Rising Costs of College

Insights from the College Board’s Annual Report

Rising Costs of College
August 14, 2017

The most recent Trends in College Pricing report from the College Board brings the startling news that college costs are rising. In other breaking news, the sun is rising in the east and there is trouble in the Middle East.

It’s easy to poke fun at that obvious conclusion, but there are actually a lot of useful insights to be gained by digging further into the report. For one thing, while college costs have risen overall, the 2013-2014 school year increase at public institutions (four-year) for in-state fees and tuition was only 2.9% – less than two-thirds of the rate of increase from 2012-2013 and the smallest percentage increase since the 1980’s. Now that is startling news!

Unfortunately, student aid has also fallen off compared to increases from 2009-2011, meaning it is still a struggle for many kids to attend college even with the slower growth rates in costs.

The data in the report is classified in several different ways for analysis, but the majority of the data is divided into five classifications: Public Two-Year, Public Four-Year In-State, Public Four-Year Out-of-State, Private Non-Profit Four-Year, and For-Profit.

Looking at the four-year public universities, we see that the 2.9% increase for in-state tuition raised the average to $8,893 – smaller than the average room and board component of $9,498, which rose 3.6% over the last year.

The average tuition and fees for private four-year universities topped $30,000 in 2013-2014 at $30,094, and combined with an average $10,823 room and board and estimated $3,733 in other expenses, that raises the cost to $44,750 per year (compared to the average total cost of $22,826 for four-year public colleges in-state and $36,136 out of state. A recent study found at least 50 American colleges and universities are now charging students more than $60,000 per year in tuition, room and board.

Two-year colleges are still a relative bargain at $15,933 in average total costs. Strangely enough, for all the bad press they have received, for-profit universities had the smallest increase in tuition and fees, with only a $70 increase reflecting a change of 0.5%

With four–year costs well into the hundreds of thousands of dollars, it is no surprise that almost two-thirds of full time students use the assistance of grant aid. Federal tax credits and deductions are also widely used to support the costs.

The report also calculates the net cost by subtracting the aid provided, thus giving a reasonable estimate of the average amount that students pay by category, and provides data from past years for comparison. This knocks down the tuition, fees, room, and board costs as follows by each category:

  • Public Two-Year College – Reduced by 44.8%, down from $10,730 to $5,920.

  • Public Four-Year, In-State College – Reduced by 34.3%, down from $18,390 to $12,620.

  • Private Four-Year College – Reduced by 43.1%, down from $40,920 to $23,290.

To find the total net costs, subtract the unadjusted tuition, fees, room and board number from the average total costs for each category listed above, and add them back to the adjusted tuition, fees, room, and board costs.

The report also contains interesting information on breakdowns by region and income group, as well as assessments of average institutional revenues and expenses, public appropriations components, and endowments. For more detailed information, you can download the full report at http://trends.collegeboard.org/sites/default/files/college-pricing-2013-full-report.pdf.

While the report is interesting, for most prospective students and parents, it probably is not going to change their actions in any way except to evaluate the relative bargain that their chosen school provides. Your focus will remain where it should be – seeking the best college that suits your child’s needs, and working all the possible financial aid and scholarship possibilities to help pay for it.

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