A Recovering Economy Slows Increases in Tuition
May 5, 2014
By Mary Ann Cooper
This is the time of year HO takes a step back and offers a snapshot of the state of higher education in America as it applies to Hispanic students and their families. Each year brings a different set of variables that can affect the placement on any school on any of the Top 100 lists we publish each year. Fluctuations in tuition, the job market or federal legislation to change access to financial aid can suppress or elevate enrollment or degree attainment from year to year.
One of the best predictors of trends in higher education comes from the College Board (CB) which conducts extensive surveys predictive of tuition, enrollment and completion of degrees in colleges and universities. In the past few years the impact of a sluggish economy has pushed up tuition to unprecedented levels, and suppressed enrollment and degree completion by Hispanics and other minorities. Has an uptick in the economy made any impact on the cost of higher education? The CB concludes that it has – at least on the rate of tuition hikes this past year. An improving economy has finally begun to bend the curve of tuition increases. But it’s a more complicated picture than just slowing the increase of tuition.
According to the CB’s Trends in College Pricing, “The 2013-14 increase in published tuition and fees at public four-year colleges and universities is the smallest we have seen in many years. This does not mean college is suddenly more affordable, but it does mean the rapid growth of recent years did not represent a ‘new normal’ for annual price increases. That said, after large increases in grant aid in 2009-10 and 2010-11, especially from the federal government, growth in this student assistance has not continued. As a result, many students are facing larger increases in the prices they pay, even in the face of smaller increases in published prices.”
Drilling down on the numbers, the CB’s Trends report shows that a 2.9 percent increase in in-state tuition and fees at public four-year institutions in 2013-14 followed increases of 4.5 percent in 2012-13 and 8.5 percent in 2011-12 and was the smallest percentage increase in over 30 years. The average published tuition and fees for in-state students at public four-year institutions increased from $8,646 in 2012-13 to $8,893 in 2013-14. At $9,498, room and board charges account for more than half of the total charges for these students. The average published out-of-state tuition and fees at public four- year institutions rose by $670 (3.1 percent), from $21,533 in 2012-13 to $22,203 in 2013-14. Average total charges are $31,701, and average published tuition and fees at private nonprofit four- year institutions rose by $1,105 (3.8 percent), from $28,989 to $30,094 in 2013-14, making the average total charges to students $40,917. The picture for two-year colleges is similar. The average published tuition and fees at public two-year colleges increased by $110 (3.5 percent), from $3,154 in 2012-13 to $3,264 in 2013-14. The estimated average tuition and fees for full-time students in the for-profit sector increased by about $70 (0.5 percent), from $15,060 in 2012-13 to $15,130 in 2013-14. The CB report puts the tuition increases in historical perspective. “After a 9.5 percent real increase in 2009-10, the growth rate in public four-year college tuition has declined in each successive year. Similarly, large increases from 2002-03 through 2004-05 were followed by more moderate growth in prices. The same pattern occurred in 1990-91 through 1993-94 and before that, in 1982-83 and 1983-84.”
Has the rise of tuition impacted college enrollment since the Great Recession? According to the CB Trends report enrollment has grown rapidly in recent years. This is in part due to the industry and government’s efforts to mitigate tuition increases with creative financial packages and increasing grants and loans. So although enrollment slightly declined between fall 2011 and fall 2012, the rest of the decade from 2002-03 to 2012-13 showed an increase in the number of full-time undergraduate students by 28 percent, from 9.1 million to 11.6 million. The number of part-time undergraduate students increased by 19 percent, from 5.6 million to 6.7 million.
Another reason for the an enrollment increase disproportionate to the rate of tuition increases is due in part to the weak labor market that has made school a more appealing alternative and partly due to a recognition of the growing gap between the earnings of workers who have college degrees and those who do not.
The CB report urges caution, however, to states as they determine how much they can fund higher education in their budgets. A weak labor market and federal loan programs are not enough to sustain continued growth in enrollment and degrees conferred. “The rapid enrollment growth in recent years was met by a significant decline in per student state funding. If we are to meet the needs of our citizens and our economy for increased postsecondary attainment, state budgets will have to give a higher priority to education in the coming years.”
The report concludes with the recognition of a challenge to ponder as we spotlight the lists of this year’s Top 100 schools enrolling and awarding degrees to Hispanic students. “Efforts are well under way to develop lower-cost methods of delivering college courses. It is too early to say whether or not these efforts will revolutionize higher education, or which segments of our diverse and multipurpose postsecondary education system will be the most affected.”
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