Introduction

Perceptions of the price of going to college depend largely on published or “sticker” prices. Despite the federally mandated creation of net price calculators, the ongoing simplification of the financial aid application process, and the large role of financial assistance available to help students pay for college, increases in published prices continue to capture most headlines.

Trends in College Pricing 2016, along with its companion publication, Trends in Student Aid 2016, provides detailed information about both published prices and net prices, and about college students’ living expenses in addition to tuition and fees. Trends in College Pricing also provides information on enrollment patterns, institutional revenues and expenditures, and family income over time in the United States.

Events associated with the Great Recession increased the role of financial aid in helping students and families pay for college. Increases in tuition and fees from 2008-09 to 2011-12 were unusually large relative to general inflation. But increases in aid — particularly federal grants and tax credits — actually led to declines in average net prices over these years. However, the story has shifted considerably since that time, with increases in aid covering about two-thirds of the increase in tuition and fees between 2011-12 and 2016-17 for the average private nonprofit college student and much less for those enrolled in the public sector. Students also have to come up with the resources to cover increases in living expenses. Despite some recovery in incomes over these years, income inequality has increased and average incomes have grown slowly or not at all across the income spectrum (Figure 19A).

Trends in College Pricing 2016 includes data that can provide insight into the forces underlying increases in the prices students pay for college, including changes in state funding levels and in enrollments, the composition of institutional expenditures and revenues, the distribution of endowment resources across institutions, and tuition discounting patterns.

The gap between published and net prices is large. The average full-time student at a private nonprofit four-year college receives more than $19,000 a year in grant aid from all sources and federal tax credits and deductions. Aid averages more than $5,800 for public four-year students and more than $4,000 for public two-year students. While published prices paint an exaggerated picture of the financial barriers students face in pursuing postsecondary education, these barriers are growing as net prices rise.

Published Prices for One Year of Full-Time Study

The prices reported in Trends in College Pricing are for one year of full-time study. Many students enroll part time, and prorating these prices does not always give an accurate picture of the published prices that students face, much less of the net prices generated by the grant assistance and tax benefits they receive. But even for full-time students, one-year prices at “two-year” and “four-year” institutions may not be adequate indicators of the cost to students pursuing postsecondary certificates and degrees. Among students who began their studies full time at a four-year institution in 2008, about 40% had completed a bachelor’s degree at their first institution after four years and about 60% had completed a degree after six years (NCES, Digest of Education Statistics 2015, Table 326.10). In other words, among students who earned bachelor’s degrees within six years, one-third took more than four years to do so. Not all of these students paid more than four years of full-time tuition — they may have taken time off or enrolled part time for at least a semester. But for many of those who took longer than four years to earn their degrees, tuition and fees (before accounting for grant aid) were likely to be considerably more than four times the one-year price.

Taking more than two years to earn an associate degree or more than four years to earn a bachelor’s degree has financial implications beyond tuition and fee expenses. Forgone earnings from reduced participation in the labor force constitute the largest portion of the cost of college for most students. The more quickly students earn their degrees, the more time they have to earn college-level wages and reap the financial benefits of postsecondary education. Bachelor’s degree recipients between ages 25 and 34 had median earnings 69% ($18,876) higher than those with high school diplomas in 2015 (U.S. Census Bureau, 2015 Income Data, Table PINC-03).

Past and Future

As Figure 4 illustrates, the rate of growth of published tuition and fees is not accelerating over time. In both the public and private nonprofit four-year sectors, inflation-adjusted prices increased at a slower rate between 2006-07 and 2016-17 than in either of the previous two decades (Figure 4). In the public sector, both the dollar and percentage increases between 2011-12 and 2016-17 were smaller than over the previous five years (Table 2A). But Figure 5 shows how these price increases have accumulated over time. After adjusting for inflation, the average published tuition and fee price in the public four-year sector is 3.1 times its level 30 years ago. In the public two-year and private nonprofit four-year sectors, the prices are about 2.4 and 2.3 times their 1986-87 levels, respectively.

For public institutions, declining state revenues per student are a major factor behind rising prices. State funding for higher education is cyclical, but there is also a long-term downward trend in this subsidy to postsecondary students (Figures 14A and 14B). In 2014-15, appropriations per full-time equivalent (FTE) student were 8% lower in inflation-adjusted dollars than they were a decade earlier and 11% lower than they were 30 years earlier.

Published and Net Prices

We estimate that in 2016-17, the average in-state net tuition and fee price at public four-year institutions is about $3,770, compared to a published price of $9,650. But between 2011-12 and 2016-17, increases in grant aid for full-time students in this sector covered only about 19% of the $830 (in 2016 dollars) increase in published tuition and fees. Average aid increases covered almost two-thirds of the $3,780 increase in published tuition and fees at private nonprofit four-year colleges and universities. For public two-year college students, the $350 increase in tuition and fees over five years was met by an increase of less than $100 in average grant aid.

Averages across sectors conceal considerable variation among students. Federal grant aid goes almost exclusively to low- and moderate-income students and, as Figures 12 and 13 reveal, institutional discounts are generally larger for lower-income students. The distribution of net prices is more critical for college access than the overall average since, as Figure 19 shows, there are sharp differences in financial capacity among families.

Tuition and Fees Versus Total Charges

In addition to tuition and fees, we 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. Many of these expenses are not really part of the cost of attending college, but are expenses people face whether or not they are in school. The largest real college 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 meet living expenses. It is not so much the prices charged by institutions, but the very real costs that 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.

College Affordability

College affordability is about more than just college prices. It is about economic inequality, income levels for the majority of families and individuals, the prices of other goods and services, savings rates, and personal preferences and priorities. Affordability also depends on the financial return to a college education, since accessible borrowing allows students to pay part of the cost of their education out of future earnings. A major question that begs for more attention is the appropriate division of responsibility for financing postsecondary education between society as a whole, as represented by taxpayers, and the individual students who enroll.

In addition to the varied circumstances facing students from different backgrounds and of different ages, there is considerable variation in prices across sectors, states, and regions, as well as among institutions within these categories. National average prices tell a very incomplete story. College students in the United States have a wide variety of educational institutions from which to choose, with many different price tags and with different levels of financial aid. One of the issues many students face is how to make sense of all the options and complex pricing structures.

 

Interpreting The Data

Measuring Tuition

A growing number of institutions charge different prices for different years of study and/or for different academic majors. In other words, many students on a campus may face published prices quite different from those reported by institutions in the College Board’s Annual Survey of Colleges. Even more fundamental, the lines between sectors are increasingly blurry as more two-year colleges offer some four-year degrees. For these reasons, the average published prices for each sector that Trends in College Pricing 2016 reports are not precise measures. Trends in College Pricing 2016 presents detailed pricing data for public two-year and four-year colleges and private nonprofit four-year institutions. Although 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.

Price Changes

 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 annual percentage changes. Each year we revise the average prices calculated the previous year to account for revised data we receive from institutions. Details relating to our methodology and to other technical issues and data reliability can be found at the end of the report in Notes and Sources.

The tables supporting all of the graphs in the Trends publications, PDF versions of the publications, PowerPoint files containing individual slides for all of the graphs, and other detailed data on student aid and college pricing are available at trends.collegeboard.org. Please feel free to cite or reproduce the data in Trends for noncommercial purposes with proper attribution.