Tuition and tuition fees have risen at a historic low rate for a third straight year, according to a new report released today by the College Board, which finds that tuition fees have actually fallen over the past year. 2022-23 academic year, once adjusted for runaway inflation that has plagued the US economy.
Average annual tuition and fees—before adjusting for inflation—increased 1.8% for in-state students at public four-year institutions, 1.6% for students at public colleges two-year and 3.5% for those in private, nonprofit four-year colleges, according to the “Trends in Student Awards and Financial Aid” report. Adjusted for inflation, tuition and average fees “decreased across all three sectors,” the report said, although some individual institutions increased tuition significantly due to inflation.
The data also shows that borrowing continued to decline like every year since the 2011-2012 academic year, when it peaked due to the influx of students during the Great Recession.
Jennifer Ma, senior policy researcher at the College Board, said the findings of the annual report are broken down into four main themes. First, the average cost of a college education is increasing only slightly. Ma said she “expected higher increases” and was happy to see them staying low.
She pointed out that tuition and average fees did not increase at all in two-year institutions in eight states and remained stable for public four-year institutions in nine other states.
Second, Ma noted that “annual borrowing declined for the 11th consecutive year.”
The third trend is the continued decline in net prices in recent years.
“This is very good news for students and families in terms of paying for college,” Ma said. Inside Higher Education.
And finally, she pointed out that “total grants decreased for the second consecutive year after adjusting for inflation”. The decline “is mainly related to declining enrollment” in higher education, Ma said.
Florida had the lowest listed price for students in the state attending four-year public institutions, reaching $6,370 for the 2022-2023 school year, according to the College Board report. At the opposite end of the spectrum, tuition in the state of Vermont reached $17,650. Nationally, the average cost was $10,940.
The average net price—the amount paid after applying federal and institutional grants—for students at public four-year institutions was estimated to be $2,250, compared to $14,630 at private, nonprofit four-year institutions.
Among four-year private nonprofit institutions, the average net price was $39,400.
For two-year public colleges, California was the most affordable, with an average net price of $1,430 for those paying local rates. In contrast, two-year colleges in Vermont cost $8,660, more than $1,300 more than the second most expensive state. The national average for two-year institutions was $3,860.
Examining financial aid trends for the 2021-2022 academic year, the report found that full-time undergraduate students received an average of $15,330 in grants, federal loans and other aid combined. Full-time graduate students received an average of $27,300 in financial aid.
In total, undergraduate and graduate students received $234.6 billion in financial aid in the 2021-2022 academic year in the form of grants, federal loans, work-study programs and credits and tax deductions. Students and families borrowed a total of $94.7 billion in federal and non-federal loans.
Outside experts have noted many factors that explain why tuition fee increases continue to rise at historically low rates, even as inflation hit 8.3% earlier this year.
“Tuition fee increases remain low for several reasons. The first is that in many public universities, they are not allowed to raise tuition fees. The state legislature or state higher education agency just tells them no,” said Robert Kelchen, professor and head of the department of educational leadership and policy studies at the University of Tennessee at Knoxville. . “Another factor is that most colleges don’t have very strong market power to raise tuition right now. Higher education enrollment is down and they fear that if they raise tuition fees they will lose students to other colleges. And then the third reason is that colleges try to keep tuition increases as low as possible because they know a lot of students are struggling to afford a college education. If they increase tuition too much, students may not be able to continue.
Beth Akers, senior fellow at the center-right think tank American Enterprise Institute and an economist by training, offered a similar perspective, adding that student skepticism of higher education and rising costs for households Americans may have influenced colleges to keep tuition low.
“The surprising part is that we see prices rising in all other major sectors of the economy with historic inflation levels. So I think it wouldn’t have been surprising to see higher education prices rising at a similar rate, or at least faster than they had risen in the past, because institutions, like everyone world, have to pay the higher costs of living, which means energy prices and wages paid to workers who keep campuses running,” Akers said. “On the other hand, we are seeing a decline in enrollment. It seems that in recent years students have started to become more skeptical of what traditional higher education sells them, and perhaps institutions are feeling pressure to charge them prices that attempt to send the message that they offer value with their listing experience.
But with inflation continuing to climb, Kelchen and Akers noted that it will be difficult for colleges to keep prices low, especially given the rising costs of running a campus.
Kelchen pointed out that public sector tuition increases hover around 2%, but inflation has reached 8.3% this year, creating an unsustainable financial deficit. While “state funding has helped close that gap” in some states, he said, that’s not true in all areas. Many colleges attempt to cut costs in a variety of ways, such as laying off employees, keeping vacancies open for longer periods of time, and reducing canteen hours, for example.
Going forward, he suspects that if institutions cannot raise tuition fees to cover their costs, they may resort to larger classes, fewer faculty advisers and reduced services overall.
Akers said while colleges have been able to make cuts to offset rising costs, that solution is temporary. Ultimately, she believes colleges and universities will have to find the answer in innovative solutions. And if they can’t innovate to succeed, consumers will pay the price.
“What we’re seeing here is that institutions are able to absorb the rising costs of doing business by reducing spending on other things,” Akers said. “It’s not clear they’ll be able to do this forever. And if we have continued inflation that drives up their running costs even more, that may ultimately trickle down to students in the form of a rapid price increase.