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Tuition Increases Continue to Slow at Public Colleges According to the College Board’s 2006 Reports on College Pricing and Financial Aid

Total Grant Aid Increased Last Year, But Pell Grants Declined

October 24, 2006

The College Board today announced that at four-year public colleges the increase in average tuition and fees slowed for the third year in a row, but prices are still up 35 percent from five years ago, after adjusting for inflation. The increase in average tuition and fees for two-year public colleges in 2006-07 was just slightly above the inflation rate. At all institutions, the net price—the average price students pay after grants and tax benefits are considered—is significantly lower than the published price. Total student aid increased by 3.7 percent to $134.8 billion in 2005-06, but total federal grant aid failed to keep pace with inflation. Even without factoring in inflation, the average Pell Grant per recipient fell by $120.

Evidence of these trends, along with average 2006-07 college prices and 2005-06 student aid data, is documented in the reports, Trends in College Pricing 2006 and Trends in Student Aid 2006. Also released today was a 2006 supplement to Education Pays: The Benefits of Higher Education for Individuals and Society, which documents the monetary and nonmonetary benefits of higher education in addition to differences in participation and success across demographic groups.

“The College Board continues to advocate for need-based aid, so that more students can have the opportunity to benefit from a college education,” said Gaston Caperton, president of the College Board. “Though student aid makes it possible for many students from low- and middle-income families to afford college, we still face inequality in access to higher education across ethnic, racial, and economic lines.”

This year’s reports contained the following information on tuition price by sector:

• Published tuition and fee charges atfour-year public colleges average $5,836 in 2006-07. There was a $344 increase over last year, which represents 6.3 percent, or 2.4 percent after adjusting for inflation.
• Published tuition and fee charges at four-year private colleges average $22,218 in 2006-07. The $1,238 increase over 2005-06 represents an increase of 5.9 percent, or 2 percent after adjusting for inflation. The average total tuition, fee, room and board charges at private four-year colleges and universities are $30,367.
• Published tuition and fee charges at two-year public colleges average $2,272, $90 more than last year. The 4.1 percent increase is less than one-half of one percentage point above the rate of inflation.

American Council on Education President David Ward reacted cautiously to the moderation in tuition increases.  “While I am heartened to see that the average tuition increase at community colleges was less than $100 it is clear from the data on tuition increases at both public and private four-year institutions that we must work even harder to control prices,” he said. “Hopefully, with the economy improving, state governments—which really set tuition prices at most public colleges and universities—will do their part to reinvest in higher education and keep their commitment to the financing partnership with institutions and the federal government.”

Also contained in the College Board reports is data that shows that almost two-thirds of full-time students receive grant aid that lowers the price they actually pay to attend college. Millions of students also benefit from federal tax credits and deductions for college tuition, according to the reports.

In 2005-06, postsecondary students received a total of $134.8 billion in student aid from federal and state governments, colleges and universities, and other private sources. About 44 percent of this aid was in the form of grants and 51 percent was in the form of loans through the federal government.  Subsidies awarded through the income tax system and work-study made up the remainder. Undergraduate students receive significantly more of their aid in the form of grants than do graduate students.

In each of the federal student aid programs, aid per student was lower in inflation-adjusted dollars in 2005-06 than it had been earlier in the decade. Both the total amount of Pell Grants awarded and the average Pell Grant per recipient were lower in 2005-06 than they had been in 2004-05.

“It is disturbing to see that the total dollar amount spent on the federal Pell Grant program actually declined from 2005 to 2006, and that the maximum grant now covers only 33 percent of tuition at public four-year institutions--an all-time low,” Ward added.  “The Pell Grant remains our nation’s most important financial grant for low-income students, and without future investment, thousands of individuals will have to defer or give up entirely on their dreams of earning a college degree.

“To its credit, the National Commission on the Future of Higher Education, commissioned by Education Secretary Margaret Spellings, called in its final report for nearly doubling the nation’s investment in the Pell Grant program over the next five years,” Ward continued. “We hope Congress acts quickly on this proposal which would mark a historic recommitment to need-based aid by the federal government.”

The data reported in the College Board report Education Pays 2006 documents increases over time in the earnings gap between high school graduates and college graduates. In 2005, women ages 25 to 34 with bachelor's degrees earned 70 percent more than those with high school diplomas, and for men the difference was 63 percent. For all full-time workers in this age group, the average earnings premium for a four-year college degree is almost $14,000.

Complete press materials and all three reports can be found on the College Board web site, http://www.collegeboard.org.