(EMAILWIRE.COM, October 21, 2002 ) In two studies released today, the College Board reports that in 2002-2003 college tuition and fees increased an average of 5.8 percent at four-year private institutions, 9.6 percent at four-year public institutions, and 7.5 percent at two-year public institutions, and that a record $90 billion was available in student financial aid in 2001-2002, with increases in grant aid outpacing loan aid for the second consecutive year.1

The increase in student aid is particularly important in light of the recent economic downturn, according to College Board President Gaston Caperton. "Many college-bound students and their families are affected by the struggling economy," he said. "As the cost of college rises, the availability of student aid becomes increasingly critical to a student's ability to attend college and pursue academic goals. Today's announcement of a record amount of financial aid is promising for America's students, but we must do more to ensure that college remains affordable, and that more students who have the preparation and desire, have access to higher education."

Trends in College Pricing 2002

College Pricing Averages 2002-2003 vs. 2001-20022
The College Board's data show the following increases in college tuition and fees:

At 4-year private institutions, tuition and fees average $18,273 ($1,001 more than last year's $17,272-a 5.8% increase);
At 4-year public institutions, tuition and fees average $4,081 ($356 more than last year's $3,725-a 9.6% increase);
At 2-year private institutions, tuition and fees average $9,890 ($690 more than last year's $9,200-a 7.5 % increase); and
At 2-year public institutions, tuition and fees average $1,735 ($127 more than last year's $1,608-a 7.9 % increase).
Room and Board Averages 2002-2003 vs. 2001-2002

At 4-year private colleges, room and board average $6,779 ($300 more than last year's $6,479-a 4.6% increase);
At 4-year public colleges, room and board average $5,582 ($316 more than last year's $5,266- a 6.0% increase);
At 2-year private colleges, room and board average $5,327 ($82 more than last year's $5,245- a 1.6% increase); and
For 2-year public institutions, there was not a sufficient sample size to achieve statistical significance on this calculation.
In the report Trends in College Pricing, the College Board reports tuition and fee data for the 2002-2003 academic year. The report shows a 9.6 percent increase in tuition and fees at four-year public colleges-the largest increase in a decade. However, the cost of attendance at public four-year institutions, which also factors in room and board, went up somewhat less-7.5 percent (see Exhibit 1).

Though the average increases at public institutions seem steep, the average dollar amount of the tuition increase is $356 for four-year public institutions and $127 for two-year public institutions.

According to Caperton, the tuition and fee increases at public institutions can likely be linked to their dependence on a shrinking tax revenue base. "As tax revenues decline, public colleges have searched for other sources of funding and for many, that has led to tuition increases," said Caperton. "But despite this year's increases, public colleges and universities are still a remarkable value."

Despite the rising tuition and fees, Caperton stressed that over the last decade, tuition growth at four-year colleges and universities was less than 40 percent, after adjusting for changes in consumer prices-much lower than the increase of about 60 percent during the preceding decade (see Exhibit 2).

Trends in Student Aid 2002

The College Board's Trends in Student Aid 2002 delivers good news for students looking for assistance in financing a college education. The College Board reports that student aid reached more than $90 billion in 2001-2002, an increase of 11.5 percent over the preceding year (or 10 percent after adjusting for inflation). Over the past decade, total aid has increased by 117 percent in constant dollars (see Exhibit 3).

For the second consecutive year, grant aid grew more rapidly than loan aid to college students. However, the decade-long trend finds growth in loans outpacing growth in grant aid. In 1991-92, loans accounted for 47 percent of student aid, compared to 54 percent in 2001-02. Grants declined from 50 percent to 39 percent of total aid over this time period (see Exhibit 4). 3

While the increase in total aid is encouraging, said Caperton, the increased reliance on loans must be considered critically. Unsubsidized loans (both student loans through the unsubsidized Stafford program and parent loans through the PLUS program), which now account for more than half of federal education loan volume, are available to students at all income levels. Low-income students are also eligible for both subsidized loans and Pell Grants from the federal government. Although Pell Grants increased by 23 percent in inflation-adjusted dollars in 2001-2002, the maximum Pell Grant still covers only 42 percent of average public four-year institution fixed costs (tuition and fees, room and board), compared to 84 percent 20 years ago (see Exhibit 5).

Over the past year the College Board has been examining critical college finance issues such as the grant/loan ratio, the increased reliance on borrowing, and the value of the Pell Grant.

"A year ago, the College Board created a Blue Ribbon Student Financial Aid Panel, to conduct a national conversation on how to ensure that a lack of student financial aid is not a barrier to higher education for those students who are prepared for and have a desire to attend college," said Caperton. The Blue Ribbon Panel is scheduled to present its findings to the Administration and to Congress this December. "As Congress considers the reauthorization of the Higher Education Act, we believe that the Panel's findings will greatly help to clarify the central issues involved in improving the federal student financial aid system to facilitate access to higher education," he said.

Keeping an Eye on the Prize: The Value of a College Education

Caperton urged students and parents alike to weigh the cost of a college education against the value it will bring over a lifetime. College graduates can still expect to make an average of $1 million more over their professional lives than can their high school-graduate counterparts (see Exhibit 6). And the value of a degree is actually heightened in a weak economy. According to a recent study, 1.1 million new jobs for college graduates were added over the last year while 2 million nondegree jobs were eliminated. "In addition to potential financial gains, it is more important than ever that we encourage our students to pursue a college education-it is the best investment we can make to foster knowledgeable and empowered citizens," Caperton said.

In order to make it easier for students to plan for college financing, the College Board provides extensive resources on its Web site. For more information, visit www.collegeboard.com.

The College Board is a national nonprofit membership association whose mission is to prepare, inspire, and connect students to college success and opportunity. Founded in 1900, the association is composed of more than 4,200 schools, colleges, universities, and other educational organizations. The College Board is committed to the principles of excellence and equity, and that commitment is embodied in all of its programs, services, activities, and concerns.

Corresponding exhibits are available on www.collegeboard.com.

1Trends in College Pricing 2002 reports tuition and fees for the current academic year, 2002-2003. Trends in Student Aid 2002 provides the most complete data available on federal, state, and institutional aid to students and parents through the most recently completed academic year, 2001-2002. Trends in Student Aid 2002 does not include projections of aid to students in 2002-2003.

2 Trends in College Pricing 2002 is based on data collected in the College Board's Annual Survey of Colleges, 2002-2003.

3In 1998, the federal government implemented education tax credits. These credits now constitute 6 percent of total student aid, causing both grants and loans to decline slightly as a proportion of the total.

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Produced for The College Board

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Jennifer Topiel, Chiara Coletti
212 713-8052

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