According to two newly released reports by the College Board, national college tuition rate increases have outpaced the total grant aid available to students, although colleges have slowed down the rate of tuition growth. View the report series at Trends in Higher Education here.
In sharp contrast to tuition rate surges at public four-year institutions over several years, this year’s in-state tuition increased just 2.9 percent, a 30-year increase low. Even private, nonprofit four-year colleges raised tuition just 3.8 percent, still somewhat lower than recent tuition increases.
Yet, in spite of such seemingly modest tuition hikes, the net price the nation’s higher education – which is the actual put-of-pocket cost families need to pay after all forms of financial aid is considered – is moving up across all sectors.
The College Board estimates that at public universities, students will pay net tuition and fees of $3,120, compared to $3,050 earlier this year. At private, non-profit institutions, the net cost is expected to rise this year to $12,460, a 4.4 percent increase.
On average, the published community college cost this year is $3,264, a 3.5 percent or $110 increase, over last year’s price.
The combination of a more modest tuition increase plus the arrival of added financial aid, chiefly from the federal government, have held down or even reduced the net amount that families actually have to pay for college. But that situation is changing.
According to the College Board report that situation was a temporary respite. After a 125-percent surge in federal grant aid between 2007-08, and 2010-11, such funding then dropped by 9 percent in 20012-2012, and by an additional 1 percent last year. The report measured spending in adjusted-for-inflation dollars.
The growth in tuition will likely not cause much financial response from the government, according to Sandy Baum, senior fellow at the Urban Institute and research professor at George Washington University’s Graduate School of Human Development and the report’s co-author. “The federal government is not going to continue to cushion the growth in tuition,” Baum said. “We have no reason to believe the federal government is going to stop helping students, but everyone would be surprised if they decided next year to increase aid dramatically again,” he added.
Additional Aid Sources
Additional sources of grant aid have also increased over all this year, specifically from states and institutions. State aid grew 2.2 percent last year, plus grant aid from colleges and universities increased close to 5 percent last year and is expected to increase another 4 percent or so to $44 billion this academic year.
However there was broad range in how much states distribute student financial aid, with some states more generous than others. According to the report, in 2011-12, state grants per each full-time undergraduate student ranged from under $200 in 12 states, to more than $1000 in 10 states. Direct subsidies to students, at 49 percent, produced the largest share of financial aid packages in over a decade.
Simultaneously, last year total education borrowing dropped by 6 percent, after a 2 percent fall the year before. It’s important to note that those reductions in borrowing followed a severe increase of 55 percent from 2002-3 to 2007-8 in the amount of funds students took out in college loans.
Sandy Baum, the report’s co-author noted, “You don’t want to say that nobody has to worry anymore because borrowing has moderated, but it’s important that it doesn’t just keep going up.”
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