a company under contract with the Massachusetts Bay Transportation Authority — a network that includes the nation's oldest subway and is known to Bostonians simply as the T — were plagued by equipment problems during the past winter.

The fleet of 80 aging locomotives had, among other woes, trouble starting, keeping auxiliary power functioning for lighting systems and maintaining enough air pressure for braking systems, according to transit officials.

On one cold February night, a commuter train bound for Worcester broke down outside Boston, transforming passengers' usual 80-minute commute into a four-hour nightmare.

The T bought two new commuter rail locomotives this year — the first new ones in 20 years — and is pledging to continue efforts to modernize the line. But financial struggles are hardly unique to Boston or other big cities, and are reflective of the vast majority of transit systems large and small.

By one survey, more than 80 percent of U.S. transit systems had cut service, raised fares or both since the economic downturn started. The Federal Transit Administration has pointed to tens of billions of dollars in deferred maintenance nationwide, a problem particularly acute for older urban systems.

William Millar, president of the Association of Public Transportation Agencies, said that there are signs of financial improvement, but that it's not enough to make up for the needs.

"We still have a significant majority of systems that are still running unfunded deficits, that are still going to have to consider further fare increases and further service cuts, though they certainly don't want to do those things," he said.

Especially when ridership is growing. In Boston, for example, May was the busiest month on record for the T's subway system, and overall ridership is up more than 5 percent from a year ago.

"Almost universally, across the political spectrum, people are saying rising gas prices are making them nervous, that they really want to have more and better transit options," said David Goldberg, communications director for Transportation for America, a coalition representing the interests of transit users.

More riders represent a mixed bag for operators. Fare revenue goes up, of course, but the gains can easily be offset by the higher fuel costs that systems must incur.

An influx of riders also might generate greater political support for mass transit, but the added strain on aging and overtaxed equipment could frustrate commuters and leave them ready to return to their cars when gas prices ease.

A 2009 FTA study that examined the "state of good repair" of the nation's seven largest rail transit agencies — New York, Boston, Philadelphia, Washington, D.C., Chicago, San Francisco and the New Jersey Transit System — found anything but good repair.

The report found that 35 percent of all rail assets of those agencies were in subpar condition. Another 35 percent were deemed adequate and only 30 percent were in good or excellent condition. Upgrades would cost the seven largest systems $50 billion, the agency estimated.

Add in the rest of the country's public transit systems, and the maintenance backlog mushrooms to $78 billion.

Millar's group surveyed its 1,500 agencies and found that at least 40 percent were delaying capital improvements.

"The problem is to try to keep fares to a reasonable level, to try to keep services at a reasonable level, they have had to let some maintenance practices slip," he said. "Of course they are concerned about safety, so they try hard not to defer anything of a major safety need."

It's not just the major systems that are being forced to scrimp.

The Transit Authority of River City, which provides bus service for five counties in the greater Louisville, Ky., region, laid off 42 operators and mechanics last year and 10 administrative employees the previous year.

The authority's executive director, J. Barry Barker, said the system also was forced to reduce service and raise fares by $1 to $2.50 for express buses. Preventing further cuts or steeper fare hikes has meant sacrificing some improvements.

"The feds have a guideline that you can replace a full-size, 40-foot bus every 12 years. Basically I don't know anybody in the business who is replacing them after 12 years, and it's typically 14-16 (years)," he said.

Over the past several years, the authority has purchased only about half the replacement buses needed to meet even the longer cycle.

Federal support for mass transit comes largely in the form of the gasoline tax, with 2.86 cents per gallon of the federal tax earmarked for transit. But revenue has been declining as fewer Americans drive and many who do have switched to more fuel-efficient vehicles.

Federal funding also has strings attached.

Transit systems in larger cities can apply it only toward capital improvements, while systems in areas with populations of 200,000 or less can use federal money to pay operating expenses. Federal stimulus money, now ending, provided a short-term boost with 1,072 grants worth $8.8 billion for special transit projects. That included the purchase of new buses and rail cars, according to the Federal Transit Administration.

Going to the ballot box has become a popular tool for systems trying to raise revenue, and voters have generally seemed receptive.

In 2010, voters nationwide approved 73 percent of transportation-related ballot questions, many calling for increases in sales or property taxes.

St. Joseph, Mo., boasts of having one the nation's oldest public transit systems, dating to when horses pulled large coaches before the Civil War. But with revenue falling and costs increasing for fuel, health insurance and liability coverage, the system had to go to local voters for a one-quarter cent sales tax increase in 2008 to avoid shutting down some of its eight bus routes.

But it may be only a temporary patch.

"We raised our sales tax, but the people haven't been buying as much stuff. It's not producing the revenue we would have hoped," said Andrew Clements, assistant director for St. Joseph public works. "As the future looms, eight to 10 years from now, we may be looking at a much harder challenge."

The public transit system serving Grand Rapids, Mich., won voter approval of property tax measures in 2000, 2003 and 2007 — allowing it to expand from 63 buses in 1999 to 105 buses this year at peak hours and more than double its ridership, said Peter Varga, chief executive officer of The Rapid.

The agency hasn't run a deficit in a decade, nor has it increased fares or cut service, he said, even as Michigan's economy has tanked.

The financial crunch has prompted creative approaches to generate additional money for transit systems.

To help close a projected $127 million operating deficit, the Boston-area system adopted a plan to sell bonds secured by future parking revenue at nearly 100 lots and garages. Proceeds from the bond would also be used to pay off future debt. The agency also hoped to sell more advertising space at stations and on trains and buses, and move its unionized employees to a more flexible state-run health insurance plan.

Passengers no longer will get a free ride if their bus or train is more than a half-hour late, but fare hikes, for now at least, are off the table.

Historically, fares have accounted for 30 percent to 40 percent of total transit revenue nationwide.

Experts who point to more modern and reliable systems around the world say U.S. cities must find ways to overcome financial hurdles and invest in public transit.

In Los Angeles, voters agreed in 2008 to pay a half-cent sales tax over the next 30 years to fund a massive expansion of public transportation. But Mayor Antonio Villaraigosa doesn't want to wait that long for the projects to be completed, so he's proposed borrowing billions from the federal government so the work can be done in just a decade.

"It's becoming clear that (cities) have to remain healthy and vital, and it's also becoming increasingly clear that a functioning transit system is a big part of that," said Robert Puentes, a transportation expert with the Brookings Institution.

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Associated Press writers David Lieb in Jefferson City, Mo., and Russell Contreras in Boston contributed to this report.

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