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More college students seek private aid, studies say

Cost increase in double digits for public schools

As college costs continue to climb, students are relying more on private loans rather than grants or other federal money to pay for school, according to two new studies released yesterday by the College Board.

This 2004-05 academic year marked the second straight of double-digit increases in the average cost of a four-year public college, the studies found. Nationwide, tuition and fees for in-state students rose 10.5 percent to $5,132. That pace is slightly slower than last year, when tuition and fees rose 13 percent, but higher than the increases for most of the 1990s.

Students at the University of Massachusetts, hit by several years of major fee increases triggered by state budget cuts, saw only a modest rise this year, according to figures provided by the university system. Tuition and fees rose by just 0.3 percent at the University of Massachusetts at Amherst, to $9,008. The highest increases were at the Dartmouth and Lowell campuses, where tuition rose 2.3 percent, to $7,802 at Dartmouth and $7,891 at Lowell. UMass-Boston saw a 2.2 percent increase to $8,024.

As costs rise, students are turning increasingly to private loans to pay for school, according to the College Board. Students borrowed $11.3 billion last year from nonfederal sources, mostly private lenders.

That amount has risen 147 percent in three years, the board found -- although the true figure is almost certainly higher, because the survey does not include credit card debt, which as many as one-quarter of college students may be relying on to finance their education.

Education specialists say college loans, usually at guaranteed low interest rates, generally represent a good investment for students -- but caution that the trend toward paying tuition with loans rather than grants can be hard on poorer students.

''For low-income students it's particularly difficult, because they don't have family resources on which to fall back to help them repay their loans," said Sandy Baum, senior policy analyst with the College Board and an economist at Skidmore College.

Price increases were more modest at two-year public colleges, where tuition and fees rose 8.7 percent this year to $2,076, and at private colleges, where costs rose 6 percent on average to $20,082.

Factoring in room and board, prices at public four-year schools rose 7.8 percent to $11,354. Costs at private institutions were up 5.6 percent to $27,516. Of course, most students don't pay the full sticker price -- in 2003, the average full-time equivalent student saw those figures shrink by an average $4,500 in grants and tax benefits.

In the current year, the net costs of higher education have probably gone up, though the College Board can't yet say for sure because student aid data are a year behind the tuition price data.

According to the College Board, the New-York based organization that owns the Scholastic Assessment Tests, student aid from the federal government rose 10 percent in real terms in 2003-2004 to more than $81 billion. Funds for Pell Grants, the primary support for low-income students and a topic in the presidential campaign, rose 6 percent, even after adjusting for inflation. But the number of Pell Grant recipients also rose 7 percent, and the average amount of each grant fell 1 percent in constant dollars.

For years, the dollar amounts of individual Pell grants have grown more slowly than the cost of college, and the current $4,050 maximum has been frozen for two years.

As the gap grows between the Pell money and the average price of an education, students must meet the gap with a mixture of scholarships, state aid, work, and debt.

Loans through banks and other private sources accounted for 16 percent of education loan volume in 2003, compared with just 7 percent in 1998. Most loans still come from the federal government.

David Ward, president of the American Council on Education, which represents public and private schools, said political pressure, cost-cutting, and improving state budgets have helped moderate tuition increases.

But, he said, a fundamental issue remains: Colleges are getting more of their support from students and less of it from taxpayers.

''It's the substitution of tuition for state support that's causing tuition to go up," he said.

Marcella Bombardieri of the Globe staff contributed to this report.

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