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New Report Shows Recent Trends in Postsecondary Revenues and Expenses

June 1, 2012

The report, Condition of Education 2012 is published annually by NCES. The 2012 report uses the latest data to present 49 indicators on the status and condition of education at all levels. The 2012 report places particular focus on recent trends in postsecondary revenues and expenditures.  These indicators show that while total revenue per full-time equivalent student decreased at 4-year public and private non-profit schools, total expenses were on the rise, driven by increasing instructional and student services costs.

Trends in Postsecondary Revenues

At four-year public colleges and universities, revenue from tuition and fees per full-time equivalent (FTE) student increased nearly 15 percent in inflation-adjusted value from 2004-05 to 2009-10, while state appropriations fell 13 percent. As a result, tuition and fees increased from approximately 16 percent of total revenue to 19 percent, while state appropriations fell from 22 percent to 20 percent. Total revenue per FTE student fell 2004 by 1 percent at four-year public institutions.

At four-year private non-profit higher education institutions, total revenue per FTE fell nearly 4 percent in the 2004-05 to 2009-10 time span. Tuition and fee revenue for these institutions increased 9 percent, but revenue from investment returns dropped 25 percent. Revenue drops at four-year private non-profits were also fueled a reduction in private gifts, grants, and contracts, which declined 5 percent.  As a result, tuition and fees as a share of total revenue for independent institutions increased from 29 percent to 33 percent, while investment returns fell from 22 percent to 17 percent.

Further revenue trends from other higher education sectors include:

  • Total revenue per FTE at public two-year institutions (community colleges) rose 19 percent, despite a sharp decline in local government appropriations.  Tuition and fee dollars collected by these schools rose 16 percent, while state appropriations were essentially flat and local government appropriations fell 12 percent.
  • Two-year private for-profit institutions experienced a experienced a 53 percent increase in total revenue, driven by a 65 percent gain in tuition and fee dollars. Federal government funds to these proprietary institutions also rose sharply (96 percent), offsetting decreased revenue in auxiliary services, investment returns, and other sources.

Trends in Postsecondary Expenses

While revenue declined at four-year public institutions, expenditures per FTE for institutionally funded scholarships and fellowships to students rose 29 percent.  In contrast, the amounts for academic instruction increased just 1 percent, and the amounts devoted to research declined roughly 4 percent. Total expenditures for four-year colleges grew only 0.5 percent. Private non-profit four-year institutions reported a 5 percent increase in total amounts spent, with instruction rising 5 percent while research spending was essentially flat. Spending on institutional grant aid to students actually declined in inflation-adjusted value, but this may have occurred because depreciation and other deductions are included in the schools' grant spending figures.

Other key expenditure findings include:

  • Community colleges reported a 1 percent gain in total expenditures per FTE. Inflation-adjusted amounts spent on instruction fell 8 percent, but expenditures for student scholarships and fellowships increased 64 percent.
  • Community colleges devoted 35 percent of their total expenditures to instruction, compared with 25 percent for four-year public institutions and 33 percent at four-year private non-profit colleges and universities.
  • For-profit (proprietary) two-year schools saw a 6 percent decline in instructional expenditures per FTE but a 65 percent increase in grant aid to students. Overall expenses for these institutions fell 8 percent a negligible amount on research ($8 per FTE student) .
  • In each sector, two-year schools spent a larger portion of their budgets on instruction than four-year schools.  However, only at four-year private nonprofit institutions did per FTE spending on instruction increase.
The dichotomy in instructional spending between four-year private nonprofit institutions and all others may be due to the differences in the types of academic programs non-profit institutions offer, rather than any broad differences in educational efforts being undertaken by nonprofit and public sectors.
A full copy of the Condition of Education report is available at no charge from the NCES Website.