Rate of Tuition Increases Is Up

Annual study by College Board also finds continued growth in share of borrowing that comes from private loans.
October 23, 2007

The rate of tuition increases is going up -- in public and private higher education.

Across sectors, an annual report by the College Board found that this year's percentage increases were slightly larger than those reported a year ago.

Here are some of the key data released by the College Board Monday:

Tuition Changes by Sector, 2007-8

Sector 2007-8 Tuition 1-Year $ Change % Change This Year % Change Last Year
Public 2-year $2,361 $95 +4.2% +4.1%
Public 4-year (in state) $6,185 $381 +6.6% +6.3%
Private 4-year $23,712 $1,404 +6.3% +5.9%

The College Board also reported, but with some caution because data cover only 57 percent of enrollments, that the average tuition at for-profit colleges is $12,089 this academic year, up 6.2 from last year.

For residential students, room and board are also key costs and here, too, they are up. At public institutions, the average room and board this year is $7,404, an increase of 5.3 percent over last year. At private colleges, the average this year is $8,595, an increase of 5.0 percent. (Last year, the percentage increases in room and board were 5.1 percent at public institutions and 5.0 percent at privates.)

A major theme of the College Board report every year is that the relatively few institutions for which total costs now exceed $50,000 a year are highly atypical, even if they include some of the more prestigious colleges and universities in the country. Only 5 percent of students at private four-year institutions (which enroll fewer students than publics) attend colleges where tuition and fees total $36,000 or more. Sixty-five percent of private college students are enrolled at institutions where tuition is less than $27,000.

At public four-year institutions, a plurality of students (43 percent) attend institutions where tuition and fees are $3,000-$5,999. The next largest group (34 percent) enroll at institutions where tuition and fees are $6,000-$8,999.

Another major theme of the College Board, this year as in the past, was that what students actually pay ("net price") tends to be considerably less than what colleges list as their tuition and fee rates. Net price subtracts grants or tax breaks, and the figures here are based on averages for the sectors. While the numbers for net price are going up as well, the base is much smaller.

Net Tuition and Fees, 2007-8

Sector Net Tuition and Fees 1-Year $ Increase 1-Year % Increase
Public 2-year $320 $20 +7%
Public 4-year $2,580 $160 +7%
Private 4-year $14,400 $630 +5%

Sandy Baum, a Skidmore College economist and senior policy analyst at the College Board, said that these data provide important context. She said that there are major "gaps in access" to higher education for members of disadvantaged groups, and she said that "money is a factor" in those gaps. But she said that the relatively low cost of many colleges (especially after aid is awarded) suggested that there are other issues in play as well.

In terms of aid, the College Board offered extensive data there as well. Federal loans are the top source of aid for both undergraduate and graduate students, the data show, with loans playing a much larger role for graduate education.

Student Aid by Type, 2006-7

Type of Aid Undergraduates Graduate Students
Total $97.1 billion $33.4 billion
Federal loans 40% 61%
Institutional grants 21% 17%
Pell Grants 13% n/a
State grants 8% 1%
Private and employer grants 7% 9%
Education tax credits/deductions 5% 2%
Federal grants other than Pell 4% 9%
Federal work-study 1% <1%

One key trend on student loans is the continued growth in private borrowing, which worries many educators because such loan programs have far fewer protections for student borrowers. In 2006-7, the last year for which data are available, private borrowing reached 24 percent of student loan volume. That's up just one percentage point from the previous year, but is double the 12 percent share private loans had in 2000-1, and four times the 6 percent share that the loans had in 1996-7.

Baum said she wasn't sure why the growth slowed. While private loans have received much publicity in the last year due to scandals over campus aid leaders recommending lenders who were also providing them with certain benefits, those scandals broke after the period when most of the borrowing in this year's report would have taken place.


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