Top Public Policy Issues Facing Governing Boards in 2023–2024:
Affordability and Value

Addressing concerns about the cost of college.

Affordability is the issue that is, or should be, of most concern to all those charged with leading and charting the future of U.S. higher education. It may not be a front-burner topic in political debates leading up to the November 2024 elections, but it is one that every institution must confront. There is no guarantee that over the next few years the market demand for higher education will return to its historical growth pattern, and a large part of the reason may be that students, their families, and the public in general find college too costly or of questionable value.

Updated May 20, 2024.

Student Debt

A $1.76 trillion mountain of debt has been the elephant in higher education’s parlor for years, fueling concerns about whether a college degree is still worth the price. It is a question not only for private colleges and universities with steep tuition rates but for public institutions, as well. Tuition increases, which have far outpaced overall price inflation for decades, have finally met intransigent resistance, ironically after a period of low inflation (around 2 percent) when many colleges finally exercised restraint. Tuition discounting by private colleges and universities—seen as a necessity to keep their institutions affordable for many students and families—has risen from 45 percent to 55 percent of the “sticker” prices. And now, the COVID-19 pandemic and other factors have triggered a resurgence of inflation in the U.S. economy to the highest levels in 40 years, which could not have come at a worse time as many institutions deal with enrollment declines.

Meanwhile, the Supreme Court ruled that the Biden administration could not forgive more than $400 million in student debt—a quarter of the total owed by 43 million Americans—through the president’s preferred legislative avenue, known as the HEROES Act. A half dozen Republican state attorneys general challenged the plan, and congressional Republicans decried debt forgiveness as unfair to the 100 million Americans who never went to college.

In response to the Court’s decision, the Biden-Harris administration decided it would seek its debt relief goal through a different, more time-consuming mechanism: the Higher Education Act. The administration published a portion of its regulatory plan on this matter in April, proposing to forgive loans that had been in repayment for at least 20 years, and write off capitalized interest costs. What remains unpublished at this point is the administration’s policy pertaining to loan forgiveness for borrowers in hardship. While a negotiated rulemaking committee reached consensus on the definition of “hardship,” the Department of Education has yet to publish a proposed rule for public comment.

In addition, the Department of Education finalized new regulations creating the Saving on a Valuable Education (SAVE) plan, which would dramatically reduce income-driven loan repayments for low- and middle-income borrowers, with individuals making $30,600 or less having zero-dollar monthly loan payments and those in a family of four with incomes up to $62,400 also paying zero each month. The revised rules would also cut in half monthly payments on undergraduate loans for others in income-driven repayment plans and seek to automatically enroll distressed borrowers in this repayment plan.

Even with modest in-state tuition at public campuses, attending a four-year college is expensive, particularly for those living away from home. While the median U.S. household income in 2022 was $74,580, the College Board’s report, Trends in College Pricing and Student Aid 2023, found tuition and fees recently averaged:

  • $11,260 for public four-year in-state students
  • $29,150 for public four-year out-of-state students
  • $41,540 for private, nonprofit four-year institutions
  • $3,990 for public community colleges

And the total costs of a year in college, including room and board, averaged:

  • $24,030 in-state at public four-year institutions
  • $41,920 out-of-state at public four-year institutions
  • $56,190 at private four-year institutions
  • $13,960 at community colleges

It should also be noted that colleges are now facing scrutiny not only about their prices but also for lacking transparency about what exactly students and their families must pay in tuition. The U.S. Government Accounting Office (GAO) has reported that 91 percent of the colleges it surveyed did not divulge their net price or understated it when they made financial aid offers to prospective students, making it difficult for students and parents to compare offers and college affordability. The GAO has recommended changes in federal law to require colleges to give all students the same standardized information they are now required to give veterans. This all comes at a time when polling shows us that college affordability is top of mind for Americans.

Pell Grants

Besides lowering student debt and monthly payments on loans, federal and state governments are strengthening or initiating other programs to help make college more affordable, notably through free tuition and grants. President Biden campaigned on a promise to make the first two years of community college tuition-free, and he has again requested funding in his FY 2024 budget to transition to free community college over the next decade. Although it is unlikely that Congress will approve free community college, more than half the states already provide free tuition for at least the neediest students.

In addition, the president has secured a hefty $500 increase in the maximum Pell Grant for 2023–2024 to $7,395—the highest jump in a dozen years—on top of a $400 increase for 2022–2023, and he is seeking $820 more in his FY 2024 budget for academic year 2024–2025. With Congress now divided, however, the run of big increases could be over. The FY 2024 appropriations process maintained the maximum Pell Grant at $7,395. However, the Biden administration, in its FY 2025 budget, proposed boosting the maximum Pell Grant by $750 for the 2025–2026 academic year. The appropriations process in Congress will eventually determine the maximum Pell Grant amount with spending caps from the Fiscal Responsibility Act of 2023, creating pressure to simply maintain the current maximum for another year. In addition, there has been bipartisan interest in using the Pell Grant to cover shorter-term, workforce-related programs, and while the House Education and the Workforce Committee passed such a proposal in late 2023, the bill has yet to advance to the House floor.

Although Pell Grants are means-tested, they are not just for those raised in poverty. They help seven million students pay for college, or more than a third of the entire college population. Some selective colleges now boast about their rising enrollments of Pell-eligible students. The grants are awarded on a sliding scale, with students from families with incomes up to 175 percent of the federal poverty level ($54,600 in 2024) receiving the maximum. Still, even with increases, the grants now cover a much smaller percentage of college costs than when they started in 1973–1974 at $443, the equivalent of $3,000 today.

Relatedly, a bill was introduced in the Senate Finance Committee at the end of September to exclude from taxation the Pell monies used for living expenses. The bill would also enable students and families to make full use of the American Opportunity Tax Credit, furthering the bill’s benefits to affordability. Excluding Pell Grants from taxation has long been a goal of many higher education associations, including AGB. Senators Sheldon Whitehouse (D-RI) and Charles Grassley (R-IA) teamed up to introduce the bill. Finance Committee Chair Ron Wyden (D-OR) has co-sponsored it. In April, Lloyd Doggett (D-TX) introduced a similar House version in the Ways and Means Committee.


In the wake of questions about the affordability of college, the once unshakeable belief that a college degree is a ticket to a better life has given way to doubts about whether it’s even worth the price. In the New America survey of public attitudes toward higher education, only 27 percent said they believe that all Americans need at least a bachelor’s degree to achieve financial security, while a third felt a high school diploma sufficed. Nonetheless, and perhaps paradoxically, over three-quarters believe “that education beyond high school offers a good return on investment for students.”

It’s worth noting that the debate over the value of a college diploma is not new. Newsweek ran a cover story in 1976 that posed the question, “Is College Worth It?” But that question is not a theoretical one these days as more major public and private sector employers drop degree requirements for the people they are hiring. On his first day in office, Democratic Pennsylvania Governor Josh Shapiro eliminated a degree requirement for 92 percent of state jobs. He was following the example of Republican governors in Maryland and Utah, and he won praise from the New York Times Editorial Board, which said, “This demonstrates both good policy and good leadership, representing a concrete change in hiring philosophy that stops reducing people to a credential and conveys that everyone—college-educated or not—has experience and worth that employers should consider.” Meanwhile, in a burst of bipartisanship on Capitol Hill, the House voted 422–2 in January 2023 to pass the Chance to Compete Act, which seeks to further deemphasize degree requirements and accelerate use of skills assessments in filling federal jobs.

Questions for Boards

  • How does our institution strive to keep college affordable? If we discount tuition, what is our discount rate?
  • How dependent are our students on state and federal financial assistance?
  • If we are in a state where the first two years at a public college are free, what are the implications for our institution?
  • What do we know of the student loan indebtedness of our current students and recent graduates, such as average debt, range of indebtedness, and numbers of graduates in repayment?
  • What is the percentage and number of Pell recipients at our institution(s)?
  • How effective are we at communicating the value of our particular institution and higher education in general to students, policymakers and other important audiences?

The AGB Perspective

AGB supports robust investments that would help ensure that all students are able to access and complete a higher education. Specifically, AGB supports doubling the maximum Pell Grant and improving income-driven repayment plans to better support students.