New College Board Trends Reports: Price of College Continues to Rise Nationally, with Dramatic Differences in Pricing Policies from State to State

Increases in federal tax credits, combined with growth in grant aid, help some students cover rising expenses

NEW YORK, Oct. 26, 2011 /PRNewswire-USNewswire/ --Increases in college prices for the 2011-12 academic year reflect the continued impact of a weakened economy as well as state funding that has not kept pace with the growth in college enrollments. For the fifth consecutive year, the percentage increase in average tuition and fees at public four-year colleges and universities was higher than the percentage increase at private nonprofit four-year colleges. While national data provide an important snapshot of overall college prices, this year's data also reveal substantial state-to-state pricing variations underlying the national averages.

Student aid plays an important role in cushioning the impact of increases in published prices.  New data reveal that the American Opportunity Tax Credit (AOTC), implemented in 2009, increased the subsidies provided to students through the combination of education tax credits and deductions from about $7 billion in 2007-08 to an estimated $14.8 billion in 2009-10 and 2010-11.

These are just some of the findings detailed in the College Board Advocacy & Policy Center's Trends in College Pricing 2011 and Trends in Student Aid 2011 reports that will be released at the College Board's Forum today.

The national increase in tuition and fees at public four-year colleges and universities for the 2011–12 academic year was influenced substantially by the State of California. Nationally, the increase for the public four-year sector was 8.3 percent between 2010-11 and 2011-12 including California but only 7.0 percent excluding it. Similarly, the national increase for public two-year institutions was 8.7 percent including California and 7.4 percent excluding it.

California, which enrolls about 10 percent of the nation's full-time public four-year college students, had the highest percentage increase in published in-state tuition and fees (21 percent) for that sector in 2011-12. Arizona and Washington increased published in-state tuition and fees at public four-year institutions by 17 percent and 16 percent, respectively. In contrast, increases in Connecticut and South Carolina were about 2.5 percent.

Key Tuition and Fee Findings:

• Published in-state tuition and fees at public four-year institutions average $8,244 in 2011-12, $631 (8.3 percent) higher than in 2010-11. Average total charges, including tuition and fees and room and board, are $17,131, up 6.0 percent.
• Published out-of-state tuition and fees at public four-year colleges and universities average $20,770, $1,122 (5.7 percent) higher than in 2010-11. Average total charges are $29,657, up 5.2 percent.
• Published in-state tuition and fees at public two-year colleges average $2,963, $236 (8.7 percent) higher than in 2010-11.
• Published tuition and fees at private nonprofit four-year colleges and universities average $28,500 in 2011-12, $1,235 (4.5 percent) higher than in 2010-11. Average total charges, including tuition and fees and room and board, are $38,589, up 4.4 percent.
• Published tuition and fees at for-profit institutions average an estimated $14,487 in 2011-12, 3.2 percent higher than in 2010-11.

"While the importance of a college degree has never been greater, its rapidly rising price is an overwhelming obstacle to many students and families," said College Board President Gaston Caperton. "Making matters worse is the variability of price from state to state. This report is yet another reminder that we must do more to help disadvantaged students, many of whom face additional barriers to college that are not financial. The least we can do is slow the skyrocketing price of college and put the dream of higher education back within reach of every American."

Despite these increases in tuition, it is important to note that published charges do not reflect the prices most students pay. About one-third of full-time students pay without the assistance of grant aid, and some of these students receive federal tax credits and deductions to help cover expenses.

Average net tuition and fees, after subtracting grant aid from all sources and federal education

tax credits and deductions, is about $170 higher in 2011 dollars for public four-year college and university students than it was five years ago, but lower in all other sectors.  

Key Student Aid Findings

• As a result of the introduction of the American Opportunity Tax Credit in 2009, education tax credits and tuition deductions per student increased by more than 80 percent in inflation-adjusted dollars between 2007-08 and 2010-2011.
• The distribution of subsidies from federal education tax benefits changed considerably with the introduction of the American Opportunity Tax Credit in 2009. The percentage of savings from credits and deductions going to taxpayers with incomes below $25,000 increased from 5 percent in 2008 to 17 percent in 2009. The percentage of savings going to those with incomes above $100,000 increased from 18 percent in 2008 to 26 percent in 2009.
• In 2010-11, undergraduate students received an average of $12,455 per full-time equivalent (FTE) student in financial aid, including $6,539 in grant aid, $4,907 in federal loans, and $1,009 in a combination of tax credits and deductions and Federal Work-Study (FWS).
• Graduate students received an average of $23,955 per FTE in aid, including $6,750 in grant aid, $16,423 in federal loans, and $782 in a combination of tax credits and deductions and Federal Work-Study (FWS).
• From 2009-10 to 2010-11, grant aid per FTE undergraduate student increased by an estimated 7 percent, while federal loans declined by 2 percent.
• These changes followed increases of 20 percent in average grant aid per FTE undergraduate student and 10 percent in average federal loans between 2008-09 and 2009-10. Over the three years from 2007-08 to 2010-11, both grant aid and federal loans per student increased by about 30 percent in inflation-adjusted dollars.

"In an era of persistently high unemployment, family incomes that fail to keep up with inflation, and savings that have been eroded by declining stock market values, colleges are relying on tuition for an increasing share of their revenues," said Sandy Baum. "At a time when students and families are ill-equipped to manage additional expenses, student financial aid is more important than ever."

The increasing price of college has not deterred students from enrolling. Total postsecondary enrollment increased by about 22 percent between 2005-06 and 2010-11. Full-time enrollment increased more rapidly than part-time enrollment. The largest increases have been in public two-year and for-profit institutions. The fact that students are finding ways to finance their education is largely explained by the understanding that more education generally leads to higher earnings throughout life.

The Trends in Higher Education series helps answer important questions about college affordability. A college education is critical to long-term financial security, yet many students and families face real financial barriers to college enrollment and success. The data on college prices and student aid included in these reports create a context for evaluating public policies designed to increase educational opportunities.

The information from the newest Trends reports will be presented to College Board members at a session at the organization's yearly Forum. Those who are unable to attend are invited to join the session via a live webcast.

For any questions about the reports, please contact Carly Lindauer, [email protected], 212-713-8052.

The College Board Advocacy & Policy Center was established to help transform education in America. Guided by the College Board's principles of excellence and equity in education, the Center works to ensure that students from all backgrounds have the opportunity to succeed in college and beyond. Critical connections between policy, research and real-world practice are made to develop innovative solutions to the most pressing challenges in education today. Drawing from the experience of the College Board's active membership consisting of education professionals from more than 5,900 institutions, priorities include: College Preparation & Access, College Affordability & Financial Aid, and College Admission & Completion.

SOURCE The College Board