The spiraling rise of both college costs and student debt has slowed, according to a new report from the College Board. But even though costs aren’t rising as steeply as they were, they are still rising, and the failure of aid to keep pace with tuition increases means that the net cost students pay for college continues to go up.
That’s one conclusion from the 30th annual "Trends in College Pricing" and "Trends in College Aid" reports the College Board released Wednesday. Taken together, the comprehensive reports provide not just a snapshot at how both tuition and student aid are shifting in the most recent year – in which they have been under scrutiny by policymakers determined to make college more affordable – but also how they’ve changed over the past three decades.
“The rapid increases in published college prices have slowed,” says College Board President David Coleman. “However, students and their families are paying more because grant aid hasn’t kept up.” Still, despite the rising costs, Mr. Coleman emphasizes that a college education – as evidenced in another recent College Board report, "Education Pays" – is worth it. “I do not want to diminish the real concern around student debt and the price of college,” Coleman says. “But a college education is one of the best investments students and their families can make in terms of health, income, and upward mobility.”
Among the key findings from this year's “Trends” reports are the following:
• Published tuition and fees for in-state students at public four-year colleges increased 2.9 percent from 2012-13 to 2013-14 – the smallest one-year increase since 1975-76. After adjusting for inflation, the increase is 0.9 percent, the lowest inflation-adjusted increase since 2000-01.
• Between 2010-11 and 2012-13, federal grant aid declined – a major reason that net prices rose for families. Because of earlier increases in aid, the average net price for full-time students attending in-state, public four-year colleges actually fell by $650 (in 2013 dollars) between 2008-09 and 2009-10, but between 2009-10 and 2013-14 it increased from $1,940 to $3,120.
• Over the decade from 2002-03 to 2012-13, the total number of federal undergraduate and graduate student loan borrowers increased by 69 percent, and the average annual amount borrowed increased by 6 percent, from $7,900 (in 2012 dollars) in 2002-03 to $8,350. In 2012-13, the average undergraduate federal loan was $6,760, and the average graduate student loan was $17,230.
• Total Pell Grant expenditures peaked at $37.5 billion in 2010-11 (in 2012 dollars) and declined to $32.3 billion by 2012-13. Both the average grant and the number of recipients were lower in 2012-13 than in 2010-11.
Part of the affordability problem is that family income has fallen even as prices for college have risen, says Sandy Baum, co-author of the Trends reports. After adjusted for inflation, real income at all levels of the income distribution were lower in 2012 than they were in 2002, and at the bottom quintile, family income declined by 13 percent in that decade.
Ms. Baum said the College Board focused the hardest on the “net price” students pay, since most students have access to some form of aid or tax credits, but says that “the news in terms of the college price increase is that it does seem that the spiral is moderating…. Price increases are moderating, and financial aid is still there, but it’s not increasing at the rate it would have to to cushion students from the rate increases.”
The report also highlights the vast differences between states, both in how much they charge for tuition – and how much the state subsidizes that tuition – and in how they grant their aid.
South Carolina and Georgia, for instance, are the most generous with their grant aid per full-time student. But in Georgia, none of that aid is needs-based, and in South Carolina, only 16 percent of the state grand aid was needs-based.
And in 2013-14, published tuition and fees for in-state students at flagship universities range from $4,404 a year at the University of Wyoming to $17,926 at Penn State-University Park.
“There are dramatic differences depending on where you live,” says Baum.
In 2012-13, 49 percent of all student aid was in the form of grants – the highest percentage over the past decade. But many students are still borrowing. Some 60 percent of students who earned bachelor’s degrees in 2011-12 from the public and private nonprofit institutions at which they began their studies graduated with debt, borrowing an average of $26,500. Some 1.6 million students are in income-based repayment plans – about 11 percent of borrowers.
The College Board has published the trends on both college pricing and student aid and borrowing annually for 30 years now, but this year, the reports come at a time of increased attention to the college affordability problem.
In August, President Obama drew attention to the problem and called for a new college ranking system that would emphasize things like graduation rates and sticker price as a means to help make colleges more affordable.
"We’re going to start rating colleges not just by which college is the most selective, not just by which college is the most expensive, not just by which college has the nicest facilities – you can get all of that on the existing rating systems. What we want to do is rate them on who's offering the best value so students and taxpayers get a bigger bang for their buck,” Mr. Obama said in a speech last month at the University of Buffalo, in New York.
Numerous people, including a number of colleges, have pushed back against that proposal – and it remains unlikely that this Congress would agree to tie federal student aid to such a system – but most people agree that spiraling college costs and student debt are a problem.
The latest data from the Trends reports, says Baum, show that “there aren’t any magic bullets here.” What’s needed, she and Coleman say, is to be thinking more about appropriately targeting student aid for those who need it most, having adequate public funding for higher education, and providing better guidance for students trying to navigate the complex decisions involved. Often the least information is available to the students who need it most, they say, and the College Board is working to get better information to low-income students.
But they also emphasize the value, despite the rising costs, that a college education still gives students – and worry that the current discussion about the danger of taking on debt will discourage some students from getting that education, particularly those with the least access to good information, or who don’t have family members who have gone to college.
“It is imperative that we provide the best information possible to students and their families about the value of a college education and what debt really means,” says Coleman, noting that the average debt for a bachelor’s degree recipient is $26,500 – which could be repaid in 10 years by payments of less than $300 per month. But studies show that an average bachelor’s degree recipient can expect to earn an extra $550,000 to $600,000 in income in his or her lifetime compared with those who do not, he says. “I don’t diminish the real concerns about the price of college, but it is a moral and social imperative that we’re clear about the truth.”