October 20, 2004

Public University Tuition Is Up Sharply for 2004

Tuition at the nation's public universities rose an average of 10.5 percent this year, the second largest increase in more than a decade, according to the latest annual survey by the College Board. Last year's rise, 13 percent, was the highest.

Private universities and community colleges also increased tuition, by 6 percent and 9 percent, in a year when inflation has been about 2.5 percent. The tuition increases at private and community colleges were also among the steepest in a decade.

It is the first time that the average tuition at the nation's postsecondary institutions has surpassed $20,000 for a private college, $5,000 for a public university and $2,000 for a community college.

The survey of nearly 2,700 colleges and universities, released yesterday, did not try to determine the reasons for the steep increases. But among the many factors cited by its authors and other higher education experts were shrinking endowments, large increases in health insurance costs for campus employees and anemic spending on higher education by states.

"Until we publicly debate the quiet cost-shifting from state support to tuition that continues in far too many states, no amount of effort by our institutions to raise revenue and cut expenses will be able to preserve affordable tuition formulas, particularly at public colleges and universities," said David Ward, president of the American Council on Education, which represents college presidents.

Despite the increases, the survey found, students are not necessarily paying all the extra costs. Financial aid has been increasing as well, and though it has not always kept pace with rising tuition, it has often softened the blow.

As of last year, for example, the impact of grants and federal tax credits meant that students at private colleges actually paid an average of $9,600 a year in tuition and fees, about $1,000 more than they did a decade earlier, after adjusting for inflation, the survey found. At public universities, students ended up paying only $1,300 a year in tuition, about $200 less than they did a decade before, with adjustments for inflation. And at community colleges, grants and tax credits took care of the typical student's entire tuition.

The authors said, however, that this year's increases in tuition were so large that they did not expect grants to keep up. Students are also becoming increasingly dependent on loans instead of grants, according to the College Board, an association of more than 4,500 schools, colleges and educational organizations. About a decade ago, there was almost as much grant money available to students as there were loans. But by last year, loans had become a much bigger piece of the financial aid puzzle, making up almost 50 percent more of the total pool than grants.

Moreover, the nature of grants themselves has changed. The growing prominence of merit-based aid among many institutions, coupled with broader definitions of who qualifies for financial aid in such a costly market, has meant that by 2000 middle-income and wealthy students typically received larger grants from their colleges than did their low-income counterparts.

Some of that may be because wealthier students tend to go to the wealthiest, most expensive institutions, which, in turn, can afford to give bigger grants than the colleges that poorer students usually attend. Nonetheless, the survey's authors said, the grants to wealthier students underscore a larger shift, echoed in many state programs, away from awarding financial aid on the basis of need.

"It's absolutely true that the biggest increase in institutional aid has been to the upper-income families," said Sandy Baum, who analyzed the data for the College Board.

In recent years, the issue of college affordability has increasingly become a political one, at times giving rise to Congressional campaigns to penalize colleges that raise tuition too quickly. But what the colleges say they fear most is that some prospective students, especially those who are wondering whether to attend, will choose not to go because of the cost.

To that end, the College Board survey included data showing that graduates with bachelor's degrees could expect to earn 73 percent more than a high school graduate over their lifetimes. Those with master's degrees can expect to earn twice as much. Those with professional degrees can expect nearly three and a half times as much.