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By Adam Zoll | 10-02-2014 11:00 AM

Where College Planning Stands Today

Get the latest read on tuition inflation, the best values, financial aid trends, mounting student debt, and more from Edvisors' Mark Kantrowitz.

Note: This video is part of Morningstar's October 2014 College Planning Report Card special report. 

Adam Zoll: For Morningstar, I'm Adam Zoll. College has become more expensive than ever. But where are costs headed and what can college planners do to prepare? Here with some answers is Mark Kantrowitz, publisher of Edvisors.com, a college planning website. Mark, thanks for being with us today.

Mark Kantrowitz: Thank you for having me.

Zoll: So, the rate of college tuition inflation, which has far outstripped the overall rate of inflation over the past few years, seems to possibly be slowing down, according to recent figures. Are we at a tipping point at which college tuition will not be increasing as fast as it has in the recent past?

Kantrowitz: This is a pattern that we see after every economic downturn, especially public college tuition inflation. It goes through feast-famine cycles, and we're starting to enter into a period when it won't increase as much until we reach the next recession.

Zoll: What about demographics? Do demographics play a role in terms of where college tuition is headed if there's not as much demand, for example, for enrollment?

Kantrowitz: Clearly, the small colleges that are not well known nationally and have under a thousand in enrollment are feeling more and more financial pressure as demand for these colleges moderates. This is, in part, because families are becoming much more price sensitive, they are concerned about the increase in college costs, and they are asking questions about what is the return on this investment.

Zoll: Where are some of the best values right now in terms of getting the most bang for your buck for your tuition dollar?

Kantrowitz: The best colleges in terms of overall quality of education at low price are the in-state public colleges. There are also a few dozen colleges with very generous financial aid policies that eliminate loans from their financial aid package. So, to the extent that you receive financial aid, it's going to be grants and student employment, not loans. Princeton University, the college that started this trend, has an average debt at graduation of just $6,000. That's much lower even than some in-state public colleges. So, those are your best bets for finding a low-cost college that is, nevertheless, very high in educational quality.

Zoll: You mentioned financial aid, and earlier this year, we spoke about some financial aid trends. You said that grants--financial grants in particular--were not keeping pace with tuition inflation. Is this something that you foresee as a continuing trend in the years to come?

Kantrowitz: I think so. Grants from the federal and state governments have been declining on a per student constant dollar basis for decades. And until Congress gets out of its budget-cutting mood, I don't foresee any real changes in this regard. Now, there is one small, bright light, which is private scholarships. The total amount of funding for private scholarships doubled in the last four years, and that was about $6 billion. That's a significant increase over the $2.7 billion to $3 billion that was available in 2007-08, but that's just a drop in the bucket compared to the complete college cost picture. It is part of your plan to paying for college; but for most students, it's not the entire plan.

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