University tuition is free! No, wait, the full cost of college is tens of thousands of dollars annually. Hold up. There’s enough financial aid to bring down the price tag to just a few thousand dollars a year — tuition, food and housing included.
All of those statements are true, depending on where you attend and how much you or the parents who claim you on their taxes earn. For something as consequential — and at times more costly than a small condo — as affording a degree, understanding how much a family must shell out for a better shot at higher wages can be complicated.
This guide is meant to explain the basic truth about affording college: For almost everyone who attends, they don’t pay the published price.
Most Californians attending public universities — and the vast majority of students in the state attend public, not private, schools — don’t pay tuition because of state and university grants for lower-income students.
And so the story of affordability in California isn’t immediately intuitive: After recession-era cuts, the state has recently started to spend big on higher education. Tuition at the University of California and California State University used to be non-existent; now it’s a major source of university revenue. Housing is often a larger expense than tuition. But financial aid can turn a sticker price of $30,000 into $5,000, depending on the school and a student’s family income.
Here’s a primer on how costs have changed — and how and where higher education can be affordable.
Public tuition climbs — but many attend free
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In its 1960 higher education “master plan,” California promised students that tuition at its public universities would be free. Like a city filled with flying cars, that promise never came to be.
Ten years later, then-Gov. Ronald Reagan prompted the University of California to introduce tuition-like charges — he and his allies had scaled back state support to punish the UC for tolerating student activism, and also to save taxpayer dollars. In Reagan’s view, college students shouldn’t rely on the state alone for an education that most Californians didn’t pursue.
This view of higher education as a consumer good rather than public right spread nationally — fueled by a public tax revolt. Tuition rose rapidly. The California State University system began collecting fees in 1981, labeling them “tuition” in 2011.
Over the past half-century, student fees and tuition at UC have nearly quadrupled, adjusted for inflation, and continue to rise. At Cal State, they’ve jumped six-fold, with plans to raise tuition 6% annually for the next five years.
Yet almost 60% of California resident undergrads at UC and Cal State actually pay no tuition or systemwide fees. That’s due to an annual state financial aid program exceeding $3 billion, plus another $1.6 billion in university-run grants. A third to nearly half of the money from students who do pay flows back to fund financial aid.
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Cal State is a bargain for low-income Californians
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Tuition, however, is a small portion of the total cost of college. The big toll is housing — the wrecking ball often obliterating families’ affordability plans. Food, textbooks and transportation add up as well. But California’s robust financial aid system, including the growing power of the federal Pell Grant for low-income students, helps keep college affordable for low- and middle-class students — a concept known as “net price.”
Families making more than $110,000 have historically paid much higher college costs, chiefly because they receive less state and federal aid. California ranks among the most affordable states for low- and middle-income students at public universities. Cal State is the bigger bargain: Students from families with incomes below $30,000 typically pay less than $5,000 to attend. Why is it cheaper than a UC? Lower in-state tuition and more students living at home.
Still, although low-income families qualify for more financial aid, the share of family income they pay remains high.
The story is the same for UC: Students from families with incomes below $60,000 have a net price of about $11,000 a year — a level that barely budged in two decades. Through loans and part-time work, those costs can be manageable, but they still eat up nearly a fifth of that family’s income.
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Public colleges are more affordable than California’s private schools
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Generally, public schools are cheaper than private colleges after all financial aid is considered. But some private colleges have really generous financial aid.
At Stanford, for example, the net price for low-income families is nothing. At the University of Southern California, low-income students end up paying slightly more than what a typical UC costs, according to federal net-price data.
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The state’s contribution to colleges has bounced back
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California, like other states, used to spend more on higher education per student before recession hammered the economy in the early 2000s. Campuses absorbed big cuts. But in recent years, the state’s per-student spending has shot far above the national average.
Still, while UC and the Cal States have been getting more money from the state, the systems have had to rely increasingly on tuition revenue to afford their education missions, reflecting a national trend. Four decades ago, California funded 80% of UC’s education mission. Last year, it was less than half — and that’s a partial rebound from what it was during the tough recession years of the early 2000s. State support also collapsed mightily for Cal State, but has partially rebounded in recent years.
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Financial aid options keep California college costs down
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California spends in excess of $3 billion on grant aid to students — tops among all states. Students can apply for numerous state, federal and campus-specific grants and scholarships. Here are the major ones:
- Cal Grant: Around 400,000 students receive this, which waives some tuition for private colleges and all tuition at the UC and CSU. Lawmakers and the governor are due to decide whether they can expand the Cal Grant, including to more than 100,000 community college students. The state’s deficit bodes poorly for that proposal. A majority of recipients also get some kind of cash award of up to $6,000.
- Middle Class Scholarship: About 300,000 get this, a relatively new award that provides an average of about $2,000 to UC and CSU students. Nearly 160,000 students receive both this and the Cal Grant.
- Pell Grant: This is a federal grant for low- and middle-income families worth as much as $7,400 annually.
- Promise Grant: Nearly half of community college students who’d have to pay tuition don’t through this grant, a benefit for those with low incomes. It can save full-time students at least $1,100 annually.
- UC grants: The university has its own internal pot of money worth nearly $900 million that it awards students. Students get this by first applying for financial aid through the state or federal government.
- Cal State’s university grant: Students with low incomes who don’t get a Cal Grant to cover tuition may get this. Cal State spends $700 million to run this grant. Students get it by first applying for financial aid through the state or federal government.
Many students who are likely eligible for these awards don’t apply, leaving free money on the table.
Apply for state and federal financial aid here.
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The rent-and-ramen struggle is real
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If you’re an undergrad living off-campus and not with your parents, you can only wish housing was as affordable as tuition. For Cal State students, housing tends to cost two to three times the price of tuition and fees. Food and housing for Cal State students living off-campus accounted for more than half of the total cost of attendance — before financial aid kicked in. Meanwhile, most UC campuses are in expensive rental markets where a one-bedroom apartment rents for more than $2,000 monthly.If students worry about losing stable housing or reliable access to food, their grades and prospects for graduating suffer.
A majority of California college and university students say they have experienced housing and food insecurity in the past 12 months, according to a November 2023 survey by the California Student Aid Commission. That’s way up from just a few years ago, when it was a third of students. The commission blames the uptick on inflation and the COVID-19 pandemic.
In response to the rising need, California’s government has ramped up funding to help campuses provide students emergency housing and food.
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How the state is pitching in to create more affordable housing
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Because most UC and Cal State students live off campus, housing can likely only be solved by local, state and federal governments, as well as private developers, who all have a role to play in combating the housing shortage statewide.
Still, legislators in 2021 established a $2.2 billion plan to construct affordable campus housing at the UC, Cal State and community colleges — space for an estimated 12,000 students. After the state’s budget forecast worsened, that money instead turned into bonds the campuses had to borrow, with the state vowing to cover annual payments on those debts.
That money will help the UC, the state university system with the highest share of students living on campus. It’s planning or building space for 13,700 beds by fall 2028 and has added about 35,000 beds for students in the past decade.
More money to fund no-interest loans for subsidized student housing may not survive 2024’s budget tightening.
© 2024CalMatters
Today’s students have more financial need and are more racially diverse
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As the demographics of California have changed, so too has the racial and ethnic makeup of the state’s college and university undergraduates.
In 2010 white students were the largest demographic group in California. Now, Latino students make up the plurality of all undergraduates.
There’s also variation in who goes where. At the UC, more than 30% of undergraduate students were Asian, according to 2022 federal data, even though statewide, Asian students made up 15% of undergraduate enrollment. Latino students make up 27% of all UC undergrads — and 50% of community college students.
California also continues to attract more low-income students to its public colleges and universities than the rest of the country. New California students are much more likely to receive state and local grants, which typically go to students from low and middle class families. In 2021-22, about 60% of the state’s public college and university students received state aid, much higher than the national average of 39%. Compared to other states, a greater share of California students get the federal Pell grant, which is reserved for low-income students.
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Special burdens for undocumented students
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The roughly 60,000 undocumented college students at California’s public campuses are eligible for state financial aid, but not federal grants and loans. They cannot legally work, and they struggle to find the money to afford rent, food and other college expenses beyond tuition.
These students often can have their tuition waived, though until recently excessive paperwork likely prevented some students from receiving all the state aid for which they were eligible.
Some lawmakers are pushing for legislation that would permit undocumented students to work at public colleges and universities. The effort follows a failed attempt by students at the UC to persuade the system’s leadership to adopt a novel, but untested, legal theory that says state agencies are exempt from federal rules blocking undocumented residents from working in the U.S. The ability to work on campus would likely help many undocumented students afford their education.
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Californians are less likely to borrow than other U.S. students
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California undergraduates are much less likely to use federal loans — just 15% of students in the state did in 2021-22, compared to 29% nationally. In both cases, that’s a significant drop from the time of the Great Recession, when family incomes collapsed, tuition doubled as state coffers disintegrated, and debt was the only way to pay for a degree.
One major reason California has a lower borrowing rate is because community college students, who make up most of the state’s undergraduates, almost never borrow — just 1% do.
The federal government limits how much undergraduates can borrow annually in federal loans. The latest numbers put the national average for federal borrowing at about $6,600. In California, the average amount borrowed was nearly $6,900.
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But millions of Californians are still paying off student loans
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Years of debt accumulation has meant that almost 4 million Californians owe about $146 billion in federal student loans. Just a small share of student loan debt is private.
Paradoxically, borrowers with the least federal student debt are historically more likely to default at higher rates, typically because those with smaller balances are less likely to have graduated.
In California, relatively few borrowers accumulated more than $100,000 in federal debt. But, because they borrowed so much, their large loan balances represent nearly half of California’s debt total.
President Joe Biden’s debt-forgiveness plan in February cleared $1.2 billion in federal debt for borrowers who’ve been repaying for a decade and borrowed $12,000 or less. Students with higher balances could see their debt cleared in as little as 10 years under the Biden program, which offers more generous provisions than existing debt forgiveness plans. But a lawsuit brought by Republican-led states is challenging that program, calling it a “bailout for the wealthy.” For some who work in government or non-profit jobs, federal repayment plans can forgive debt after a decade. And borrowers in default on federal student loans have until September to opt into a program to gain more debt relief.
© 2024CalMatters
College is usually worth it. How California helps.
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Large debts and not-great pay can make some question if pursuing that degree was worth it. But overall, a college degree usually pays off — for some, it may even mean one day affording that flying car we were all promised.
Working Americans are much more likely to earn less than $50,000 if they don’t have a bachelor’s degree. And those with at least a bachelor’s are far more likely to earn above $100,000.
Younger working Americans ages 25 to 34 gain big from earning a bachelor’s — their incomes are typically around $60,000 — about $22,000 more than those who just completed high school, according to federal data.
© 2024CalMatters
Research and production by CalMatters data reporter Erica Yee and producer Liliana Michelena.
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