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How Much Can Families Afford to Pay for College?

Author

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  • Peter Hinrichs

    (W.E. Upjohn Institute for Employment Research)

Abstract

This paper studies families’ capacity to pay for college in the United States, focusing on changes over time and differences by race and socioeconomic status. I use data from the National Postsecondary Student Aid Study (NPSAS) to document changes over time in the Expected Family Contribution (EFC) from the Free Application for Federal Student Aid (FAFSA). The results suggest that the EFC has been rising over time, and that this has been driven primarily by families in the upper quartile of the income distribution. I then use data from the Panel Study of Income Dynamics (PSID) to calculate alternative measures of the ability to pay for college. I find that it is possible to alter the distribution of who pays what amount by changing details of the EFC calculation, but the extent of this depends on details of the implementation.

Suggested Citation

  • Peter Hinrichs, 2025. "How Much Can Families Afford to Pay for College?," Upjohn Working Papers 25-416, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:25-416
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    File URL: https://research.upjohn.org/cgi/viewcontent.cgi?article=1436&context=up_workingpapers
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    More about this item

    Keywords

    higher education; affordability; college savings;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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