Education Funding

Report: College Cost Hikes Slowing, But Are Still Outpacing Inflation

By Alyson Klein — October 31, 2006 4 min read
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College costs are continuing to rise faster than inflation, but the annual increases aren’t as steep in percentage as they were just a few years ago, the College Board reported last week.

For the third year in a row, increases in average tuition and fees slowed slightly. Those costs at four-year public colleges rose 6.3 percent—to $5,836—from 2005-06 to 2006-07. In the past decade, tuition for such institutions has increased as much as 8 percent in a single year. The percentage hikes in tuition and fees were smaller at two-year public colleges, which saw a 4.1 percent increase—to $2,272—this academic year, and at four-year private colleges, which went up 5.9 percent, to $20,980.

“Trends in College Pricing” and “Trends in Student Aid” are available from the College Board.

The average cost of tuition and fees at a four-year public college has gone up by 35 percent over five years, after adjusting for inflation, according to the New York City-based group’s report “Trends in College Pricing.”

“Neither student-aid funds or family incomes are keeping pace with college prices. This is a serious problem that needs to be addressed,” Gaston Caperton, the president of the College Board, said in a call with reporters on Oct. 24, the day the report was released. He said that while the slowdown in tuition increases is positive, tuition hikes over the past four years have been high by historic standards.

Brightening state and local revenue forecasts have boosted public appropriations for some state colleges, keeping tuition increases somewhat lower than in past years, said Sandy Baum, a senior policy analyst at the College Board. Still, factors such as increased enrollment, higher energy prices, bigger price tags for health benefits, and faculty pay raises continue to drive up costs.

The Tuition Bill

The College Board reported last week that tuition and fees continue to increase in various sectors of higher education.

Sector 2006-07 2005-06 % Change
Two-year public $2,272 $2,182 4.1%
Four-year public 5,836 5,492 6.3
Four-year private 22,218 20,980 5.9

SOURCE: College Board

Although total student aid, which includes federal, state, and institutional aid, increased by 3.7 percent, to $134.8 billion, in 2005-06, federal grants have been shrinking. The average Pell Grant fell $120 for the 2005-06 school year, without adjusting for inflation. That drop is due to a December 2004 administrative change in calculating eligibility for the grants that left many students receiving lower grants than they otherwise would have received. Congress has not increased the Pell Grant maximum of $4,050 in the past three academic years.

Students are increasingly turning to loans to cover increased costs, with private loans continuing to take up a greater share of that market. Private loans now constitute 20 percent of all student loans. During the 1995-96 school year, they constituted 5 percent of all loans, according to the College Board’s “Trends in Student Aid” report. (“College Students Use Private Loans to Meet Growing Tuition Bills,” Oct. 4, 2006.)

Mari L. De La Rosa, the research director for the Institute for College Access and Success, based in Berkeley, Calif., said the expansion of that market is troubling because private loans can be riskier for students. She said policymakers should bolster need-based financial aid and make the terms for federal student loans more borrower-friendly, so that students don’t graduate from college with a high amount of debt.

“They shouldn’t be relying so much on student loans that it impacts their future after college,” she said.

Remediation Costly

Students are also taking longer than the traditional four years to complete their degrees. Bachelor’s degree recipients during the 1999-2000 academic year who began college at a four-year public college took 6.2 years to graduate, while those who started at a four-year private college took 5.3 years to obtain the same degree.

More than one-third of first- and second-year students have taken a remedial course since high school, according to the report. Those remedial courses contributed to the longer completion time and student costs, Ms. Baum said, since students usually do not earn credit toward a degree for taking them. During the 2003-04 school year, 77 percent of students who enrolled in a remedial course took one in mathematics, while 35 percent of students took one in writing.

High schools and colleges should work together to ensure that high school graduates have the skills they need to handle credit-bearing college courses, said Robert H. McCabe, a past president of Miami Dade College, a two-year institution in Miami. Such efforts, he said, might include allowing students to take college-placement tests in 10th grade so they can see which skills they need to work on.

But he cautioned that if students enter college needing developmental courses, they should be encouraged to take them, or will risk failing credit-bearing courses. Such failures are costly for both colleges and students, he said.

“The standard should be to not let students begin standard college work until they get their skills up,” Mr. McCabe said.

A version of this article appeared in the November 01, 2006 edition of Education Week as Report: College Cost Hikes Slowing, But Are Still Outpacing Inflation


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