October 29, 2010

Financial Aid Rises Alongside College Prices

The College Board released its 2010 Trends in College Pricing report this week. The report made a large public splash amidst heightened concern about college prices during the economic crisis. The report’s data and conclusions were presented and dissected from many different perspectives, including: The Wall Street Journal, The New York Times, The Washington Post, NPR, Inside Higher Ed, and The Chronicle.

The full report is worth reading, but some of the highlights include the following:

• Over the past decade, tuition sticker prices increased, on average, 5.6% per year at public four year institutions. Note that in the 1990’s when state funding levels were high, tuition increased more slowly, while cuts to state funding in the last decade have led to rapid increases.
• On average, state appropriations per FTE declined by 9% in 2008-09, and by another 5% in 2009-10.
• In 2009-10, state appropriations per student were 19% lower than they were a decade earlier.
• Over 47% of all students enrolled in a four year institution (public or private) face published prices of less than $8,999 per year. Only 13% are enrolled in an institution with a published price of over $30,000 per year.
• In 2010-11, the average student at a public four year institution received $6,100 in grant aid and tax benefits, and Only 1/3rd of college students pay the published tuition and fee rates.
• Due to historic increases in Federal Pell Grants and increased institutional aid, the average net price paid by students was actually less than the net price paid in 2005-06. Note that students and families who receive little or  grant or tax aid are paying significantly more than they were in 2005-06.

While college costs continue to rise faster than the rate of inflation, which is especially concerning when family incomes are losing ground, the data show that federal, state and institutional grant and tax aid have had a powerful effect on the net cost of college. In fact, many students with financial need are paying less today than they were 5 years ago.

In addition to illustrating the striking role that financial aid is playing in college affordability, the report also highlights the dramatic decline in state support for public institutions, which are operating with almost 20% less state funding per student than they were a decade ago, despite state approval of larger than normal tuition increases.

Ultimately, the costs of public higher education are being shifted from the states to the students and families who are paying higher tuition, and to the federal government, which is providing increasing levels of financial aid.

Expect further detailed analysis of this report and how the College Board’s findings apply to the UW soon.