Growth in Net Price Exceeds Inflation

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December 1, 2005

The percentage change in financial aid for all major sectors of higher education from 1999-2002 was higher than the percentage change in the price of attendance, according to the National Center for Education Statistics report “Changes in Patterns of Pricing and Financial Aid.” This finding implies that the net price (price of attendance less financial aid) is growing at a slower rate than the price of attendance as a result of financial aid. Although this is good news for students, other trends point to a more problematic future. For example, grant aid has been growing at a slower pace than in previous years and net price has exceeded inflation for the period for nearly every sector.

Here are some of the report's highlights:

For all sectors other than public community colleges, the median price of attendance increased. However, median aid amounts increased at a faster rate. Both price of attendance and aid increased at a faster rate than inflation.
For all sectors other than public community colleges, the three-year increase in net price exceeded inflation for the period, by 2.8 percent for four-year public institutions, 3.2 percent at for-profit colleges, and 4.4 percent at four-year independent institutions. The increase at two-year public institutions trailed inflation by 1.3 percent over the period.
Among four-year institutions, those that were “very selective” had higher median net prices (all aid) than the median for all institutions.

The full report is available on the NCES Web site.