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Tuition Hikes of the Downturn

October 28, 2010

Tuition is up (no surprise) and this year the percentage increases for public and private four-year colleges and universities are higher than they were last year. Generally, the percentage increases at public institutions are larger than those at privates (which are more expensive to start with). Those trends are standard for tight economic times, when states cut budgets and try to make up for shortfalls with larger tuition increases, and when many private colleges worry that sticker shock will scare away families and so tend to moderate price increases.

Across the board, the increases exceed the inflation rate of about 1.2 percent for the last year, which, while low, was higher than the slightly negative rate of the year before.

Those are the key findings from this year's annual survey on college prices (and a companion survey on student aid) being released today by the College Board. In many respects, the data extend trends that were evident last year as well. Here are the overall figures for the 2010-11 academic year:

Tuition and Fees by Sector

Sector 2010-11 Tuition and Fees One-Year Dollar Increase One-Year % Increase Previous Year's % Increase
Private, nonprofit four-year colleges $27,293 $1,164 4.5% 4.4%
Public four-year colleges, in-state residents $7,605 $555 7.9% 6.5%
Public four-year colleges, out-of-state residents $19,595 $1,111 6.0% 6.2%
Community colleges $2,713 $155 6.0% 7.3%
For-profit colleges $13,935 $679 5.1% 6.5%

 

For room and board, public increases also outpaced the privates, and privates are also more expensive. The average public college rate is going up by 4.6 percent, to $8,535, and the average private rate is going up by 3.9 percent, to $9,700. Those figures are for four-year institutions only, as the pool of community colleges and for-profit colleges charging for room and board remains small.

As is the case every year, College Board officials stress that the data show that most colleges -- however much their prices frustrate students and families -- are not in the mid-$50,000 range that attracts so much attention. Total expenses for a private four-year institution are, on average, just under $37,000 a year. But because the most famous private institutions tend to be well above that average, many people assume tuition rates are even higher than they are. (At Harvard University, an undergraduate's total costs this year, typical for those at elite private research universities and liberal arts colleges, are estimated by the university to be between $53,950 and $56,750.)

Many of the data in the report focus on the impact of state budget shortfalls on public colleges. For instance, in comparing inflation-adjusted average tuition increases from the last three decades, the College Board finds that over that time, the rate of increase has dropped for private four-year institutions and gone up for public four-year institutions. Further, while the rate of increase at private institutions was greater than that of publics in the 1980s, it is now smaller.

Annual Average Tuition Increases (Inflation-Adjusted) by Sector

Sector 1980-1 to 1990-1 1990-1 to 2000-1 2000-1 to 2010-1
Private four-year 5.1% 2.6% 3.0%
Public four-year 4.2% 3.3% 5.6%
Community colleges 3.9% 3.2% 2.7%

The College Board's report on student aid notes that the past two years -- which have seen significant increases in tuition at many public colleges and universities and growing economic pressures on many families -- have seen a rapid expansion in aid packages.

From 2008-9 to 2009-10, grant aid per full-time equivalent undergraduate increased by about 22 percent (or $1,073) and federal loans increased by 9 percent (about $408). Particularly notable, the College Board report said, was the increase in the maximum Pell Grant of 16 percent in constant dollars in 2009-10, the largest one-year increase in program history. The total Pell budget reached $28.2 billion, divided among 7.7 million students.

Sandy Baum, a policy analyst for the College Board and co-author of the reports being issued, said that the tuition figures "were not very surprising," given the state of the economy. "I don't think anybody thought public tuition would go up only 2 percent this year."

She urged educators and policy-makers to pay more attention to the long-term issues raised by this year's data. She noted, for example, that the impact of tuition increases on low-income students has been mitigated in part by the strong support for the growth in Pell Grants -- growth that probably will not be matched in the years ahead. "No matter what kind of Congress we get, the idea that Pell Grants will keep growing at this rate is unlikely," she said.

Baum said that in many ways she sees the tuition trends posing more of a threat ahead to public higher education than to private colleges. She said that some private institutions -- those that are being forced to give so much aid to attract students that they can't balance their books -- are in danger. But she said that the basic financial model for most privates, in which some students pay enough to subsidize others, is sound.

For public higher education, however, she said she feared that "the basic model may no longer be sustainable." While states are likely to restore some support for higher education as the economy improves, she said, it seems unlikely that enough support will be provided to maintain tuition at affordable levels. She said she anticipates public colleges having to consider more radical changes in how they provide education, ideally using means that cut costs. She noted that while technology has to date not cut costs in providing higher education, that may not be the case in the future.

If new models fail to provide more students with quality education, she said, "we could lose public higher education, and that would be a huge social failure."

 

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