New College Board Trends Reports: Public College Tuition Increases Slow; Rapid Growth in Federal Grant Aid Ends

Tuition continues to rise, but while large increases in federal grant aid and tax benefits cushioned the impact of rising tuition prices from 2008-09 to 2010-11, total grant aid for students did not increase in 2011-12.

MIAMI, Oct. 24, 2012 /PRNewswire-USNewswire/ -- While the 4.8% ($399) 2012-13 increase in published in-state tuition and fees at public four-year colleges and universities across the nation was lower than that of recent years, the rapid growth in federal aid — which for a few years actually reduced the average net prices students paid — has ended.

With two-thirds of full-time undergraduate students receiving grant aid, the net prices most students pay are lower than the published prices. In 2012-13, full-time undergraduates at public four-year institutions receive an estimated average of $5,750 in grant aid from all sources and federal tax benefits to help them pay the average $8,655 published tuition and fees. The students pay an average net tuition and fee price of just over $2,900. After declining for two years in inflation-adjusted dollars, the net price has risen each year since 2009-10.

In 2011-12, undergraduate students across all sectors of higher education received an average of $13,218 per full-time equivalent (FTE) student in financial aid, including $6,932 in grant aid from all sources, $5,056 in federal loans, and $1,230 in a combination of tax credits and deductions and Federal Work-Study. Federal grant aid for undergraduates nearly doubled from $26 billion (in 2011 dollars) to $52 billion between 2008-09 and 2010-11, but it declined to $49 billion in 2011-12.

These are just some of the findings detailed in the College Board Advocacy & Policy Center's Trends in College Pricing 2012 and Trends in Student Aid 2012 reports that will be released at the College Board's Forum 2012 today.

Key Tuition and Fee Findings

• Average published tuition and fees for in-state students at public four-year colleges and universities increased from $8,256 in 2011-12 to $8,655 in 2012-13. The 4.8% increase in tuition and fees was accompanied by a $325 (3.7%) increase in room and board charges for students living on campus. At $9,205, room and board charges account for more than half of the total charges for these students.
• Average published tuition and fees for out-of-state students at public four-year colleges and universities increased by $883 (4.2%), from $20,823 in 2011-12 to $21,706 in 2012-13. Total charges, including room and board for students living on campus, average $30,911.
• Average published tuition and fees at private nonprofit four-year institutions increased by $1,173 (4.2%), from $27,883 in 2011-12 to $29,056 in 2012-13. Total charges, including room and board for students living on campus, average $39,518.
• Average published in-state tuition and fees at public two-year colleges increased by $172 (5.8%), from $2,959 in 2011-12 to $3,131 in 2012-13.

"Colleges and universities, along with state and federal officials, share the concern of students and families grappling with the rising price of a college education," said Sandy Baum, independent policy analyst for the College Board. "Continued efforts to rein in costs and to provide sufficient public subsidies — both to public colleges and to students with financial need — are vital to the future of our society and our economy."

The average annual increase in average published tuition and fees at private nonprofit four-year colleges and universities over the decade from 2002-03 to 2012-13 was 2.4% beyond inflation — lower than in either of the two preceding decades. But the 5.2% average growth rate in published tuition and fees at public four-year institutions was higher than that of either of the two preceding decades.

It is difficult to project future price increases. After a 9.3% real increase in 2009-10, the tuition increase in the public four-year sector has declined in each successive year. Similarly, large increases from 2002-03 through 2004-05 were followed by more moderate growth in prices. The same pattern occurred in the early 1980s and the early 1990s.

A key factor contributing to the rise in tuition at public colleges and universities is diminished state funding. Inflation-adjusted state appropriations per public full-time equivalent (FTE) student fell sharply for a fourth consecutive year in 2011-12. The 10% decline followed declines of 9% in 2008-09, 6% in 2009-10, and 5% in 2010-11. From 2007-08 to 2011-12, total state appropriations fell by 17% after adjusting for inflation, while public FTE enrollment increased by 12%. As a result, state appropriations per public FTE student declined by 26% during this time period.

Key Student Aid Findings

• Total education borrowing, including federal student and parent loans, as well as nonfederal loans, declined by 4% in real terms between 2010-11 and 2011-12 — the first decline in at least 20 years. However, the 2011-12 total of $113.4 billion was 24% higher than five years earlier.
• Over the decade from 2001-02 to 2011-12, the number of federal Stafford Loan borrowers almost doubled, while the average amount borrowed from subsidized and unsubsidized Stafford Loans combined increased by 8%, from $7,627 (in 2011 dollars) to $8,230.
• During the 2011-12 academic year, $236.7 billion in financial aid was distributed to undergraduate and graduate students in the form of grants from all sources, Federal Work-Study (FWS), federal loans, and federal tax credits and deductions. In addition, students borrowed about $8.1 billion from private, state and institutional sources to help finance their education.
• The number of students receiving Pell Grants — the central federal grant program providing funding for low- and moderate-income students — increased from 2.7 million in 1981-82 and 3.8 million in 1991-92 to 4.3 million in 2001-02 and to 9.4 million (37% of all undergraduates) in 2011-12.

The Trends in Higher Education series helps answer important questions about college affordability. A college education is critical to one's 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 new Trends reports will be presented to College Board members at a session at the organization's Forum 2012. Those who are unable to attend are invited to join the session via a live webcast.

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