College: Less Expensive Than You Think?

Posted by: Louis Lavelle on June 23, 2011

This is one of those good news-bad news blog posts. The bad news first: for the third consecutive year, tuition at private, nonprofit colleges and universities is up by more than 4 percent, according to a survey of 429 institutions by the National Association of Independent Colleges and Universities (NAICU).

The good news: institutional student aid is up even more. This year’s 7 percent increase comes on top of a 6.8 percent increase in 2010-11 and a 9 percent hike in 2009-10, NAICU reports. The upshot is that college got modestly more affordable this year. NAICU President David L. Warren said:

`”In response to the economic downturn, private colleges have worked to slow down tuition increases, while increasing institutional student aid at a faster rate. During a difficult time for students and families, private colleges have stretched their resources to keep out-of-pocket expenses for students as low as possible, enhance the educational value they provide and remain competitive in the marketplace.”

NAICU doesn’t collect dollar amounts, just percentage increases and decreases, but other organizations do, even if the data are a little old. The College Board reports that tuition and fees at private colleges and universities averaged $27,290 in 2010-11, while net tuition (after grant aid from all sources and federal tax benefits are factored in) averaged $11,320. Over five years, the net inflation-adjusted cost of tuition and fees at private colleges actually declined by 11.2 percent, according the College Board.

There are probably not a lot of people who would ever use “private school education” and “inexpensive” in the same sentence, but that’s exactly what NAICU is suggesting. If the numbers don’t lie, and I have no reason to believe they do, where does the perception of private school tuition as wildly expensive come from? One possibility: compared to four-year public schools—where tuition and fees average just $7,610, while net tuition is a mere $1,540— private school costs seem high.

Still, private schools have always been pricey. If a new car cost $20,000 in 2005 and the 2010 model went for $19,657—that is, if the inflation-adjusted price declined by 11.2 percent over five years—it would seem like a bargain. But when the same thing happens to the cost of a private school college education, we have the opposite reaction. Thoughts?

Post a comment

 

About

Read daily reports from BusinessWeek editors and reporters Louis Lavelle, Geoff Gloeckler, Alison Damast and Francesca Di Meglio and boost your chances of getting into your best-fit B-school.

BW Mall - Sponsored Links

Buy a link now!