Transcript The Rising Price of a College Education

The Rising Price of a
College Education
Sandy Baum
Skidmore College &
The College Board
Michael McPherson
The Spencer Foundation
College Savings Foundation
May 2008
Rising college prices:
Not a new story
Average Published Charges for
Undergraduates, 2007-08
(Enrollment-Weighted)
Source: The College Board, Trends in College Pricing 2007
Average Published Tuition and
Fees, Five-Year Intervals,
1977-78 to 2007-08 (Enrollment-Weighted)
Source: The College Board, Trends in College Pricing 2007
Variation in Prices
Distribution of Full-Time Undergraduates at
Public & Private Four-Year Institutions by
Published Tuition & Fees, 2007-08
Source: The College Board, Trends in College Pricing 2007
Tuition & Fee and Room &Board
Charges by Region & Sector,
in Constant (2007) Dollars, 1997-98 and 2007-08
(Enrollment-Weighted)
Source: The College Board, Trends in College Pricing 2007
Tuition and fees don’t tell the
whole story.
Average Estimated Undergraduate
Budgets, 2007-08
(Enrollment-Weighted)
Source: The College Board, Trends in College Pricing 2007
The net price to students after
considering grant aid and tax
benefits, is a better indicator of
affordability than the published
price.
Tuition & Fees, Net Tuition & Fees,
and Room & Board
in Constant (2007) Dollars: 1992-93 to 2007-08,
Source: The College Board, Trends in College Pricing 2007
Full-Time Dependent Student Net Tuition &
Fees and Net Cost of Attendance:
Percentage of Family Income, 1992-93 and 2003-04
Sources: NPSAS: 1993 and 2004; U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 1992 and 2003; calculations by
authors. The College Board, Trends in College Pricing 2007
Full-Time Dependent Student Net Tuition &
Fees and Net Cost of Attendance:
Percentage of Family Income, 1992-93 and 2003-04
Sources: NPSAS: 1993 and 2004; U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 1992 and 2003;
calculations by authors. The College Board, Trends in College Pricing 2007
What is driving the price of
college?
Annual Percentage Changes in Educational
Appropriations per Public FTE Student and in
Tuition & Fees at Public Four-Year Institutions
in Constant (2007) Dollars, 1980-81 to 2005-06
Source: SHEEO data, The College Board, Trends in College Pricing 2007
Average Annual Percent Change in Median Spending
per FTE Student – Publics
Public Research
+
Public Masters
Public Associates
1987-1996
1998-2005
1987-1996
1998-2005
1987-1996
1998-2005
Instruction
0.5%
0.4%
0.6%
0.4%
1.0%
-0.2%
Research
3.9%
3.2%
4.3%
3.2%
-3.7%
1.0%
Public Service
5.0%
7.2%
5.4%
3.7%
2.1%
0.0%
Academic Support
2.3%
0.1%
2.0%
0.6%
1.0%
0.2%
Student Services
2.4%
0.9%
1.3%
0.4%
2.0%
0.3%
Institutional
Support
0.6%
0.9%
1.8%
1.2%
1.3%
0.5%
Operations and
Maintenance
-0.4%
2.0%
-0.6%
1.8%
-0.3%
0.9%
Institutional Grants
9.5%
7.5%
7.6%
6.4%
6.1%
4.6%
Source: The Delta Cost Project, 2008
16
Average Annual Percent Change in Median Spending
per FTE Student – Private Institutions
Private Research
+
Private Masters
Private Baccalaureate
1987-1996
1998-2005
1987-1996
1998-2005
1987-1996
1998-2005
Instruction
2.2%
1.0%
1.8%
1.3%
1.0%
0.8%
Research
1.9%
7.3%
2.2%
4.9%
4.7%
7.0%
Public Service
3.7%
0.4%
4.5%
-2.0%
-2.8%
4.5%
Academic Support
2.8%
2.4%
2.1%
2.1%
1.8%
2.3%
Student Services
3.5%
1.9%
3.1%
1.8%
3.0%
2.8%
Institutional
Support
2.4%
1.6%
1.2%
1.9%
1.3%
1.1%
Operations and
Maintenance
2.3%
0.9%
0.1%
0.2%
0.4%
0.9%
Institutional Grants
6.5%
4.4%
8.6%
4.3%
8.7%
3.1%
Source: The Delta Cost Project, 2008
17
Prices, Revenue, Spending: % Change
1998-99 to 2004-05, in 2005 CPI Adjusted $
Direct
Full
In-State
Net Tuition Instructional Educational Total E&G
Undergraduate Revenue per Spending per Spending per Spending
"Sticker" Price
FTE
FTE
FTE
per FTE
Sector Type
Public
Research
45.6%
34.6%
3.2%
0.2%
7.9%
Public Masters
Public
Associates
Private
Research
42.3%
36.6%
2.7%
3.4%
-3.0%
28.5%
34.1%
-1.3%
0.3%
-3.4%
24.0%
16.7%
6.9%
4.5%
17.8%
Private Masters
Private
Bachelors
23.5%
19.0%
9.6%
10.9%
5.6%
22.6%
16.5%
5.9%
6.1%
4.6%
Measures of median spending per FTE student; Delta 19-year matched set.
Source: The Delta Cost Project, 2008
National Average Full Educational Cost per FTE at
Public Institutions, 1998 and 2005
Full Educational Cost per FTE (2005 constant dollars)
$16,000
$14,000
Cost= $13,118
$12,000
$10,000
$7,191
$8,516
$8,000
subsidy
$5,416
$6,085
$6,000
$6,518
$6,051
$4,000
$6,328
$2,000
$4,602
price
$4,649
$3,529
$1,974
$2,585
$0
1998
2005
Public Research
1998
2005
Public Master's
Net Tuition per FTE
1998
2005
Public Associates
Average Subsidy
All measures are mean $/FTE, data source Delta database 19-year matched
Source: The Delta Cost Project, 2008
19
National Average Full Educational Cost per FTE at
Private Institutions, 1998 and 2005
Full Educational Cost per FTE (2005 constant dollars)
$40,000
$35,000
$30,000
Cost= $28,868
$16,635
$25,000
$13,653
subsidy
$20,000
$8,844
$15,000
$4,075
$8,175
$4,066
$10,000
$15,215
price
$17,469
$10,349
$5,000
$12,715
$9,767
$11,970
$0
1998
2005
Private Research
1998
2005
Private Master's
Net Tuition per FTE
1998
2005
Private Bachelors
Average Subsidy
All measures are mean $/FTE, data source Delta database 19-year matched
Source: The Delta Cost Project,
How are students paying?
Ten-Year Trend in Funds Used to Finance
Postsecondary Education Expenses
in Constant (2006) Dollars (in Billions), 1996-97 to 2006-07
Source: The College Board, Trends in Student Aid 2007
Growth of Federal, Institutional, and
State Grant Dollars
in Constant (2006) Dollars (in Billions),1996-97 to 2006-07
Source: The College Board, Trends in Student Aid, 2007
Growth of Stafford, PLUS, and
Nonfederal Loan Dollars
in Constant (2006) Dollars (in Billions), 1996-97 to 2006-07
Source: The College Board, Trends in Student Aid, 2007
Average Amount Borrowed (& Percent Borrowing)
from Federal and Private Sources, Full-Time
Dependent Undergraduates by Family Income
in Constant (2006) Dollars, 1992-93 to 2003-04
Sources: NPSAS: 1993, 1996, 2000, and 2004; calculations by authors. U.S. Census Bureau, Current Population Survey,
Annual Social and Economic Supplement, 1992, 1995, 1999, and 2003. The College Board, Trends in Student Aid, 2007
Is it worth it?

Median Earnings and Tax Payments of Full-Time
Year-Round Workers Ages 25 and Older,

by Education Level, 2005
Notes: Taxes paid include federal income, Social Security, and Medicare taxes, and state and local income, sales, and property taxes.
Sources: U.S. Census Bureau, 2006, PINC-03; Internal Revenue Service, 2006; McIntyre et al., 2003; calculations by the authors. The
College Board, Education Pays 2007
Estimated Cumulative Earnings Net of
Loan Repayment for Tuition and Fees, by
Education Level
Note: Based on median 2005 earnings for each education level at each age and discounted using a 3 percent annual rate. Earnings for bachelor’s degree
recipients include only those with no advanced degree. Assumes tuition and fees are financed with borrowing, and loan payments are made for 10 years after
graduation.
Sources: U.S. Census Bureau, 2006, PINC-03, PINC-04; The College Board, 2005; calculations by the authors. The College Board, Education Pays 2007.
What will the future bring?
Key Variables: Ability to Pay
Economic growth
Income distribution
Demographics
Key Variables: Cost and Price
Innovations in instruction
Technical change
University governance
Government subsidies (state and
federal)
The Role of Saving
Who can save?
New saving vs. asset allocation
Distribution of tax subsidies
(deductions vs. credits)
The Role of Loans
Continued reliance
Flexible repayment options
Higher loan limits