Every year Trends in College Pricing reports on the changes in tuition and fee prices at colleges across the country. Our data also include prices for room and board and other living costs, the net prices students actually pay after taking grant aid into consideration, the funding sources and the expenditure patterns of postsecondary institutions, and changing enrollment patterns. But it is the one-year tuition changes that always capture most of the attention.
This year, the 2.9% increase in average public four-year college tuition and fees is smaller than it has been for many years. Increases in other sectors are also moderate by historical standards. Perhaps this news creates the opportunity to take a step back and put these annual changes into perspective.
The relatively small increases are important because they signal that, as has been the case over the decades for which information is available, price increases are cyclical. The startling price increases of recent years, coinciding with the Great Recession, paralleled increases in other economic downturns. They did not signal a new era of accelerating prices.
It is difficult to process this reality when the strain of rapidly increasing prices in an environment of high unemployment and declining family incomes is leading many students and families to question whether they can afford a college education. It is probably easier to grasp that this year’s slowing of the price spiral does not mean that college is suddenly more affordable, that concerns about student debt will be set aside, or that lowand moderate-income students will no longer face financial hurdles as they pursue their educational ambitions.
We communicate one-year price increases in order to update information about both the published and the net prices of college. But it is the long-run picture that is most important. Understanding the cost to students of pursuing postsecondary certificates and degrees and the variety of options available across our diverse higher education system is critical to making college opportunity a reality. The information in Trends in College Pricing, combined with the information in the companion annual publication, Trends in Student Aid, paints a picture of the financial realities of higher education in the United States.
This information must be viewed in the context of the payoff to college education. The common statement that the cost of not going to college is greater than the cost of going to college is particularly relevant here. Our recent publication, Education Pays 2013: The Benefits of Higher Education for Individuals and Society, the fourth edition in this series begun in 2004 to elucidate the monetary and nonmonetary benefits of higher education, as well as differences in participation and success across demographic groups, adds perspective on the relationship between the costs and benefits of postsecondary education. The companion report, How College Shapes Lives: Understanding the Issues, focuses on the variation in the returns to postsecondary education and sheds light on some of the methodological and conceptual complexities underlying the issues covered in Education Pays.
Past and Future
After a 9.5% real increase in 2009-10, the growth rate in public four-year college tuition 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, in 1982-83 and 1983-84. As Figure 14A shows, state appropriations for public higher education are cyclical, and tuition increases show similar cycles.
As Figures 10 and 11 indicate, the difference between the published tuition and fee prices and the average net prices that students pay has grown over time as grant aid and federal education tax benefits 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 is not continuing. Total federal grant aid per full-time equivalent undergraduate student declined by 9% ($325 in 2012 dollars) between 2010-11 and 2012-13.
College enrollments have grown rapidly in recent years. Although enrollments declined slightly between fall 2011 and fall 2012, over the decade from 2002-03 to 2012-13, the number of full-time undergraduate students increased by 28%, from 9.1 million to 11.6 million. The number of part-time undergraduate students increased by 19%, from 5.6 million to 6.7 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.
The rapid enrollment growth in recent years was met by a significant decline in per student state 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.
As Figures 16A and 17A suggest, it is revenue shortages rather than expenditure growth that have driven the rapid rises in public college prices in recent years. Nonetheless, for the millions of Americans who are 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. 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 multipurpose postsecondary education system will be the most affected.
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 data on enrollment, admission, degrees and majors, tuition, financial aid, and other aspects of undergraduate education.
The prices reported here are best estimates of averages for one year of full-time undergraduate enrollment. About 37% of all undergraduates and 61% 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. A growing number of institutions charge different prices for different years of study and/or for different academic majors. We are able to incorporate some, but not all, of these differences in our price estimates. Another complexity 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. Although 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 2013 presents detailed pricing data for public two-year and four-year colleges and private nonprofit four-year institutions for the 2013-14 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 and the complex pricing structures prevalent in this sector, it is important to interpret that information with caution.
Finally, when evaluating 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 campus or off campus, they 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 the most for college access and affordability. We estimate that in 2013-14, while the average published in-state tuition and fee price at public four-year institutions is $8,893, the average net price is about $3,120. Grants and tax credits and deductions cover the remainder for the average full-time student. Average net tuition and fees for full-time in-state students enrolled in public four-year institutions actually declined from an estimated $2,590 in 2007-08 (in 2013 dollars) to about $1,940 in 2009-10. However, since that time, growth in student aid has not kept up with published prices, and net prices have grown more rapidly than published prices.
The definition of “net price” we use is the average price paid by all full-time students — including those who do and those who 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.
Trends in College Pricing 2013 also includes estimates of net prices by income levels based on the recently released National Postsecondary Student Aid Study data. As Figure 12 reveals, in 2011-12, net tuition and fees at public four-year colleges and universities (not accounting for tax credits and deductions) ranged from $0 for the lowest-income quartile to $8,070 for the highest-income quartile.
How College Prices Are Changing
Published college prices have been rising more rapidly than the prices of other goods and services over the entire time 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 non-tuition expenses associated with going to college continue to rise, and grant aid is rarely sufficient to meet those costs.
Another significant issue is that, as documented in Figure 20A, although incomes have declined over the past decade for families at all levels of the income distribution, the economic recovery has benefited those at the top more than others. The increasing economic inequality in the United States over recent decades has exacerbated the difficulty in paying for college for many students, in addition to straining federal, state, and institutional budgets.
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 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.
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. The Education Pays 2013 and How College Shapes Lives publications shed light on this issue. 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 2012 to July 2013 to compare the price level for academic year 2013-14 to earlier prices. The CPI increased by 3.6% between July 2010 and July 2011, by 1.4% from July 2011 to July 2012, and by 2.0% from July 2012 to July 2013.
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.