Lumina Aims to Reset Conversation Around College Affordability

As a new academic year begins, parents and students everywhere are stressing out about college costs.

Yet while we hear all the time that families are finding it more and more difficult to afford higher education, there's actually a missing element in the conversation around college affordability: Just what constitutes affordable?

In fact, there is no clear answer to this question, given the many variables around families and income levels. Now, one of the nation's leading funders of higher education programs — and the one that has made increasing the proportion of college-educated Americans the center of its work — has offered an answer to the question.

The Lumina Foundation this month released its Affordability Benchmark for Higher Education, a framework that strives to determine college affordability based on what families and students can and should contribute toward the cost of college. The Indiana-based funder hopes this new benchmark will reset the conversation among policymakers, researchers, advocacy organizations, and institutions of higher education, while setting the stage for greater collaboration to build a more affordable system for all students, regardless of means.

Lumina's new Affordability Benchmark assumes that families pay for college across three dimensions: savings as a proportion of discretionary income, savings over time, and students working while in school. Across these three dimensions, the benchmark applies a "Rule of 10" that caps each source of family support as follows:

  • 10 percent of savings from discretionary income
  • Savings over 10 years
  • Students working 10 hours per week while in college

The benchmark is also flexible based on families' financial circumstances. A family living well below the poverty level, for example, should not be expected to contribute savings from already sharply limited discretionary income or to take on high debt loads. The student work contribution, however, would be feasible. The benchmark estimates the contribution from students to be about $3,625 per year, based on 10 hours per week at $7 per hour.

A family earning $100,000 a year, however, could contribute about $51,500 over 10 years, based on a savings estimate of $429 a month, according to Lumina estimates. The funder touts the benchmark as one that provides easy-to-understand guidelines for students and families.

This effort to think about college affordability in measurable terms is long overdue. After all, college readiness benchmarks, expressed in terms of SAT and ACT scores, for example, have existed for years. So why not develop an indicator for affordability? There's little debate that such a benchmark is more needed than ever. Over the past decade, college costs have exploded more than 40 percent in inflation-adjusted dollars, while family incomes have declined an average of 7 percent. The rising cost of higher education is an especially potent disincentive for students from low-income families to enroll in college. Less than 10 percent of students from the lowest income quartile hold bachelor's degrees — a troubling statistic when you consider estimates from labor economists that nearly two-thirds will require some level of postsecondary education by the year 2020.

Lumina plans to work closely with policymakers and other stakeholders to find ways of applying the new Affordability Benchmark in such a way as to rethink how students and families can access and pay for college. This could mean big opportunities for college access networks, policy research outfits, and advocacy organizations, as there are multiple issues to be considered as part of this conversation around affordability. These issues include sufficient state support of higher education and improving need-based financial aid to meet the benchmark.