Economic Challenges Lead to Lower Non-Tuition Revenues and Higher Prices at Colleges and Universities

The College Board announced today that college prices for the 2009-10 academic year continue to rise as state funding and endowment values decline. The financial difficulties facing households across the nation are putting increased pressure on financial aid budgets. Although grant aid also rose significantly in 2008-09 (the latest year for which data are available), student borrowing continues to increase, as does the gap between available resources and the overall cost of attending college. Trends in College Pricing 2009 and Trends in Student Aid 2009 provide insight into how colleges and universities and their students are grappling with recent economic pressures.

Pricing
For 2009-10, the average published price of tuition and fees for in-state students at four-year public colleges in the U.S. is $7,020, $429 (6.5%) higher than a year ago. After adjusting for inflation, the average net price paid for tuition and fees by public four-year college students overall is lower in 2009-10 than it was five years ago — but higher than it was last year.

Like published prices for tuition and fees, expenses for food, housing, books and supplies, and other living costs continue to rise more rapidly than the rate of inflation, and only at public two-year colleges does grant aid for the average student stretch beyond tuition and fees.

Average price changes for the 2009-10 academic year are summarized in the table below:

	Private Not-for-Profit Four-Year	Public Four-Year In-State	Public Four-Year Out-of-State	Public Two-Year	For-Profit
Published 2009-10 Tuition and Fees	$26,273	$7,020	$18,548	$2,544	$14,174
One-Year Dollar Increase	$1,096	$429	$1,088	$172	$859
One-Year Percentage Increase	4.4%	6.5%	6.2%	7.3%	6.5%
Estimated Average Grant Aid and Tax Benefits per Student	$14,400	$5,400		$3,000	NA

Student Aid
About two-thirds of full-time undergraduates receive grants. In 2008-09, they received an average of $5,041 in grant aid per full-time equivalent student, supplemented by $4,585 in federal loans. Forty-one percent of all grant aid to postsecondary students was provided by colleges and universities, 32% by the federal government, 11% by states, and 16% by employers and other private sources. Over the decade from 1998-99 through 2008-09, grant aid per undergraduate student increased at an average of 3.4% per year after adjusting for inflation.

For students from the lowest-income families, grant aid covered total tuition and fees, on average, at public two-year colleges from 1992-93 through 2007-08 and at public four-year colleges and universities from 1999–2000 through 2007-08, the last year for which data are available. From 2003-04 to 2007-08, after subtracting grant aid, average net tuition and fees declined for lower-middle-income students at public four-year institutions, but increased at an annual rate of 2% to 3% beyond inflation for those from families with higher incomes.

For all dependent students except those from families with incomes of $100,000 or higher, average tuition and fees net of grant aid at for-profit colleges was higher than that at private not-for-profit four-year institutions in 2007-08. On average, net price declined for the lowest-income dependent students at private not-for-profit four-year colleges between 2003-04 and 2007-08.

The College Board’s estimates indicate that nonfederal education loans declined by almost 50% from 2007-08 to 2008-09. Total education borrowing increased 5% from 2007-08 to 2008-09 — a slight decline after adjusting for inflation. Federal loans increased by about $15 billion, while nonfederal loans declined by about $11 billion.

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