College Costs Outpace Inflation Rates

By JONATHAN D. GLATER
New York Times
Published: October 23, 2007

Tuition and fees at public and private universities have risen this year at more than double the rate of inflation, with prices increasing faster at public institutions, the College Board said in reports released yesterday.
These increases in the cost of higher education continue to drive up the amount that students and families borrow, with the fastest growth in private loans, the reports found.
Tuition and other costs, not including room and board, rose on average to $6,185 at public four-year colleges this year, up 6.6 percent from last year, while tuition at private colleges hit $23,712, an increase of 6.3 percent. At public two-year institutions, average tuition and fees rose 4.2 percent to $2,361.
Last year, tuition and fees at public institutions rose 5.7 percent; at private ones, 6.3 percent and at public two-year institutions, 3.8 percent.
“The average price of college is continuing to rise more rapidly than the consumer price index, more rapidly than prices in the economy,” Sandy Baum, a co-author of the report who is a senior policy analyst for the College Board and a professor at Skidmore College, told reporters at a news conference yesterday.
Ms. Baum added that the prices “are probably higher than most of us want.”
Those price increases reflect increases in the sticker price that colleges advertise, though, Ms. Baum said, the average student does not pay that full amount. At public universities, the average student gets about $3,600 in grants and tax benefits, lowering the actual cost to around $2,600. At private institutions, aid totals about $9,300, bringing the cost to $14,400.
But even the net price, after taking into account grants and other forms of aid, is rising more quickly than prices of other goods and than family incomes. In recent years, consumer prices have risen less than 3 percent a year, while net tuition at public colleges has risen by 8.8 percent and at private ones, 6.7 percent.
The changes in tuition at public institutions closely track changes in financing they receive from state governments and other public sources, the report found. When state and local support for public colleges declined over the last seven years, tuition and fees rose more quickly, and as state support has grown of late, the pace of increases fell, it said.
“We hope that state governments — which really set tuition prices at most public colleges and universities — will do their part to reinvest in higher education,” David Ward, president of the American Council on Education, said in a statement released by the College Board.
Private loans, those not guaranteed by the federal government, continued to be the fastest-growing form of borrowing, totaling more than $17 billion in the 2006-7 academic year. In the same period, students and their families borrowed $59.6 billion in federally guaranteed loans.
The report also included data on loans by full-time students at for-profit institutions, finding that in 2003-4, they took out an average of $6,750 in loans, approaching the $7,320 borrowed by students at private colleges and exceeding the $5,390 borrowed by those at public four-year institutions and $3,180 at public two-year ones.
“College officials tell us not to worry because there’s plenty of financial aid,” said Robert Shireman, executive director of the Project on Student Debt, a nonprofit organization financed largely by the Pew Charitable Trusts. “But that aid is clearly not going where it’s needed, because student debt is up by an even greater margin than tuition — an 8 percent increase from 2005 to 2006, by our accounting.”
The report prompted Representative George Miller, Democrat of California and chairman of the House Committee on Education and Labor, to pledge to try to “rein in” tuition increases. Mr. Miller added, “Making college more affordable and accessible for all qualified students is a top priority.”
Last year the average Pell grant, the federal government’s grant to the neediest students, declined for the second year in a row, after taking into account the effects of inflation. Ms. Baum, the economist, said she expected that decline to stop because Congress recently enacted increases in the maximum amount of the grant, which held constant at $4,050 for four years but will rise to $5,400 over the next five years.
The College Board’s study drew on responses from 2,976 institutions to questionnaires sent out last October, as well as government agencies and organizations like the National Association of College and University Business Officers.
According to the study, the cost of room and board has also continued to rise and at many public colleges dwarfs actual tuition. At four-year public institutions, tuition, room and board on average now total $13,589; at private colleges, $32,307.
Ms. Baum emphasized that while the College Board reports provided information on the general cost of higher education, costs varied around the country as well as at different kinds of colleges.
“The average numbers don’t tell the story for any individual student,” Ms. Baum said.