Colleges see a slowdown in tuition price increases

7:33 AM, Oct 23, 2013   |    comments
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(USA TODAY) -- Average sticker prices at the nation's four-year public universities rose 2.9% this year, the smallest annual increase in more than three decades, suggesting that the steeper increases over the past few years "did not signal a new era of accelerating prices," says a report out Wednesday.

Still, the smaller rates of increase this year -- across public, private non-profit and for-profit colleges -- are tempered by recent declines in federal grant aid, it says.

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"This does not mean that college is suddenly more affordable," says economist Sandy Baum, co-author of Trends in Higher Education reports on tuition and financial aid, released by the non-profit College Board. "It does seem that the (upward tuition) spiral is moderating. Not turning around, not ending, but moderating."

The increase in published rates for in-state students at public four-year colleges comes after increases of 4.5% last year and 8.5% the year before, the report says. Tuition this fall averaged $8,893. With estimated grant aid, the net price averaged $3,120. Average published tuition and fees for out-of-state students is $22,203, up 3.1% from last year.

The smaller increases serve as a reminder of the cyclical nature of price increases, Baum said. In 1983-84, for example, the first year for which the College Board began tracking annual costs, tuition and fees at four-year public institutions increased 11.3% over the previous year, to $1,148 in current dollars (not adjusted for inflation). Federal data show a dip in 1974-75, when annual tuition and fees fell from $514 to $512 in current dollars (not adjusted for inflation).

Even as sticker prices have climbed, the average amounts students pay out of their own pockets in recent years have been moderated by larger infusions of grant aid and tax benefits, the report says. In 2009, for example, net price dropped for undergraduates attending four-year public universities.

That began to change a few years ago. Total federal grants, for example, increased from $26 billion in 2008-09 to $51 billion in 2010-11, but dropped to $46 billion in 2011-12. Preliminary data show a drop this year to about $45 billion.

Highlights in other sectors:

* Sticker prices at public community colleges are up 3.5% to $3,264 this year. With estimated grant aid, students would have $1,550 left after paying tuition to put toward books and living expenses.

* Published rates at private four-year colleges are up 3.8% to $30,094 this year. With grant aid, the average net price is $12,460.

* Average tuition at for-profit colleges increased just 0.5% to $15,130 and net prices average about $3,420. The study urged caution in interpreting those numbers because most for-profit institutions do not participate in the survey.

Just as tuition has steadily climbed over the years, the number of people going to college has steadily increased, though it dipped slightly in 2011. Typically, enrollments increase in a weak economy and dip again when the employment picture brightens.

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(USA TODAY)

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