Is the U.S. tuition system more progressive?

Canadians are graduating with more debt than their American counterparts—despite the well-known higher sticker prices south of the border.

In the U.S., average debt at graduation rose to $25,250 in 2010, according to a Nov. 3 report by the Project on Student Debt. Here in Canada, students were graduating with an average debt of $26,680 according to a 2009 report released by the Millennium Scholarship Foundation. If anything, the Canadian average is higher now.

The numbers seem almost impossible: isn’t tuition ridiculously high in the U.S.?

While tuition is higher in the U.S. in most cases, what American students end up paying is probably much less than you think. Many private universities, including those in the Ivy League, charge big fees, averaging $28,500 a year, according to The College Board. American students also pay a lot to attend public universities in states where they’re non-residents, on average $20,770. For students who go to public universities in their home states, the figures are still high, $8,244 a year.

Clearly those sticker prices are much higher than the Canadian average of $5,138. So why are Americans debt levels lower than ours? The answer is that they receive much more student aid.

In most provinces, even students from the lowest income backgrounds can only qualify for a guaranteed maximum bursary of $250 per month from the federal Canada Student Grants program. Grants from most provincial governments are similarly low for most students. The rest of students’ funding has to come from loans.

In the United States 51 per cent of all undergraduate aid dollars given out this year were grants that don’t have to be paid back. The largest source of grants, accounting for 20 per cent of all aid, is the Federal Pell Grant program which handed out $35-billion last year. Although it’s now facing cuts, 35 per cent of all university students received a Pell last year.

Institutional aid continues to play a much larger part of the U.S. system too. By charging students from wealthy backgrounds high rates, universities are able to provide significant aid for students from low-income backgrounds. According to the College Board, graduates of Pomona College, Princeton University, Williams College and Yale University—each of which charges more than $30,000 in tuition fees—leave school with an average debt under $10,000—an enviably low figure.

And university aid programs aren’t just available at elite private schools, Across the U.S. universities give out $30-billion in grants annually. In fact, the College Board estimates that this year the average net tuition and fees—that’s the actual price of school, including ancillary fees but minus grants and tax credits—for in-state students at public four-year universities is only $2,490. That’s less than half the average price of tuition in Canada.

Whose system do you think is the fairest now?