Paying for College October 28, 2010, 10:30AM EST

College Costs Are Up Again

The College Board says this time students at four-year public schools are taking the biggest hit. The good news? Financial aid is up, too

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Students and families already struggling in a tough U.S. economy got little relief from swelling college costs this year, with the published prices of tuition and fees continuing their upward climb, according to a College Board report released today. The news isn't all bad, though, with the financial blow to families somewhat softened this year by record increases in federal grant aid, said the College Board, a nonprofit membership association of colleges and high schools.

At four-year private colleges in the U.S. , the average tuition rose to $27,293, a 4.5 percent increase over last year. The annual tuition hike was the highest at four-year public colleges, which continued to be slammed by state budget cuts. Nearly 20 percent of students at public four-year colleges and universities attended schools that increased their sticker prices this fall by 12 percent or more, the College Board said. Annual tuition and fees for in-state students at public universities grew 7.9 percent for the 2010-11 academic year, raising the average cost of attendance $555 to $7,605.

This year's tuition increase for U.S. public colleges is more than a full percentage point higher than last year's increase (6.5 percent). That's a trend that is worrisome to Richard Vedder, director of the Center for College Affordability & Productivity, a Washington-based nonprofit.

"The report may tell you that the costs are not rising quite as much as those statistics indicate because of increased financial aid, but the reality is that the colleges are doing relatively little to adjust to the economic realities of the recession," said Vedder in a telephone interview. "They have been too modest in their attempts to make cuts so far and, in my opinion, are doing too little too late."

Decade of Steep Increases

The cost of college has been going up steadily for years, with a four-year degree from the nation's most expensive institutions now carrying a price tag of more than $200,000, excluding aid. But the rise in prices has been the most brutal over the last decade. Published tuition and fees at public four-year colleges and universities over the last decade have increased at an average rate of 5.6 percent per year beyond the rate of general inflation, the highest increase of the last three decades, according to the College Board. This year was no different, with published tuition and fees at private and public colleges and universities continuing to outpace inflation. Between July 2009 and July 2010, the Consumer Price Index increased by 1.2 percent, according to the College Board.

At the same time, college costs are far outpacing the average U.S. family's ability to pay. In 2009, the average family income was 11 percent lower than it had been a decade earlier for families with incomes in the bottom 20 percent of incomes in the U.S. , and 5 percent lower for those in the middle 20 percent of incomes , the College Board said.

There has been a significant shift in the way public higher education is being financed as a result of state budget cuts, said Terry Hartle, a senior vice-president of the American Council on Education, in a telephone interview. There are 19.5 million students currently enrolled in higher education, about 80 percent of whom attend public institutions, he said. In the last two years, almost every state has cut funding for higher education, while at the same time enrollment in higher education has ticked up steadily, he said. This year, the federal government provided $150 billion to colleges and universities, while the states provided only $75 billion, a funding model that is different from years past, he added.