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Trends Reports Point to Continued Increases in Prices, Net Tuition, and Borrowing

October 30, 2007

The College Board’s 2007 reports on trends in college pricing and student aid show that average published tuition and fees increased again this year and that the annual growth continues to outpace inflation.  However, the College Board puts the increases in a broader context and points out that the majority of undergraduates are concentrated in lower-priced institutions and most college students do not pay the published price.  For example, 56 percent of full-time undergraduates at four-year institutions in 2007-08 attend institutions that charge less than $9,000 per year, with 32 percent attending institutions that charge less than $6,000. Only 6 percent of full-time undergraduates attend a four-year institution that charges $33,000 per year or more.  Furthermore, about half of all college students and two-thirds of full-time undergraduates receive grant aid, reducing the price of their tuition. 

Average Published Tuition and Fees
Average published tuition and fees increased across all sectors in 2007-08.  Over the past 30 years, increases in published average tuition and fees have been the most rapid at public four-year institutions and the slowest at public two-year institutions.

  • At public four-year institutions, tuition and fee charges in 2007-08 for in-state students average $381 more than in 2006-07 (a 6.6 percent increase). This represents a slightly larger increase than experienced between 2005-06 and 2006-07, when the published average tuition and fees increased 6.3 percent.

  • At independent four-year institutions, tuition and fee charges in 2007-08 average $1,404 more than in 2006-07 (a 6.3 percent increase). This is a larger increase than last year, when published average tuition and fees for this sector increased 5.9 percent.

  • At public two-year institutions, tuition and fee charges in 2007-08 average $95 more than in 2006-07 (a 4.2 percent increase). This is a slightly larger increase than experienced the previous year, when published average tuition and fees increased 4.1 percent.




Net Price

Net price--or what students actually pay--is also increasing.  For these reports, net price is calculated as the average tuition and fee rate less average grant aid and tax benefits.

  • At public two-year institutions, the average net price paid by full-time undergraduate students is about $320, with grant aid and tax benefits covering approximately 86 percent of the published tuition and fee rate in 2007-08.

  • At public four-year institutions, the average net price paid by in-state full-time undergraduate students is about $2,600; grant aid and tax benefits cover approximately 58 percent of published tuition and fees and 26 percent of tuition, fees, room, and board charges.   

  • At independent four-year institutions, the average net price paid by full-time undergraduate students is about $14,400; grant aid and tax benefits cover approximately 39 percent of published tuition and fees and 29 percent of published tuition, fees, room, and board charges. 

Student Aid
Grant aid from all sources to undergraduate and graduate students increased by 82 percent from 1996-97 to 2006-07, after adjusting for inflation.  However, the proportion of undergraduate funding in the form of grants continues to decline.  Almost half of the student aid used by undergraduate students to finance their education is in the form of loans, with undergraduate students borrowing $39.1 billion in 2006-07 through federal loan programs.  Over the course of the decade, however, subsidized federal loans declined from 54 percent to 32 percent of total educational loans, while the private loan volume grew.  Students are continuing to rely even more heavily on private loans to pay for college.  In 2006-07, private student loans comprised 24 percent of all borrowing, compared to a decade ago, when private loans made up only 6 percent of borrowing.

College Savings Plans
To begin saving for future college tuition payments, families have been increasingly investing in state-sponsored Section 529 plans.  In 2007, 10 million state-sponsored college savings accounts held an average of $12,257.  Over the course of a decade, assets within these accounts have grown from $2.4 billion in 1996 to $122 billion in 2007.

The College Board’s 2007 Trends in College Pricing and Trends in Student Aid contain a wealth of information on the financing of postsecondary education.  Both reports are available to download at no charge from the College Board’s Web site.