College Tuition Just Keeps Climbing

As families are squeezed, public colleges look more attractive—but beleaguered state governments may need to hike tuition even further

By Alison Damast

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Tuition and fees at four-year public colleges and universities rose faster than those of private schools, yet again outpacing the rate of inflation, the College Board said in a report released Oct. 29.

The continuing rise in the cost of higher education (see slide show) comes at a time when financial turmoil and recession is prompting more families to consider public colleges instead of pricier institutions. Applications at Binghamton University, one of the top-tier schools in New York's state system, are up 50% so far this year, a spokeswoman said this week. At the University of Massachussets at Amherst, the flagship campus of the Massachusetts state university system, admissions officers are seeing a "significant increase" in early-action applications, a spokesman said.

Yet this year's College Board report shows hikes of 6.4% for public in-state tuitions and 5.9% for private colleges. The consumer price index rose 5.6% between July 2007 and July 2008, the College Board said.

The pace of the increases is not quite as sharp as last year's, when tuition and fees at public and private colleges and universities rose at more than double the rate of inflation. This year, they were just slightly above the consumer price index.

"College prices are doing what other prices are doing," said Sandy Baum, senior policy analyst at the College Board and professor of economics at Skidmore College. "They are not going up more rapidly, they are just keeping pace. This is different from what historically has been the case in recent years."

Unfortunately, the new interest in public schools comes just as beleaguered state governments are under the gun to make hefty budget cuts, with the result that many public colleges and universities may need to hike tuition even further, said Terry Hartle, a senior vice-president of the American Council on Education.

Midyear Budget Cuts

"What we are deeply troubled about is that we see some very dark storm clouds on the horizon—[namely,] the economic circumstances facing state government," Hartle said. He said that the jump in public tuitions is a sign that state schools may already be having trouble making ends meet, he said.

There are 17 states looking at midyear budget cuts, which if undertaken could mean reduced funding for institutions of public higher education and, in the worst case scenario, midyear tuition increases, Hartle said. The move could have a chilling effect on the nation's 14 million students who attend these schools, he noted.

According to the College Board report, the average in-state tuition and fees at four-year public colleges for the 2008-09 academic year are $6,585, up $394 from last year. Those numbers don't include room and board, which adds on about $8,000.

Costs at private universities were also on the upswing, with published tuition and fees for this school year averaging $25,143, a $1,398 increase over last year.

However, those "sticker prices" tell only one part of the story, Baum said. A more accurate indication of what students pay for their college education is the net price, which is what the average student pays after grants, student aid, and tax benefits are factored into her college bill.

At four-year public colleges and universities, the average student receives about $3,700 in aid, bringing the average tuition cost to around $2,900. At private universities, aid totals around $10,200, bringing the average tuition to about $14,900.

Still, over the past five years, the net prices at four-year public colleges and universities have been going up faster than published prices, mostly because the amount of federal and state grant aid doled out to students has not been enough to minimize the impact of tuition hikes, Baum said.