Conflicting Information about Trends in Net College Costs - Fastweb

Conflicting Information about Trends in Net College Costs

Mark Kantrowitz

November 17, 2011

A report released today by The Center for College Affordability and Productivity (CCAP), discusses trends in net tuition and net price at US colleges and universities. Net Tuition and Net Price Trends in the United States: 2000-2009 reports that

“At four year colleges, net tuition has increased by around one thousand dollars over a time period when per capita income has fallen, and the total price of college has risen even faster. In contrast, at two year colleges, net tuition has fallen substantially, though the continued increase in total price is quite worrisome.”

But an article by Sandy Baum and Michael McPherson in the Chronicle of Higher Education last fall, The Real Price of College: Looking Beyond the Sticker, reported that

“Over the decade from 2000-01 to 2010-11, average published tuition and fees at public four-year colleges rose 72% after adjusting for inflation. The 35% increase at private four-year colleges and the 31% increase at public two-year colleges seem moderate by comparison. But after subtracting estimated average grant aid and federal tax credits and deductions received by full-time students, the net price actually declined in each of these three postsecondary sectors. In other words, on average the net tuition and fees students are paying are lower in 2010 dollars than they were a decade ago.”

So one report claims that net prices rose while another report claims that net prices fell. How can both reports, which are published by reputable organizations, be right?

Both reports agree that published tuition rates are rising and argue that the focus should be shifted from gross tuition rates to net tuition. But they reach different conclusions concerning the change in net tuition, in part because the two reports involve two different sets of years. One report compares net tuition in 2008-2009 with net tuition in 1999-2000, while the other report compares net tuition in 2010-2011 with net tuition in 2000-2001.

The maximum Pell Grant was unchanged for four years during the Bush Administration, from 2003-2004 to 2006-2007. The average Pell Grant barely budged during this time period, increasing 1.1% from $2,467 to $2,494, and the number of recipients increased from 5.1 million to 5.2 million. This compares with average annual increases of $175 during the previous decade.

The American Recovery and Reinvestment Act of 2009, also known as the stimulus bill, compensated for this with a significant increase in the maximum Pell Grant. The maximum Pell Grant increased by $619 (13.1%), from $4,731 in 2008-2009 to $5,350 in 2009-2010, and the average Pell Grant increased by $676. At the same time the number of recipients increased 26.2% from 6.1 million to 7.7 million.

Thus one report excludes the increase from the stimulus bill, while the other report includes it. Total annual Pell Grant funding increased by $8.9 billion during the time period measured by the first report, compared with $24.9 billion during the time period measured by the second report. That’s a rather substantial difference, enough to have a measurable impact on the net price.

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