Attending and completing college remains one of the most important ways a person can boost their lifetime earnings and employment opportunities. The costs of college tuition, however, have soared in recent decades, creating an affordability crisis that burdens many students and their families with financial hardship and debt.
The cost of college—even after financial aid—rose across all income levels in recent decades, but families experienced that increase differently, depending on their income level. In a recent working paper, Upjohn Institute Research Fellow Peter Hinrichs found that, between 1996 and 2020, the cost of attending college was highest and rose fastest for families in the top quarter of the income distribution. But families in the lowest income quartile paid a much larger share of their income—rising to about two-thirds of their annual earnings—towards tuition.
Top-earning families now pay much more for college
One of the best ways to examine college affordability is using the information on the Free Application for Federal Student Aid, or FAFSA, the form prospective students and their families fill out to determine how much financial aid they’re eligible for. FAFSA forms provide detailed information on family wealth and income, and they’re used to calculate a student’s Expected Family Contribution, or EFC, which represents the government’s estimate of what a family can afford to pay toward college.
Hinrichs’ research examined data from two sources: one national survey on student aid by the Department of Education, and a major longitudinal household survey by the University of Michigan. Both provide information on demographics, income, and how the costs families paid for college have changed over time.
The data make clear the stark but varied ways in which college has become more expensive. As income increased in recent years for families in the richest quartile, their average EFC rose dramatically, nearly doubling in inflation-adjusted terms from $43,000 in 1996 to $84,000 in 2020.
The EFC has changed less dramatically for other income groups: for the bottom quarter, it dropped from $3,000 in 1996 to $1,000 in 2020. The second quartile remained about the same, at $9,000, and the third rose from $19,000 to $27,000.
These dollar amounts are one measure of the affordability issues families face, but they aren’t a complete picture.
Low-income families now pay a much larger share of their annual income
Another important measure of college affordability is how tuition fits into a family budget. If college takes up a bigger share of a family’s annual income than it did before, it hasn’t gotten more affordable, and families are likely to feel more financial strain than they would have previously.
The graph below shows just how much more college tuition is eating into family budgets for those outside the top income quartile.
Families in the bottom quarter paid tuition amounts equal to 54 percent of their annual income in 1996, but 66 percent in 2020. (These figures include both cash payments and loans but are net of grants that don’t have to be paid back.) 
The share of income spent on tuition has increased less dramatically for higher-income families, rising to 35 percent for the second quartile, 24 percent for the third, and 15 percent for the top quarter. These changes reflect the fact that incomes have increased dramatically for top earners, but have stagnated or declined—especially after the Great Recession—for those in the lower income brackets.
The future of college affordability is uncertain
A number of recent developments make the future of college affordability difficult to predict. The FAFSA Simplification Act changed the financial aid formula starting in the 2024-25 school year, replacing EFC estimates with a new metric called the Student Aid Index, and it’s too early to know how the new calculations will affect college affordability. In addition, uncertainty over federal need-based higher-education funding, as well as other federal funding cuts, make it hard to determine whether college will get more affordable, or become an even greater financial burden for families, in the years to come.
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