Press Releases
Tuition Levels Rise but Many Students Pay Significantly Less than Published Rates
$105 Billion in Student Aid Buffers Total Costs for Many10/21/03
WASHINGTON, D.C. -- After grants are taken into account, the net price that the average undergraduate student pays for a college education is significantly lower than the published tuition and fees. Evidence of these net prices, along with this year's college costs and 2002-03 student aid funds, which continue to grow rapidly, are documented in reports released today by the College Board, Trends in College Pricing 2003 and Trends in Student Aid 2003.
During the 2003-04 academic year, college tuition and fees increased an average of $579 at four-year public institutions, $1,114 at four-year private institutions, and $231 at two-year public institutions. In 2002-03, $105 billion was distributed in student financial aid -- a record amount, which was $13 billion more than was distributed the previous year1. Total aid per full-time equivalent student averages about $9,100, with $3,600 of that amount in the form of grants.
College Board President Gaston Caperton stressed the importance of higher education, while acknowledging rising costs: "Those who oversee America's colleges and universities believe their institutional importance to economic recovery is undeniable, and they are, in large measure, correct. Still, all of us need to focus on the mounting and troubling hardships of financing an education."
Trends in College Pricing 2003
Average College Tuition and Fees
2003-04 vs. 2002-032
- At four-year public institutions, tuition and fees average $579 more than last year ($4,694 vs. $4,115, a 14.1 percent increase).
- At four-year private institutions, tuition and fees average $1,114 more than last year ($19,710 vs. $18,596, a 6.0 percent increase).
- At two-year public institutions, tuition and fees average $231 more than last year ($1,905 vs. $1,674, a 13.8 percent increase).
For the first time ever, the College Board looked at average net charges -- the average price that students actually pay after grant aid is considered. About half of all college students receive grant aid from at least one source, so there is considerable variation in the amounts individual students pay. With close to $42 billion in grant aid distributed in 2002-03, students enrolled in two-year public colleges received an average of almost $2,000 in grant aid and average grants for public four-year college students totaled about $2,400. At four-year private institutions, grant aid averaged $7,300 per student (see Trends in College Pricing 2003, Figure 6).
The College Board also looked at trends in total charges, which include tuition and fees, and room and board for the 2003-04 academic year. Because room and board charges increased at the lower rate of 6.6 percent at four-year public institutions, the increase in the average total charges at schools in that sector was 9.8 percent. At four-year private institutions, the total charges increased 5.7 percent (see Trends in College Pricing 2003, Table 1).
Average Total Charges: Tuition and Fees, Room and Board (TFRB) 2003-04 vs. 2002-03
- At 4-year public institutions, TFRB average $10,636 ($947 more than last year's $9,689-a 9.8% increase).
- At 4-year private institutions, TFRB average $26,854 ($1,451 more than last year's $25,403-a 5.7% increase).
Shrinking State Appropriations
Caperton noted that tuition and fee increases at public institutions are significantly affected by shrinking state appropriations. The data over time show that public sector tuition and fees tend to rise more rapidly when state appropriations decrease or grow at very slow rates (see Trends in College Pricing 2003, Figure 9). "Education leaders must be able to make persuasive cases to governors and legislators on the importance of reasonable and predictable levels of state support," said Caperton. "Levels of state funding have dipped to a dangerously low point in recent years. Campus leaders and their institutions of higher learning must, at all times, be deserving of public trust and public dollars."
This year's increases in tuition and fees at public colleges and universities are high by historical standards. However, the longer-term trend data do not indicate that we are in an era of unprecedented growth in college charges. In constant 2003 dollars, over the 10-year period ending in 2003-04, average tuition and fees rose 47 percent ($1,506) at four-year public colleges and universities and 42 percent ($5,866) at private colleges. This growth rate was lower than that of the preceding decade, when the real rates of increase were 54 percent and 50 percent, respectively.
In spite of rising college charges, the data show that a small percentage of students are enrolled in those colleges and universities with the highest levels of tuition and fees. Only 8 percent of students enrolled in four-year institutions face tuition charges of $24,000 or more per year. A quarter of full-time undergraduates attend two-year public colleges. Of those enrolled in four-year institutions, about 29 percent attend institutions charging less than $4,000 in tuition and fees, and almost 70 percent face tuition charges of less than $8,000 (see Trends in College Pricing 2003, Figure 1).
However, Caperton noted that there are very different circumstances facing families at the lowest income levels. While total college charges at four-year public institutions represent 5 to 6 percent of income for the 25 percent of families with the highest incomes, they represent 19 percent of family income for middle-income families, and 71 percent for low-income families (see Trends in College Pricing 2003, Figure 8).
"Higher education's case needs to be tied to legitimate social and economic objectives, and it must not be placed unfairly on the backs of students and their parents who bear costs," said Caperton. "All of us must do more to ensure that college remains affordable, and that more students who have the preparation and desire, have access to higher education."
Trends in Student Aid 2003
The College Board reports that student aid reached more than $105 billion in 2002-03, an increase of 15 percent over the preceding year, or 12 percent after adjusting for inflation (see Trends in Student Aid 2003, Table 1). This total includes most grants students receive, virtually all loans (including private loans that are not subsidized), work-study, and federal education tax credits. It does not include all of the subsidies students receive through income tax provisions and omits some private sources of grant aid. Grant aid grew by 10 percent in real terms in 2002-03, while education loan volume rose by 14 percent. Grant aid per full-time equivalent (FTE) student grew $300 or 9 percent in constant dollars this year, compared to a $551 or 13 percent increase in loans per FTE.
Pell Grants and Other Need-Based Aid
Pell Grant funding rose by 15 percent in inflation-adjusted dollars, but the average Pell Grant increased only 3 percent, providing an additional $123 per recipient. The $2,421 average Pell Grant covers less than 30 percent of average total charges (tuition and fees, room and board) at public four-year colleges and universities, while the maximum Pell Grant covers 41 percent of these charges (see Trends in Student Aid 2003, Figure 7). The Pell Grant program is considered the cornerstone of aid for low-income students.
While most federal grant aid is need-based, a decreasing portion of federal aid is distributed according to need. Combined, unsubsidized Stafford loans, federal loans to parents, and tax credits now constitute 43 percent of total federal aid. While all of these programs make college more easily affordable for families and students, they are not targeted toward low-income students.
Institutional Aid
Institutional grants account for nearly 20 percent of student aid. These funds have more than doubled in real terms over the past decade and constitute about 62 percent of the grant aid that undergraduates at private colleges receive, and over a quarter of the grant aid used by those attending four-year public institutions. However, as is the case for state grants, a quarter of which are now non-need-based, the proportion of institutional grant aid being awarded to the lowest-income students is declining.
While the boost in total aid is encouraging, Caperton said that the relative decline in need-based aid is disheartening. "Higher education was meant to open doors, not to close them, and it must remain a conduit to the American dream," he said. With 2004 marking the fiftieth anniversary of the creation of a national system of need-based aid, Caperton said: "We must take this opportunity to renew a national commitment to need-based aid. The upcoming reauthorization of the Higher Education Amendments gives us the opportunity to work toward removing financial barriers to higher education for low-income students."
The Value of a College Education
The price of college may cause concern among many families, but the costs associated with not going to college are likely to be much greater. Within each demographic group, median annual earnings for year-round, full-time workers with bachelor's degrees are about 60 percent higher than earnings for those with only a high school diploma. Over a lifetime, the gap in earnings between those with a high school diploma and a B.A. or higher exceeds $1,000,000 (see Trends in College Pricing 2003, Figure 13).
"In the United States, college is clearly an investment in the future that pays off over a lifetime in both monetary and nonmonetary terms," said Caperton. "Students from around the globe continue to seek admittance to leading colleges and universities in the United States. These unique and often complex institutions, with proven records of exceptional teaching, creative research, and needed service to society, are envied on the international scene."
Caperton also noted that families are getting more involved in the process of saving for college. Rapidly growing Section 529 college savings plans now contain assets of more than $35 billion, with an average value of $6, 573 per account (see Trends in Student Aid 2003, Figures 13 and 14).
"What all of us need to remember, and tell others, is that America's future and quality of life are tied to the benefits of higher learning, to what transpires in the lecture halls and labs across the country," said Caperton.
1. Trends in College Pricing 2003 reports tuition and fees for the current academic year, 2003-04. Trends in Student Aid 2003 provides the most complete data available on federal, state, and institutional aid to students and parents through the most recently completed academic year, 2002-03. Trends in Student Aid 2003 does not include projections of aid to students in 2003-04.
2. Trends in College Pricing 2003 is based on data collected in the College Board's Annual Survey of Colleges, 2003-04.
For more information, contact Jennifer Topiel or Chiara Coletti at (212) 713-8052