As we report on another year of increases in the published tuition and fee prices of colleges and universities around the country, it is important to step back to gain some historical perspective on these prices and the forces driving them.
The majority of students enroll in public colleges and universities, and it is the prices of these institutions that are of greatest concern from a public policy perspective. The public four-year sector accounts for 36% of all (and 44% of full-time) undergraduate students, and the public two-year sector accounts for 40% of all (and 26% of full-time) undergraduate students.
Prices at public two-year colleges remain relatively low. In 2012–13, the national average of $3,131 tuition and fees for a full-time student at a public two-year college is just 36% of the average published tuition and fees at public four-year institutions. Moreover, on average, two-year public college students receive enough financial aid to cover their tuition payments—with some funds left over to apply to other expenses. Low tuition is vital in this sector, which is the gateway to postsecondary education for many low-income and first-generation students who have very limited resources and little or no familiarity with higher education systems and processes. Many students enroll in public two-year colleges with inadequate academic preparation for college-level work, and low prices make their postsecondary undertakings less risky.
The 4.8% increase in the published price of tuition and fees at public four-year colleges and universities this year is the smallest since 2000–01—and the smallest in inflation-adjusted dollars since 2008–09 (when inflation was particularly high). It is smaller than the 5.8% increase for public two-year colleges, but higher than the 4.2% increase at private nonprofit four-year colleges and universities. However, the growth in published prices at four-year public institutions has been higher over the past decade (averaging 5.2% per year beyond inflation) than over either of the two preceding decades. Published prices have risen more rapidly in this sector than in the other sectors over both the past five years and the past 10 years. The average tuition and fee price at public four-year colleges was $5,213 (in 2012 dollars) in 2002–03 and is $8,655 today.
Past and Future
It would likely be wrong to assume that price increases will just keep accelerating. After a 9.3% real increase in 2009–10, the growth rate has declined in each successive year. Similarly, large increases from 2002–03 through 2004–05 were followed by more moderate growth in prices. The same pattern occurred in 1990-91 through 1993–94 and before that, 1982-83 and 1983-84. As Figure 12A shows, state appropriations for public higher education are cyclical, and tuition prices show similar cycles.
As Figures 9 and 10 show, the difference between published tuition and fee prices and the average net prices that students pay has grown over time as financial aid programs have come to play a larger role. In particular, from 2008–09 to 2010–11, the federal government markedly increased its funding for students, causing average net prices for students to fall in years when tuition was rising rapidly. But that trend will not continue. Concern over federal budget deficits is growing, and while support for existing levels of student aid is strong, it is difficult to imagine continued growth in student aid programs that would compensate for future tuition increases to any significant extent.
College enrollments have grown rapidly in recent years. In the decade from 2001–02 to 2011–12, the number of full-time undergraduate students increased by 37%, from 8.6 million to 11.8 million. The number of part-time undergraduate students increased by 24%, from 5.5 million to 6.8 million. This growth is partly a result of the weak labor market that has made school a more appealing alternative and partly a result of the growing gap between the earnings of workers who have college degrees and those who do not.
Although the trend in rapid enrollment growth has already tapered off, it was met by a significant decline in per-student funding. If we are to meet the needs of our citizens and our economy for increased postsecondary attainment, state budgets will have to give a higher priority to education in the coming years.
We must also pursue innovative ways of increasing efficiency on college campuses and providing quality education to large numbers of students. Efforts are well under way to develop lower-cost methods of delivering college courses. It is too early to say whether or not these efforts will revolutionize higher education, or which segments of our diverse and postsecondary education system will be most affected.
It is revenue shortages rather than expenditure growth that have driven the recent rapid rises in public college prices. Nonetheless, for the millions of Americans dependent on colleges and universities to improve their prospects for fulfilling and secure lives, cost reductions that are reflected in slower growth in prices are critical.
The data provided in Trends in College Pricing can inform policymakers, researchers, and others in their analyses of these issues. The companion publication, Trends in Student Aid, contains detailed information about the financial aid that helps students and families pay these prices.
The published prices on which Trends in College Pricing is based come from data reported by institutions on the College Board's Annual Survey of Colleges. This survey, which is distributed to nearly 4,000 postsecondary institutions across the country, collects a wealth of data on enrollment, admission, degrees and majors, tuition, financial aid, and other aspects of undergraduate education.
The prices reported here are averages for one year of full-time undergraduate enrollment. About 36% of all undergraduates and 60% of those attending public two-year colleges are enrolled part-time. Because of the variety of enrollment and pricing patterns, it is not possible to provide estimates of the charges facing these students that would be as accurate as the information we provide about full-time students.
The prices included in Trends in College Pricing represent best estimates of average prices for all full-time undergraduate students. However, a growing number of institutions charge different prices for different years of study and/or for different academic majors. We are able to incorporate differences in prices by year of study reported to us by individual institutions, but not differences by programs. Another complexity that has developed in recent years is that more and more two-year colleges are offering a small number of four-year degrees or providing course work that leads to four-year degrees awarded on other campuses. While we make every effort to adjust our methodology to accommodate these changes, it is impossible to draw precise lines between sectors and to develop exact measures in all cases.
Trends in College Pricing 2012 presents detailed pricing data for public two-year and four-year and private nonprofit four-year institutions for the 2012–13 academic year. While we provide an estimate of the average charges at for-profit institutions, because of the relatively small sample of those institutions from which we are able to collect data, it is important to interpret that information with caution.
Finally, when interpreting college prices, it is important to remember that Trends in College Pricing reports on the price of one year of college. Many students require more than two years of study to earn an associate degree or more than four years of study to earn a bachelor's degree. It is critical to consider the total price for all years of study when thinking about what is required to pay for college. There is considerable variation across sectors as well as among institutions within sectors in both average time to degree and overall graduation rates.
Tuition and Fees Versus Total Charges
Some of the graphs in this report focus only on tuition and fees, but we also report room and board charges for residential students, living costs for commuter students, and other components of student budgets. Whether students live on or off campus, they all must pay for housing and food, buy books and supplies, and cover transportation and other basic living costs. Room and board and other living costs are not really part of the cost of attending college. These are expenses people face whether or not they are in school. The largest real cost many students face is forgone earnings. It is very difficult to succeed in college while working full-time. However, the cost of students' time is difficult to measure, and we make no attempt to do so in this report. Because students tend to think of living expenses as part of the cost of going to college, and because they must come up with the funds to cover these outlays, it is useful to use these expenses as a proxy for forgone earnings.
The cost of living poses a significant hurdle for many students. Even those who receive grant aid sufficient to cover tuition and fee charges may struggle to cover living expenses. It is not so much the prices charged by institutions, but the very real costs students incur by devoting their time to school and forgoing the income needed to support themselves and their families while in school that create the burden for these students.
Net Prices: What Students Actually Pay
Although it is generally the published prices that make headlines, it is the net prices paid by individual students that matter most for college access and affordability. We estimate that in 2012–13, while the average published tuition and fee price at public four-year institutions is $8,655, the average net price is just over $2,900. Grants and tax credits and deductions cover the remainder for the average full-time student. Over the past five years, the average published price has increased by 27% in real terms, while the average net price has increased by 18%.
The definition of "net price" we use is the average price paid by all full-time students—including those who do and do not receive student aid—after subtracting grant aid from all sources in addition to federal tax credits and deductions. Data on prices from the Annual Survey of Colleges and on student aid from Trends in Student Aid allow us to generate new, updated estimates for average net prices by sector each year. Only data from the National Postsecondary Student Aid Study allow us to estimate net prices for students at different income levels enrolled in different types of institutions, and no data are available from this source to update the 2007–08 information published in earlier editions of Trends. We have, however, included information on net tuition payments by students at different types of institutions, based on data from the Delta Cost Project. These net prices cannot easily be compared to our annual net price calculations because they cover payments by all students—full-time and part-time, in-state and out-of-state, graduate and undergraduate. But they provide an important additional perspective on the portion of gross tuition revenue paid by students and the portion being covered by institutional grant aid (discounts), and federal and state grant aid.
How College Prices Are Changing
The data in this report confirm the widespread perception that published college prices are rising more rapidly than the prices of other goods and services. This is not a new phenomenon, but one that has persisted over the entire 30-year period documented here. Only about one-third of full-time students pay the full published tuition price with no grant assistance, but the prices these students pay have increased very rapidly. In addition, the nontuition expenses associated with going to college continue to rise, and grant aid is rarely sufficient to meet those costs.
Another very significant issue is that, as documented in Figure 18A, incomes have declined over the past decade for families at all levels of the income distribution. In addition, families have not been able to plan for the fluctuations in the value of the assets they have saved to pay for college. Rising tuition levels cause even more problems because of the economic environment in which they are occurring.
Neither changes in average published prices nor changes in average net prices necessarily describe the circumstances facing individual students. There is considerable variation in prices across sectors and across states and regions as well as among institutions within these categories. College students in the United States have a wide variety of educational institutions from which to choose, and these come with many different price tags. Moreover, different students may pay different prices at the same institution. One of the problems many students face is how to make sense of all the options and complex pricing structures.
Annual percentage increases in tuition and fees consistently receive most of the attention, but the actual price level and dollar increases in the price level matter most to students and families. Small percentage increases at colleges and universities with high tuition and fee levels may translate into large dollar increases. At lower-priced institutions, larger percentage increases have less impact on affordability.
Rapidly rising postsecondary enrollments indicate that students are finding ways to finance their education and are largely explained by the understanding that more education generally leads to higher earnings throughout life. Nonetheless, the reality is that more students and families are struggling to pay for higher education, both during the college years and in the following years when education loans must be repaid.
The Consumer Price Index
We provide much of our data in constant dollars, adjusting values for changes in the Consumer Price Index (CPI). We use the change in the CPI from July 2011 to July 2012 to compare the price level for academic year 2012–13 to earlier prices. A decline in the CPI of 2.1% from 2008–09 to 2009–10 followed an increase of 5.6% in the preceding year. The CPI increased by 1.2% in 2010–11, by 3.6% between July 2010 and July 2011, and by 1.4% from July 2011 to July 2012.
A Note on Trends Data
While the information reported here provides a best approximation of trends in college charges over time, we caution readers about placing too much reliance on either precise dollar amounts or precise annual percentage changes. Each year we revise the average prices calculated the previous year to account for corrected data we receive from institutions and to provide an enrollment-weighted average based on the most recent available data on the number of full-time students attending each institution. If, over time, increasing numbers of students were to enroll in the lower-priced institutions within a sector, our measure of the average price increase would be lower than if enrollment were stable. Details relating to our methodology and to other technical issues and data reliability can be found in Notes and Sources.
Please feel free to cite or reproduce the data in Trends for noncommercial purposes with proper attribution.