New College Board Trends in Higher Education Reports: College Prices Increase at a Slower Pace While Student Borrowing Declines for the Third Consecutive Year

NEW YORK — While published tuition and fees at colleges and universities continue to rise more rapidly than the rate of inflation, the rate of increase has slowed. Between 2013-14 and 2014-15, the percentage increases in published tuition and fees (in all sectors) were smaller than the average annual increases over the previous five, 10, and 30 years, according to the College Board’s 2014 Trends in Higher Education reports — Trends in Student Aid and Trends in College Pricing — released today. Total education borrowing fell by 8% between 2012-13 and 2013-14, and by 13% over three years. Borrowing per student declined by 6% in one year and by 9% between 2010-11 and 2013-14.

College pricing and financial aid look very different in 2013 and 2014 than they did in 2010. As the economy has begun to recover from the recent recession, published price increases have slowed, making it clear that prices are not on an accelerating path. However, price increases continue to accumulate, totaling 17% between 2007-08 and 2014-15 at private nonprofit four-year colleges, and almost 30% at public two-year and four-year institutions, after adjusting for inflation.

The federal government implemented large increases in Pell Grants, education aid to veterans, and education tax credits that led to significant declines in the average “net prices” — what students actually pay after accounting for grant aid and tax breaks — in all sectors between 2007-08 and 2010-11. While grant aid has been sufficient to maintain those net prices in the private nonprofit four-year and public two-year sectors, net prices at public four-year institutions have risen. The average net price in the public four-year sector reached an estimated $3,030 in 2014-15, compared to a published price of $9,139, and to net prices of $2,680 in 2007-08 and $2,140 in 2010-11.

Annual borrowing declined in 2013-14 for the third consecutive year. After increasing by 16% (in inflation-adjusted dollars) between 2007-08 and 2010-11, the total amount undergraduate students borrowed in federal and nonfederal education loans declined by 14% between 2010-11 and 2013-14. Borrowing per student — which was equal to its 2007-08 level in 2010-11 — declined by 10% over the most recent three years. However, the recent decline in annual borrowing is not yet reflected in the debt levels of college graduates. About 60% of students who earned bachelor’s degrees in 2012-13 from the public and private nonprofit institutions at which they began their studies graduated with debt. They borrowed an average of $27,300, an increase of 13% over five years and 19% over a decade.

“This year’s Trends reports make it clear that some of the more visible trends of recent years have slowed or turned around,” said Sandy Baum, research professor of education policy at the George Washington University Graduate School of Human Development, senior fellow at the Urban Institute, and coauthor of the 2014 Trends in Higher Education reports. “It is encouraging that published prices are rising more slowly than in the past and that annual education borrowing has continued to decline. However, the reports also document dramatic increases in published tuition and fees over time that outstrip growth in grant aid for many students, as well as rising levels of cumulative debt among graduates. Assuring that our nation continues to provide access to affordable education for all who can benefit is a prerequisite for a healthy economy and society.”

“Many students and families face real financial barriers to college enrollment and success, and data on college prices and student aid create a context for evaluating research, policy, and initiatives designed to increase educational opportunities,” said Jack Buckley, the College Board’s senior vice president of research. “The College Board is committed to excellence, transparency, and equity in information not only for students and their families but also for policymakers and educators.”

Key Tuition and Fee Findings

• Average published tuition and fees for full-time in-state students at public four-year colleges and universities increased 2.9%, rising from $8,885 in 2013-14 to $9,139 in 2014-15.
• Average published tuition and fees for full-time out-of-state students at public four-year colleges and universities increased 3.3%, rising from $22,223 in 2013-14 to $22,958 in 2014-15.
• Average published tuition and fees at private nonprofit four-year institutions increased 3.7%, rising from $30,131 in 2013-14 to $31,231 in 2014-15.
• Average published in-district tuition and fees at public two-year colleges increased 3.3%, rising from $3,241 in 2013-14 to $3,347 in 2014-15.
• Average net prices are much lower than published prices because many students benefit from grant aid from federal and state governments, colleges and universities, and other sources, as well as from federal education tax credits and deductions. Over the decade from 2004-05 to 2014-15, average net tuition and fees at public four-year institutions rose by 32%, compared to a 42% increase in the published price (after adjusting for inflation). At private nonprofit four-year institutions, the net price fell by 13% over the decade, while the published price increased by 24%.
• In 2014-15, full-time students receive an average of about $6,110 in grant aid and education tax benefits at public four-year institutions, $5,090 at public two-year colleges, and $18,870 at private nonprofit four-year institutions to help them pay the published prices.

Key Student Aid Findings

• Undergraduates received an average of $14,180 in financial aid in 2013-14, including $8,080 in grants from all sources, $4,840 in federal loans, $1,195 in education tax credits and deductions, and $65 in Federal Work-Study.
• Total annual education borrowing fell by an estimated 8% in real terms between 2012-13 and 2013-14, following declines of 4% and 2% in the two preceding years, leading to a three-year decline of 13%.
• In 2013-14, undergraduate borrowers took federal Direct Subsidized and Unsubsidized Loans averaging $6,670, over $300 less (in 2013 dollars) than the year before and $740 less than in 2010-11.
• Total borrowing from the federal Direct Subsidized and Unsubsidized Loan programs fell by an estimated 10% ($8.7 billion in 2013 dollars) in 2013-14, and by 18% between 2010-11 and 2013-14. Total borrowing under the Parent PLUS program fell by 1% ($58 million) in 2013-14 and by 12% over three years; and the Grad PLUS program provided 4% ($276 million) less in 2013-14 than the preceding year and 1% more than in 2010-11.
• In 2013, 40% of borrowers with outstanding education debt owed less than $10,000, and another 29% owed between $10,000 and $24,999; 4% of borrowers owed $100,000 or more. This debt includes borrowing for both undergraduate and graduate studies.
• Grant aid per full-time equivalent undergraduate student increased by 39% between 2007-08 and 2010-11 and by 8% between 2010-11 and 2013-14.
• The number of students receiving Pell Grants — the central federal grant program providing funding for low- and moderate-income students — increased from 3.8 million in 1993-94 to 5.1 million in 2003-04 and to 9.2 million in 2013-14. The percentage of undergraduate students receiving Pell Grants increased from 25% in 2003-04 to 38% in 2013-14.

The Trends in Higher Education series provides insight into trends in college pricing and financial aid. A college education is critical to one’s long-term financial security, yet many students and families face real financial barriers to college enrollment and success. The data on college prices and student aid included in these reports create a context for evaluating public policies designed to increase educational opportunities.

For more information about the College Board’s work, please visit www.collegeboard.org.