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College Price Increases Keep Pace With Inflation

November 6, 2008

The College Board has released its annual "Trends in College Pricing" survey report, which this year shows that the listed price of tuition and fees at the nation’s postsecondary institutions generally kept pace with rising inflation as measured by the Consumer Price Index (CPI). In addition, a companion report, "Trends in Student Aid," shows that total grant, work-study, and education tax benefits to college students rose to $143.4 billion, a record high.

In the 2008-2009 academic year, average tuition and fee listed prices for undergraduates attending four-year private non-profit colleges and universities rose 5.9%, to $25,143, while listed in-state undergraduate tuition and fee prices at four-year public institutions increased 6.4% to $6,585. At community colleges, the average listed in-district tuition and fee price rose 4.7% to $2,404. In each case, the average price increase was just slightly higher than the 5.6% jump in the CPI as of July 2008.

Tuition, fees, room, and board prices for full-time undergraduates attending four-year public colleges and universities also rose at nearly the rate of inflation (5.7%) to $14,333. These charges to full-time undergraduates at four-year private non-profit institutions rose 5.6% to $34,132.

It should be noted that the tuition and fee and total cost of attendance figures were collected by the College Board in October 2007. Since then, at least 11 states have announced mid-year tuition and fee hikes in their in-state undergraduate tuition and fee prices, according to the Center for Budget and Policy Priorities. The College Board data does not reflect these mid-year tuition increases.

Financial aid for full-time students appears to be rising at nearly the same rates as the price increases, suggesting that higher education institutions and the federal and state governments are increasing their efforts to mitigate the possible adverse effects of rising tuition on the neediest undergraduates. The "Trends in Student Aid" report reveals total aid to all college students (undergraduates and graduate/professional combined) rose roughly 6% between 2006-2007 and 2007-2008. Institutionally funded grants increased almost 9%, to $29.1 billion. Collectively, colleges and universities provide 42% of the total grant aid awarded to postsecondary students; federal grant programs, by comparison, provide 31% of the total.

Rising institutional aid, combined with federal college tuition tax credits and increases in state and federal grant appropriations, suggest that a large number of students are actually paying less for college than the published tuition and fee charges indicate. The College Board estimates that in 2008-2009, full-time students at four-year private non-profit colleges and universities receive an average of $10,200 in grant aid from all sources and federal tax benefits. This aid reduces the average net tuition and fee price that full-time undergraduates pay to about $14,900. Full-time students attending four-year public colleges and universities receive an estimated average of $3,700 in grant aid from all sources and federal tax benefits, which reduces the average tuition and fees they pay to about $2,900.

The one source of aid to college students that appears to be declining is private (non-governmental) student loans. Between 2006-2007 and 2007-2008, the amount of private loans received by postsecondary students fell 1%, from $19.2 billion to $19.1 billion. This decline may reflect the freezing of the credit markets and the increasing use of federal student loans.

NACUBO staff resource: Ken Redd, Director, Research & Policy Analysis