Admissions & Student Aid

Rise in Sticker Price at Public Colleges Outpaces That at Private Colleges for 5th Year in a Row

October 26, 2011

The State of California enrolls about 10 percent of the country's full-time students attending public four-year colleges, and about 15 percent of those at public two-year colleges. So when the state's public colleges have a big tuition hike—as they did this year—it has a big impact on the average tuition increase at public colleges across the country, says a new report from the College Board.

For the fifth year in a row, the percentage increase in average published tuition and fees at public four-year colleges was higher than it was at private ones, according to the report, "Trends in College Pricing 2011." The report, released on Wednesday, examines annual changes in colleges' sticker prices, as well as the net prices students pay after grant aid and tax benefits are considered. A companion report, "Trends in Student Aid 2011," looks at the money that helps students meet those growing prices. (The pricing report looks at data through this academic year, while the student-aid report has information through 2010-11.)

The average price for tuition and fees at public four-year colleges was $8,244 for in-state students in 2011-12, up from $7,613 in 2010-11, an 8.3-percent increase. That percentage change drops to 7.0 percent if California—which had a 21-percent increase in tuition in that one-year period—is excluded.

More on the College Board Reports

EXPLORE AND COMPARE: Tuition Over Time, 2000-2011
SEARCHABLE DATABASE: Tuition and Fees Across the Country Premium Link
STICKER SHOCK: Who Charges More Than $50K

The price increase for public two-year colleges was also heavily affected by California. Average tuition and fees at public two-year colleges was $2,963 for in-state students in 2011-12, up from $2,727 the year before, an 8.7-percent increase. That increase drops to 7.4 percent when California's 37-percent increase is excluded.

At private four-year colleges, published tuition and fees rose from $27,265 in 2010-11 to $28,500 in 2011-12, a 4.5-percent increase, the report found.

Tuition increases at public colleges have been a source of concern across the country as states grapple with budget cuts, and "there's a tendency to look at national numbers," said Sandy Baum, an independent policy analyst for the College Board and an author of the reports, who also contributes to a Chronicle blog. Yet, she said, the price increases facing students vary significantly from state to state. In Connecticut and South Carolina, for example, tuition at public four-year colleges grew by only about 2.5 percent; and in Montana and North Dakota, tuition and fees at public two-year colleges grew by less than 2 percent.

Factoring in Grants

Of course, most college students don't actually pay those sticker prices: About two-thirds of full-time undergraduates receive grant aid. The College Board also looks at net price, which it defines as the average price paid by all full-time students, whether they receive student aid or not, after grants and tax benefits are subtracted from sticker price.

The average net tuition and fees at public four-year colleges came to $2,490 in 2011-12; at private four-year colleges, it was $12,970. The report also examines net price once room and board costs are considered. People need to live and eat whether they are students or not, Ms. Baum says, but she uses these costs as a stand-in for students' foregone earnings during college.

The pricing report also takes a look at some of the major revenue sources and cost pressures influencing college prices, and the picture is hardly rosy. State appropriations per full-time-equivalent student dropped by 4 percent in constant dollars in 2010-11, after dropping 6 percent in 2009-10 and 9 percent in 2008-9.

And in 2010, average American income in every quintile of the income distribution was lower in inflation-adjusted dollars than it had been a decade before.

The report does point out that endowments at private nonprofit colleges grew in value by about 9 percent, after adjusting for inflation, in 2009-10, after two years of declines.

Change in Tax Credits

The biggest change in student aid for the 2010-11 year was the American Opportunity Tax Credit, introduced in 2009, says the student-aid report.

Sometimes, people argue that tax credits should not be considered financial aid, Ms. Baum said, but the College Board counts them because they are a government subsidy just as federal grants are. And tax benefits reach a larger number of people than the Pell Grant does: about 12 million tax filers received education tax credits or deductions in 2009-10 (the most recent year for which IRS data is available), while about 9.1-million students received Pell Grants in 2010-11.

Historically, tax credits have been seen as a benefit for the middle class, Ms. Baum said, but that is not the case with this new credit, which reaches a much broader swath of the college-going population. Because the American Opportunity Tax Credit is partially refundable for families who do not owe taxes, it can reach lower-income families, and the income limit, $180,000 for joint filers, is higher than it has been for other education tax benefits. As a result, the percentage of tax savings from all higher-education tax credits and deductions that goes to families with incomes above $100,000 grew from 18 percent to 26 percent in one year.

The share of student aid provided by the federal government has grown in recent years, from 68 percent in 2005-6 to 74 percent in 2010-11. The federal programs that have grown the most quickly are the Pell Grant program, grants for military veterans, and tax benefits, the report says.

About 56 percent of students who graduated in 2009-10 from the public four-year colleges where they began their studies had borrowed student loans, with an average debt of $22,000. Sixty-five percent of that year's graduates who finished at the private four-year colleges where they began their studies borrowed, and their average debt was $28,100.

The College Board also included information on students who borrow but do not complete their degrees. About 10 percent of dependent students who last attended a public four-year college, but did not graduate, had borrowed more than $28,000. About 17 percent of students who were last enrolled at a private college and did not graduate had borrowed at least that amount, as had 15 percent of students who last attended a for-profit college and did not graduate.

Rising Prices at Public and Private Four-Year Colleges, 2000-1 Through 2010-11
Private four-year colleges have higher sticker prices, and higher net prices (what students pay after grant aid and tax benefits), than do public four-year colleges. But in recent years, the percentage increase in average published tuition and fees has been higher at public colleges than at private ones

Published Tuition and Fees

Net Tuition and Fees

Source: The College Board