Tuition Is Up, Loans Are Shifting

Percentage increase is highest at community colleges and lowest at private four-year institutions. Lending moves from private to federal programs.
October 21, 2009

To no one's surprise, tuition is up this year, with the largest percentage increases coming at public institutions that face significant cuts in state appropriations.

The College Board released its annual studies on tuition and financial aid trends Tuesday, and tried to put a non-alarmist spin on numbers that are scary to many students and their families. For instance, board officials noted that, after adjusting for inflation, the average net price paid for tuition and fees by public four-year college students is lower in 2009-10 than it was five years ago. But whether those figures will comfort parents writing checks -- or legislators hearing complaints from those parents -- is doubtful.

Here are the overall figures for the 2009-10 academic year:

Tuition and Fees by Sector

Sector 2009-10 Tuition and Fees One-Year Dollar Increase One-Year % Increase Previous Year's % Increase
Private, nonprofit four-year colleges $26,273 $1,096 4.4% 5.9%
Public four-year colleges, in-state residents $7,020 $429 6.5% 6.4%
Public four-year colleges, out-of-state residents $18,548 $1,088 6.2% 5.2%
Community colleges $2,544 $172 7.3% 4.7%
For-profit colleges $14,174 $859 6.5% 4.5%

The changes show that the private colleges tended to moderate their tuition increases this year. Many private institutions were worried about sticker price scaring off families from even finding out about aid possibilities, so many of these colleges said that they were committed this year to minimizing increases.

The biggest percentage increase comes in the sector -- community colleges -- where charges are at the lowest levels. But as College Board officials noted, the national average figures for community colleges are skewed seriously by California, where 17 percent of all community college students are enrolled. Because California's economic free-fall has led to unusually steep increases in charges, and the base there was quite low to start, the national figures understate average costs and overstate the percentage increase for everyone outside California. For the rest of the country, average tuition and fees total $2,917 this year, 6.2 percent more than last year.

For residential students at four-year colleges, room and board are also key parts of the total bill. Public institutions reported an average of $8,193, up 5.4 percent. Private institutions reported average charges of $9,363, up 4.2 percent.

One of the recurring frustrations of educators about discussions of college costs is that so much public attention goes to the relatively small share of institutions (elite privates) where total costs now top $50,000. Even though many of these institutions are among the most generous in giving aid, the high sticker prices are terrifying to many. One set of data released by the College Board Tuesday shows the percentage of four-year college students enrolled in institutions with various levels of tuition charges. Nearly three-fourths of undergraduates at four-year public colleges and universities attend institutions where tuition and fees are less than $9,000.

Distribution of Four-Year College Students by Tuition and Fees Totals, and Sector

Price Public Private
$39,000 and up 0% 7%
$36,000 to $39,000 0% 13%
$33,000 to $36,000 <1% 7%
$30,000 to $33,000 <1% 9%
$27,000 to $30,000 <1% 14%
$24,000 to $27,000 2% 12%
$21,000 to $24,000 2% 11%
$18,000 to $21,000 2% 8%
$15,000 to $18,000 3% 6%
$12,000 to $15,000 4% 4%
$9,000 to $12,000 13% 2%
$6,000 to $9,000 41% 2%
$3,000 to $6,000 32% 5%
Less than $3,000 1% 0%

"Net price," what students pay after they receive aid, is significantly lower than sticker price, reflecting the reality that at many institutions, relatively small percentages of students pay the advertised full price. The College Board data for this year show that students at private colleges receive an average of $14,400 in total grant aid and federal tax breaks, meaning that the net price of tuition is about $11,900 on average.

At public four-year colleges, average grant packages and tax breaks total about $5,400, reducing average net tuition and fees (for in-state residents) to about $1,600. At community colleges, the average grant and tax breaks total about $3,000, meaning that the funds cover tuition costs (on average) and leave about $500 for living expenses.

Much of the information about student aid provided in the report (which generally covers data a year older than the tuition data) illustrates the vast sums that the state and federal governments and institutions spend on assistance to enable students to enroll. But notable in the data is continued evidence that significant portions of student aid go not to those at the lowest levels of income levels, but to families with incomes in the six figures -- in many cases to attract students who might otherwise attend other institutions.

At public four-year institutions, for example, only about one-third of institutional aid was need-based. And among non-need based aid, the average award at public institutions was higher for those in the highest income brackets than the lowest, $730 vs. $570.

The annual release of the College Board data prompts most higher education associations to release statements regretting any increase in charges but praising their particular sector for hard work at minimizing tuition and providing student aid. One group in higher education on Tuesday issued a statement criticizing higher ed -- and drawing particular attention to how grant aid is used and the equity issues raised by providing so much to those who may not need it.

Lauren Asher, president of the Institute for College Access and Success, noted that two-thirds of public four-year colleges' aid is distributed without considering financial need. "Economic constraints can lead well-qualified students to lower their academic aspirations or give up on college altogether without adequate aid. It is particularly disturbing that public colleges are using such large share of their financial aid resources for so-called 'merit aid' in these tough times," she said.

In terms of student loans, the big shift in 2008-9 was away from non-federal loans. As credit markets tightened, borrowing dropped significantly and federal borrowing increased. The College Board estimates that non-federal education loans declined by almost 50 percent from 2007-8 to 2008-9, while total education borrowing increased 5 percent. In dollars, that means a federal loan increase of $15 billion and a non-federal loan decline of about $11 billion. While the loss of some lenders was unnerving to those who relied on them, many aid experts have for years been worrying about the growth in private loan volume, given that these loans give student borrowers far fewer protections than they receive in the federal program (and many students don't understand the differences between the programs).

Among other highlights of the report on student aid and loans:

  • From 1998-99 through 2008-09, grant aid per undergraduate increased by an average of 3.4 percent, adjusted for inflation, while loans increased by 4 percent a year.
  • About 8.5 million taxpayers benefited from education tax credits and deductions in 2008.
  • While many policy discussions on federal aid policy focus on the value of the maximum Pell Grant, only about one fourth of Pell recipients in 2007-8 received the maximum grant. In 2008-9, the average Pell Grant was $2,973, while the maximum was $4,731.
  • Of 2007-8 bachelor’s degree recipients, 34 percent graduated without student loan debt, while 10 percent had borrowed at least $40,000. At public colleges, those figures were 38 percent and 6 percent, respectively. At private colleges, only 4 percent had no debt, and 24 percent had at least $40,000 in debt.


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