Tuition Increases Slow at Public Colleges, According to the College Board’s 2005...

Tuition Increases Slow at Public Colleges, According to the College Board’s 2005 Reports on College Pricing and Financial Aid

Grant Aid Continues to Increase but at a Slower Rate than Student Loans


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Washington, DC–(HISPANIC PR WIRE)–November 22, 2005–The College Board today announced that increases in tuition at public institutions are significantly smaller in 2005-06 than they were in the last two years and that increases at private four-year colleges are similar to last year’s.

Although average grant aid per student is growing, the increases are not large enough to prevent increased reliance on borrowing. While low-income students receive more grant aid, on average, than higher-income students, recent changes in student aid policies have benefited those in the upper half of the income distribution more than those in the lower half.

Evidence of these trends, along with average college prices and 2004-05 student aid data, is documented in the reports, Trends in College Pricing 2005 and Trends in Student Aid 2005. Also released today was a supplement to Education Pays 2004: The Benefits of Higher Education for Individuals and Society, which provides updated information on the social and economic benefits of higher education and on both the progress and the persistent gaps in college participation.

“With this annual data, the College Board aims to illuminate important issues related to access and affordability in higher education, especially for the growing population of students from low-income families who are aspiring to go to college,” said Gaston Caperton, president of the College Board. “It is heartening to see new efforts from colleges and universities, as well as other educational organizations, focused on finding ways to reduce college costs, and we trust that those efforts will continue and increase. In the coming years, our country cannot afford to have segments of our population left out of higher education.”

Trends in College Pricing 2005 (1)

Published tuition and fee levels are an important but imperfect indicator of the price of a college education. The net price that students and families actually pay for college after considering grant aid and tuition tax credits and deductions provides a better measure of affordability. In addition, published prices vary considerably among institutions within each sector. Trends in College Pricing includes information on average prices by region and by state. It also includes information on both the range of published prices and the distribution of price increases across institutions.

Average College Tuition and Fees 2005-06 versus 2004-05

— At four-year private nonprofit institutions, tuition and fees average $1,190 more than last year ($21,235 versus $20,045, a 5.9 percent increase). Total charges average $29,026 ($1,561 more than last year’s $27,465, a 5.7 percent increase; see Trends in College Pricing, Table 1).

— At four-year public institutions, tuition and fees average $365 more than last year ($5,491 versus $5,126, a 7.1 percent increase). Total charges average $12,127 ($751 more than last year’s $11,376, a 6.6 percent increase).

— At two-year public institutions, tuition and fees average $112 more than last year ($2,191 versus $2,079, a 5.4 percent increase).

Although the report does not provide a complete analysis of the factors driving increases in tuition and fees, it does provide information on some of the costs faced by higher education institutions. In addition, as in past years, the report shows that the largest average increases in tuition and fees at public four-year colleges and universities occur during periods of declines or slow growth in the level of state instructional appropriations per student.

As Caperton emphasized, “Public investment in higher education is all the more important as rising economic powers commit increased resources toward research and education. The United States cannot afford to fall behind other industrialized nations.”

What Students Actually Pay

Net prices vary even more than published prices. Trends in College Pricing reports on the average price net of grants and federal education tax credits and deductions. Net prices declined or rose slowly during the early years of the 1995–2005 decade, but have been rising in all three sectors since 2001-02. Over the past decade, in both public and private institutions, net price as a percentage of income has risen significantly only for those in the lower half of the income distribution.

Enrollment Patterns

New to the reports this year is information on nontraditional enrollment patterns. Only a fraction of undergraduates fit the traditional model of students between the ages of 18 and 24 who are enrolled full-time in college classrooms. Almost 40 percent of undergraduates are over the age of 24. About 40 percent of undergraduate students are enrolled part-time.

Trends in Student Aid 2005 (2)

This year’s College Board data on financial aid show that almost $129 billion in student aid was distributed in academic year 2004-05—almost $10 billion more than the previous year. In addition, students borrowed almost $14 billion dollars from nonfederal sources to help finance their education.

Average aid per student increased by 3 percent between 2003-04 and 2004-05, after adjusting for inflation. Between 1996-97 and 2001-02, total grant aid for undergraduates grew twice as fast as total borrowing, but since 2001-02, that pattern has reversed. In 2004-05, the percentage of total undergraduate aid in the form of grants declined for the third year in a row. Undergraduates received 46 percent of their aid in the form of grants. Graduate students received 22 percent of their aid in the form of grants.

After three years of large increases, the number of Pell Grant recipients increased by only 3 percent in 2004-05, and the constant dollar value of the average Pell Grant declined for the second consecutive year. The maximum Pell Grant, which covered 35 percent of average public four-year tuition, fees, and room and board in 1994-95 and 42 percent in 2001-02, covered only 36 percent in 2004-05.

Socioeconomic Status and Access to College

Several factors have led to students in the upper half of the income distribution benefiting more from changes in student aid policies than those in the lower half. Forty-three percent of the education tax credits and about 70 percent of the benefits of the federal tuition tax deduction go to taxpayers with incomes of $50,000 or higher. Some states and institutions have also increased the proportion of aid they allocate on the basis of academic credentials rather than financial need.

Education Pays 2005, the supplement to last year’s report on the benefits of higher education for individuals and society, shows that though college enrollment rates for high school graduates from low-income families are significantly lower than enrollment rates for students from middle- and upper-income families, the enrollment gaps have declined over time.

“Although there are more students from low-income families with college aspirations and more first-generation college students, we need to do a better job of seeing these students through to graduation,” Caperton said. “To that end, the College Board recently established the Task Force on College Access for Low-Income Students to examine this and other issues.”

Education Pays 2005 also documents persistent gaps in graduation rates. Even among students with very high levels of academic achievement, those from families with low socioeconomic status are significantly less likely to enroll in college than their peers from more privileged backgrounds. Moreover, there are large gaps in college completion rates across socioeconomic groups.

“Socioeconomic status and college success cannot be separated from the serious problem of unequal academic opportunity within our schools,” Caperton said. “In addition to increasing the affordability of higher education, we need to make sure that students from all backgrounds have the opportunity to prepare for college. As well, all families should be made aware of the financial aid process and the long-term benefits, both financial and personal, of investing in a college education.”

1. Trends in College Pricing 2005 is based on data collected in the College Board’s Annual Survey of Colleges, 2005-06. It reports tuition, fees, and other charges for the current academic year, 2005-06.

2. Trends in Student Aid 2005 provides the most complete data available on federal, state, and institutional aid to students and parents through the most recently completed academic year, 2004-05.

Tuition Increases Slow at Public Colleges, According to the College Board’s 2005 Reports on College Pricing and Financial Aid