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Photo illustration by Justin Morrison/Inside Higher Ed | Rawpixel

Despite public perceptions that the cost of college is too high, tuition prices remained relatively low this year. And while the average dollar amount colleges charged for tuition and fees rose for the 2023–24 academic year, those increases were less than inflation rates, according to the College Board’s 2023 “Trends in College Pricing and Student Aid” report released today.

“We are seeing that some public school systems continue tuition freezes, which is welcome news, especially in the current inflationary environment,” said Jennifer Ma, executive research scientist for the College Board and co-author of the report.

In-state students at public four-year institutions saw their tuition and fees increase by 2.5 percent this year before adjusting for inflation. The rates increased by 2.6 percent for in-district students at public two-year colleges and by 4 percent for students attending private nonprofit four-year institutions. But after adjusting for 4.5 percent inflation between the first eight months of 2022 and 2023, the report showed that average published tuition and fees fell across all three of those sectors.

“It’s important to look at not only the sticker prices, but also the net prices, which is what students and families pay after subtracting total grant aid they receive,” Ma said. “In recent years, the net prices have been fairly stable or declining after adjusting for inflation.”

Net Prices Fell

During the 2019–20 academic year, 39 percent of full-time in-state students at public two-year colleges received enough grant aid to cover their tuition and fees, including 71 percent of students from families who made less than $40,000, according to the report.

After adjusting for inflation, the average net tuition and fees for first-time, full-time in-state students enrolled at public four-year institutions also declined from its peak of $4,230 in 2012–13 to an estimated $2,730 in 2023–24—and 31 percent of those students had enough aid to cover their tuition and fees. The net tuition and fee prices for first-time, full-time students enrolled in private, nonprofit, four-year institutions also declined from $18,820 (in 2023 dollars) during the 2006–07 academic year to roughly $15,910 in 2023–24. Eighteen percent of those students had enough aid to cover their tuition and fees.

“That’s not to say that paying for college is not an issue for many families,” Ma said, pointing to the additional costs college students incur aside from tuition and fees, such as housing and food costs. Although numerous community colleges offer free tuition programs, many of them don’t allocate money for basic needs.

“For many students, tuition and fees are on the low side, but they do have to come up with resources to cover other expenses.”

First-time, full-time students at public two-year colleges need an estimated $9,640 to pay for housing and food after grant aid, and they need another $5,900 in allowances for books and supplies, transportation, and other personal expenses, according to the report. Students at four-year public colleges needed an average of slightly more than $20,000 to cover those extra expenses, and students at four-year private institutions needed an average of nearly $35,000.

Where students are getting support to pay for college is also continuing to shift.

Fewer Borrowers, More State Aid

Annual borrowing for undergraduates declined for the 12th consecutive year: Compared to a peak of $152.8 billion (in 2022 dollars) in 2010–11, students and parents borrowed $98.2 billion in federal and nonfederal loans in 2022. (It should be noted that the cap on how much undergraduate borrowers can take out hasn’t increased since 2007.) Over the past decade, federal loans to undergraduates decreased by 49 percent and 11 percent for graduate students. Pell Grant expenditures also decreased by 43 percent between 2010 and 2023.

The declining pool of borrowers is likely the result of a combination of factors, said Nate Johnson, principal consultant for Postsecondary Analytics LLC.

In addition to a shrinking population of traditional-age college students, “Some of it is fewer students having as much financial need because the economy’s been good and wages are going up. Some of it has been that the price of higher education has peaked and started to come down. And some of it may just be that people are realizing the trade-offs with student debt,” Johnson said. “Now that we’ve had a generation of students that have incurred high levels of debt and the next generation can see what that looks like for them later on in adulthood, I think that may be having an effect on students’ willingness to take on debt.”

The percentage of annual federal education loans going to graduate students, however, increased from 36 percent in 2007–08 to 47 percent in 2022–23. While overall enrollment has decreased since the pandemic, graduate enrollment rose by 4.5 percent between 2019 and 2021.

“Some of that is age related. The enrollment growth that was driven by traditional-age college students 10 years ago; a lot of those people are now the typical age for graduate programs. That may change,” Jonson said. “But graduate education may end up being stronger for a little while than undergraduate education.”

At the same time that students are borrowing less money to attend college, institutional and state aid has increased.

Between 2012 and 2023, institutional grant aid for all students rose by $19.2 billion (in 2022 dollars) and made up 53 percent of all grant aid for undergraduate and graduate students in 2022–23. State and local funding per student also increased in 2021–22 ($10,240, adjusted for inflation) for the 10th consecutive year, reaching the highest level since 1999–2000.

‘Buyer’s Market’

“For so many years, the narrative was that college prices are rising, student debt is rising and state appropriations are falling, but all of that looks like it has reversed,” said Jason Delisle, a nonresident senior fellow in the Center on Education Data and Policy at the Urban Institute. Tuition rates staying low are a symptom of both declining enrollments and public skepticism of the value of higher education, he said.

“It’s become more of a buyer’s market, whereas before it was much more of a seller’s market,” Delisle said. “Consumers are more discriminating, colleges are working hard to keep costs in check and in some cases they have to attract students … It’s certainly possible that college can become an increasingly better deal.”

Although the report shows mostly good news for college affordability, Delisle said he’s not sure how well that optimism will carry over into public perceptions.

“There’s a desire to increase subsidies and funding for higher education, so if you’re in that industry, it doesn’t help to say, ‘Things are more affordable,’” he said. “The sad part of that, though, is it makes it difficult for people to acknowledge some of the successes of the government programs and our financial aid system and how much it does reduce prices and keep things affordable.”

Robert Kelchen, a professor of education and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee at Knoxville, said current market forces will likely keep tuition prices from rising in the near future. While that’s good news for students, colleges will have to consider what lower tuition means for their bottom lines in that environment.

“Colleges are squeezed right now, with inflation running much higher than tuition increases,” said Kelchen, who estimates more than 20 states had a tuition freeze in place during the last academic year. “Health insurance benefits, utilities—all of those costs are rising much more quickly than tuition prices are.”

Without money from increased tuition to offset those costs, that could mean layoffs, potential closures and spending out of reserves.

“It’s just a financial challenge when tuition is the single most important revenue source for many colleges,” Kelchen said, “and they’re struggling to increase tuition revenue.”

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