College Affordability Update: Value, Price, and Choice in U.S. Higher Education. Issue Brief

In 2015, Lumina Foundation introduced the Rule of Ten, a new method for assessing college affordability for students in the U.S. The rule rests on the assumption that an "affordable" cost for college should not exceed the total of: (1) what a student and his family can save by putting away 10% of their income for the 10 years before enrollment; and (2) a student's earnings, working 10 hours per week while in college. In 2017, Manhattan Institute for Policy Research published a report comparing actual student expenses in 2011-12, based on data from the U.S. Department of Education's National Postsecondary Student Aid Survey (NPSAS), with those recommended by the Rule of Ten. This paper updates the earlier analysis with the most recent NPSAS data. In 2015-16, students from the wealthiest households continued to attend the priciest institutions and continued to take on the most debt. This suggests that many students prefer higher short-run costs in exchange for higher expected long-run returns (often in the form of better-paying jobs). Thus, efforts to assess college affordability that ignore long-run returns and focus exclusively on short-run costs paint an incomplete picture of the value delivered to students.