Background Information on Affordability Issues

February 9, 2007

Tuition and Fees

Indiana Public Institution Full-Time Hoosier Undergraduate Tuition and Required Fees Effective Fall 2006 1996-97

Rate

2006-07

10-yr Increase Rate INDIANA UNIVERSITY Bloomington East Kokomo Northwest South Bend Southeast IUPUI $3,783 $2,728 $2,757 $2,768 $2,856 $2,718 $3,300 98.5% 84.8% 83.9% 85.8% 83.2% 88.3% 97.7% $7,510 $5,040 $5,071 $5,142 $5,231 $5,118 $6,523

Average

Annual Increase 7.1% 6.3% 6.3% 6.4% 6.2% 6.5% 7.1% PURDUE UNIVERSITY West Lafayette Calumet North Central IUPU Ft. Wayne

Consumer Price Index (CPI fiscal year, 2006-07 est.)

$3,208 $2,775 $2,760 $3,006

158.9

121.2% 97.0% 101.7% 101.0%

26.3%

$7,096 $5,466 $5,567 $6,041

200.7

8.3% 7.0% 7.3% 7.2%

2.4%

Indiana Public Institution Full-Time Hoosier Undergraduate Tuition and Required Fees Effective Fall 2006 1996-97

Indiana State University Univ. of Southern Indiana Ball State University Rate $3,072 $2,454 $3,286 Vincennes University (Fr/Soph) Ivy Tech Community College of Ind.

$2,367 $1,880

Consumer Price Index (CPI - fiscal year, 2006-07 est.) 158.9

Source: Indiana Commission for Higher Education.

2006-07

10-yr Increase 110.2% Rate $6,456

Average

Annual Increase 7.7% 84.2% 107.9% $4,520 $6,830 6.3% 7.6% 58.5% 44.3% $3,751 $2,713 4.7% 3.7%

26.3% 200.7 2.4%

Ten-Year Weighted Average, First-Time Entry 1995-96 rate 2005-06 Δ% rate

National

2-year 4-year

Midwest

2-year 4-year

Indiana

2-year 4-year $1,330 $2,811 $2,358 $3,728 $1,921 $3,021 64.1% 95.4% 42.3% 76.9% 41.5% 100.2% $2,182 $5,492 $3,355 $6,595 $2,719 $6,047 Source for National and Midwest: College Board, 2006 Trends in College Pricing Avg. Annual Increase 5.1% 6.9% 3.6% 5.9% 3.5% 7.2%

T&F as % of Median Family Income

Median Family Income IU Bloomington IU Southeast IUPUI PU West Lafayette PU North Central Indiana State U U of Southern Indiana Ball State U Vincennes U 1989-90 39,700 5.5% 4.4% 5.0% 5.1% 1994-95 47,465 7.1% 5.1% 6.3% 6.1% 1999-00 62,079 6.9% 5.0% 6.0% 6.0% 2003-04* 2004-05* 66,988 69,266 9.8% 6.7% 8.5% 8.7% 9.9% 6.7% 8.6% 8.8% 4.3% 5.0% 4.1% 5.0% 3.9% 5.1% 5.9% 4.6% 6.0% 4.6% 5.2% 5.5% 4.6% 5.9% 4.1% 7.0% 8.1% 5.8% 8.9% 4.7% 7.1% 8.1% 5.9% 8.9% 4.8% ITSC 3.6% 3.6% 3.2% 3.5% 3.6% Source: U.S. Census Bureau, http://www.census.gov/hhes/income/4person.html; U.S. Dept. of HHS

State Appropriations for Higher Education

Higher Education Operating Appropriations

1984-85 1989-90 1994-95 1999-00 2004-05 2006-07 University Operating $497,343 $743,321 $824,587 $1,025,422 $1,138,602 $1,185,266 University Line Items $18,946 $15,650 $25,365 $37,903 $37,691 $37,094 Debt Service $34,488 $64,018 $79,401 $104,776 $110,240 $131,149 SSACI Programs $24,301 $42,868 $60,491 $103,733 $188,243 $218,431 Other Programs $5,220 $12,185 $13,603 $18,657 $15,472 $16,367 OPERATING TOTAL $580,297 $878,041 $1,003,447 $1,290,491 $1,490,247 $1,588,307 CHANGES THROUGH 2006-07 04-05 to 06-07 99-00 to 06-07 4.1% 15.6% 94-95 to 06-07 89-90 to 06-07 84-85 to 06-07 43.7% 59.5% 138.3% $ in thousands -1.6% -2.1% 46.2% 137.0% 95.8% 19.0% 25.2% 65.2% 104.9% 280.3% 16.0% 110.6% 261.1% 409.5% 798.9% 5.8% -12.3% 20.3% 34.3% 213.6% 6.6% 23.1% 58.3% 80.9% 173.7%

Total Expenditures and State Share

IUB IUPUI Health IUPUI Gen Acad PU WL ISU USI BSU VU ITCCI

Total Expenditures

1992-93 $287.0

$94.4

$104.5

$312.2

$91.4

$24.1

$151.0

$38.4

$87.6

1996-97 $340.6

$110.4

$122.1

$362.0

$99.8

$34.9

$173.0

$42.9

$108.2

2000-01 $431.1

$128.8

$157.1

$462.5

$111.9

$50.5

$200.4

$45.7

$148.4

2004-05 $565.1

$144.4

$215.2

$614.7

$131.4

$65.6

$228.9

$56.9

$226.9

2006-07 $608.7

$171.7

$227.1

$670.1

$129.5

$71.0

$247.0

$58.0

$260.2

Δ% 112.1% 81.9% 117.3% 114.6% 41.7% 194.6% 63.6% 51.0% 197.0%

TOTAL CPI $1,357.8

$1,599.1

$1,981.8

$2,564.8

$2,784.6

105.1% 43.0% HEPI

Sources: State Budget Agency As-Passed Books, Institutional Biennial Budget Requests Income I

67.8%

State Operating Appropriations

IUB IUPUI Health IUPUI Gen Acad PU WL ISU USI BSU VU 1992-93 $146.7

$77.8

$59.8

$178.4

$63.5

$14.1

$96.8

1996-97 $159.0

$84.7

$63.1

$191.9

$68.0

$19.9

$105.1

2000-01 $181.4

$96.3

$80.7

$224.9

$76.7

$28.8

$117.6

2004-05 $195.3

$100.3

$90.3

$240.2

$78.9

$33.7

$124.9

ITCCI

TOTAL CPI

$22.1

$55.7

$807.1

$27.0

$69.4

$902.1

$29.8

$93.0

$1,063.9

$35.9

$128.5

$1,176.1

HEPI

Source: State Budget Agency As-Passed Books. In millions of dollars.

2006-07 $191.9

$99.1

$90.3

$241.3

$73.9

$35.2

$122.9

$36.4

$144.1

$1,185.3

Δ% 30.8% 27.4% 51.0% 35.3% 16.4% 149.6% 27.0% 64.7% 158.7%

46.9% 43.0% 67.8%

IUB IUPUI Health IUPUI Gen Acad PU WL ISU USI BSU VU ITCCI

TOTAL CPI HEPI

Gross Unrestricted Fees

1992-93 1996-97 2000-01 2004-05 2006-07 $140.3

$16.6

$44.7

$133.8

$27.9

$10.1

$54.2

$16.3

$31.9

$550.7

$181.6

$25.7

$59.0

$170.1

$31.8

$15.0

$67.9

$16.0

$38.8

$697.0

$249.7

$32.5

$76.5

$237.7

$35.3

$21.7

$82.8

$15.9

$55.5

$918.0

$369.8

$44.1

$124.8

$374.6

$52.4

$31.9

$104.1

$21.0

$98.3

$1,388.7

$395.0

$53.8

$133.2

$407.9

$48.3

$29.8

$114.8

$17.8

$103.0

$1,469.7

Source: Institutional Biennial Budget Requests, Income I Δ% 181.5% 224.1% 198.0% 204.9% 73.1% 195.0% 111.8% 9.2% 222.9%

166.9% 43.0% 67.8%

FTE and HEPI Adjusted Revenues and Expenditures, 1992-93 to 2004-05

$12,500 $12,000 $11,500 $11,000 $10,500 $10,000 $9,500 $9,000 $8,500 $8,000 $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 If FY93 levels maintained 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 All Inst Approp All Inst Tuition Rev All Inst Expend

100% Change in State and Family Share of Education Expenditures FY1995 to FY2005 90% 80% 70%

Tuition & Fees 40.6% 40.7% 40.9% 41.4% 41.6% 42.4% 43.3% 45.4% 48.1% 49.5% 50.1%

60% 50%

2.2% 2.5% SSACI Aid 2.7% 2.7% 3.0% 2.9% 3.0% 3.4% 3.7% 4.1% 4.0%

40% 30%

57.2% State Operating Appropriations 56.8% 56.4% 55.9% 55.3% 54.7% 53.7% 51.2% 48.1% 46.3% 45.9%

20% 10% 0% 1994-95 1995-96 1996-97 Source: Indiana Commission for Higher Education.

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

University Operating Appropriations and SSACI Expenditures on Public Students

$1,300,000,000 $1,250,000,000 $1,200,000,000 $1,150,000,000 $1,100,000,000 $1,050,000,000 Constant (CPI) $ $1,000,000,000 $950,000,000 $900,000,000 $850,000,000 Current $ $800,000,000 19 92 -9 3 19 93 -9 4 19 94 -9 5 19 95 -9 6 19 96 -9 7 19 97 -9 8 19 98 -9 9 19 99 -0 0 20 00 -0 1 20 01 -0 2 20 02 -0 3 20 03 -0 4 20 04 -0 5

400,000

Fall Headcount Enrollment in Indiana Postsecondary Institutions

Total 346,378

350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

Public 266,790 Private* 79,588

Source: Annual Editions of Report of Enrollment in Indiana Colleges and Universities, prepared for the Indiana Association of Collegiate Registrars and Admissions Officers. Independent Colleges of Indiana. Commission for Higher Education Student Information System. *Awaiting update

Hoosier and Reciprocity FTE

200,000 190,000 180,000 170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 19 92 -9 3 19 93 -9 4 19 94 -9 5 19 95 -9 6 19 96 -9 7 19 97 -9 8 19 98 -9 9 19 99 -0 0 20 00 -0 1 20 01 -0 2 20 02 -0 3 20 03 -0 4 20 04 -0 5

Operating Appropriations and SSACI Expenditures on Public Students per Hoosier FTE

$7,750 $7,500 $7,250 Constant (CPI) $ $7,000 $6,750 $6,500 $6,250 $6,000 $5,750 $5,500 $5,250 Current $ $5,000 19 92 -9 3 19 93 -9 4 19 94 -9 5 19 95 -9 6 19 96 -9 7 19 97 -9 8 19 98 -9 9 19 99 -0 0 20 00 -0 1 20 01 -0 2 20 02 -0 3 20 03 -0 4 20 04 -0 5

Estimated Weighted Average Resident Tuition and Fees Net of SSACI Aid per Hoosier Undergraduate

$5,500 $5,000 $4,500 $4,000 4 yr CPI Constant $ $3,500 $3,000 4 yr Current $ $2,500 $2,000 $1,500 2 yr Current $ 2 yr CPI Constant $ $1,000 19 92 -9 3 19 93 -9 4 19 94 -9 5 19 95 -9 6 19 96 -9 7 19 97 -9 8 19 98 -9 9 19 99 -0 0 20 00 -0 1 20 01 -0 2 20 02 -0 3 20 03 -0 4 20 04 -0 5

Financial Aid

Sources of Aid

• Grants

– Federal, State, Institutional, Private

• Loans

– Federal, Private, Subsidized, Unsubsidized, PLUS

• Work Study

Federal Grants

• The maximum Pell Grant for 2004-05 is $4,050 • The 2004-05 average Pell Grant was $2,230 • The median expected family contribution (EFC) of Pell Grant recipients in 1999-00 was $53; for non-recipients, EFC was $8,282 • The median family income of Pell recipients in 1999-00 was $15,098; for non-recipients, median family income was $49,475 • On average, the maximum Pell award in 2003 covered 68% of COA at CCs, 41% at public 4-year institutions, and 16% at private, not for-profit 4-year institutions • Pell Grant recipients who completed a degree in 1999-00 borrowed a median of $17,430, or $2,000 more than the median for all undergrads

2003 Status Report on the Pell Grant Program

, American Council on Education; College Board

• • • •

State Grants

Primary grant program is Higher Education Award/Freedom of Choice (Frank O’Bannon Award) Other large programs are 21 st Century Scholars and Children of Disabled Vets, et al.

– – – – Mean awards for 2005-06 were*: $3,303 for all students $3,089 for public 4-year students $5,515 for independent, not-for-profit 4-yr students $1,270 for public 2-year students The SSACI budget is increasing much faster than any other portion of the state’s higher education budget – nearly 800% since 1985 compared to 140% for university operating *Source: SSACI 2005-06 annual report

Institutional Grants • Merit-based and need-based

– Over the past decade, the percentage of full time undergrads at 4-year colleges receiving institutional aid increased – Over the same period, there was a notable increase in the percentage of undergrads in the highest income quartile who received institutional aid, especially between 1995-96 and 1999-00 *

What Colleges Contribute: Institutional Aid to Full-Time Undergraduates Attending 4-Year Colleges and Universities,

National Center for Education Statistics, 2003

2002-03 Institutional Grant Aid to Resident Undergraduates ($76.5M)

merit aid need based aid 21% 79% Source: Indiana’s postsecondary institutions

2002-03 Institutional Grant Aid to Non Resident Undergraduates ($51.4M)

merit aid need based aid 11% 89% Source: Indiana’s postsecondary institutions

Loans

• Subsidized Stafford Loans • Perkins Loans • Other Repayable Loans • Unsubsidized Stafford Loans • PLUS (Parent) • Private Lenders

IUB IUE IUK IUN IUSB IUS IUPUI PUWL PUC PUNC IPFW ISU USI BSU ITSC

Borrowing: Average Student Loan Debt of Graduating Resident UGs Who Borrowed

1999-00 $17,823 $18,086 $13,536 $13,488 $16,099 $12,381 $18,534 $15,539 $11,843 $10,769 $15,793 $14,629 $13,736 $16,038 $5,551 2000-01 2001-02

Bachelor's Degrees

$17,287 $17,946 $13,305 $16,751 $17,805 $13,073 $13,654 $16,174 $12,795 $19,119 $15,687 $13,535 $13,771 $16,871 $13,819 $16,249 $13,209 $19,703 $15,762 $13,069 $19,476 $14,125 $16,274 $12,980 $16,774 $14,906 $16,469 $16,280

Associate's Degrees

$6,221 $5,709 2002-03 $18,254 $18,486 $12,781 $15,632 $17,112 $12,989 $19,529 $16,598 $13,120 $21,870 $15,773 $16,925 $13,749 $16,733 $6,636 Source: 2004 Institutional Performance Indicators Submission

Private and federal student loan volume, 1995-96 and 2005-06

$80,000

$68,586

$70,000 $60,000

1995-96 2005-06 86% Increase

$50,000

$36,913

$40,000 $30,000 $20,000

913% Increase $17,300

$10,000

$1,708

$0

Private Sector Federal Loans

Note: Private sector loans do not include state sponsored non-federal loans; constant dollars calculated using Consumer Price Index.

Source: College Board, 2006.

Trends in Student Aid

.

Conclusions

Good News and Bad News

• State appropriations for higher education are increasing, but not fast enough counteract inflation and enrollment growth • The inflation-adjusted value of today’s maximum Pell grant is below its value in 1975-76 • State grants increased with tuition and fees up to FY03, but are now stalled and falling far behind actual T&F at some institutions

Good News and Bad News

• Institutional grant aid continues to increase, but much is directed toward upper-middle- and high income students • The net price (cost of attendance minus all grant aid and loans) was still far in excess of the expected family contribution for most low-income students and many middle-income students*

*What Students Pay for College: Change in Net Price and College Attendance Between 1992-93

and 1999-00, National Center for Education Statistics, 2002

Effects on Students

• Longer time to degree as students work more hours • More loans, including more private (non-federal) loans parent loans and credit card debt • Low-income students are increasingly shifting to 2-year institutions* • Financial barriers are estimated to prevent 48% of qualified high school graduates from attending 4 yr colleges and 22% from attending 2-yr colleges** *”Pell Grant Students in Undergraduate Enrollments by Institutional Type and Control, 1992-93 to 2000-01,” Postsecondary Education Opportunity, December 2003 ** Empty Promises: The Myth of College Access in America, A Report of the Advisory Committee on Student Financial Assistance, 2002

Bachelor’s Degree Attainment by Age 24 by Family Income Quartile, 2005

Bottom Quartile 12.3% Second Quartile 16.6% Third Quartile 27.9% Top Quartile 72.6%

Note: National representation.

Source: “Family Income and Higher Education Opportunity, 1970 to 2005.”

Postsecondary Education Opportunity

, December 2006.

2004 Taskforce: Points of Consensus

• Public Process of Setting Tuition and Fees • Tuition and Fee Guidelines – Set fees for 2 years at a time • Financial Aid: Continue to Support SSACI and Institutional Aid to SSACI Eligible Students • Four Year Degree Completion Incentives • Part-Time Grant Program Should be Improved • Ensure More Students Graduate with Core 40 Degree • Increase Undergraduate Enrollment at Community College

Recent Actions Related to Recommendations from the 2004 Taskforce on College Affordability

• Indiana’s colleges instituted a process of notifying the public of proposed tuition and fee increases and holding public hearings • Indiana’s colleges set tuition for two years at a time (in-line with the state’s biennial budget) • Indiana made the Core 40 curriculum the default high school curriculum for all students • Indiana aligned its financial aid policy with Indiana’s Core 40 curriculum • CHE proposed an incentive to increase time-to-degree • Community college system has been expanded statewide