(EMAILWIRE.COM, October 24, 2001 ) In two studies released October 23, the College Board reported that college tuition and fees in 2001-2002 had increased an average of between 5.5 and 7.7 percent at four-year institutions, and between 5.5 and 5.8 percent at two-year institutions, while a record of more than $74 billion was available in student financial aid.

College Board President Gaston Caperton said that "following the recent terrorist attacks on our country, and the general economic uncertainty the nation is experiencing, it is more important than ever that we continue to encourage our students to pursue a college education. The best weapon against fear and uncertainty is knowledge, and a college education is easily the best investment we can make to foster the knowledgeable and empowered citizens whom we need now more than ever."

Caperton noted however, that while student financial aid has almost doubled in the last decade (in constant dollars), the growing reliance on loan programs instead of grants was responsible for two-thirds of this increase. Over the past quarter century, federal student aid has drifted from a grant-based to a loan-based system, producing a major change in the way many students and families finance postsecondary education.

"The College Board is creating a Blue Ribbon Student Financial Aid Panel, to initiate a much-needed 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 and desire to attend college," said Caperton. "The Panel will be of vital importance in helping to increase educational equity and access. Its findings will form the basis of specific recommendations to Congress and the Administration on ways to enhance and improve the federal student financial aid system."

The panel, which will begin work this November, includes a preeminent roster of educators, researchers, policymakers, university presidents, corporate and not-for-profit leaders, student financial aid experts, and undergraduate students, among others.

Trends in College Pricing and Trends in Student Aid

According to the College Board report, Trends in College Pricing 2001, undergraduates at American colleges will pay, on average, from $96 to $890 more than last year for tuition and fees this year, depending on the type of institution. Students can also expect to face charges of between 3.9 and 6.6 percent more for room and board (see Exhibit 1). Trends in College Pricing 2001 is based on data collected in the College Board's Annual Survey of Colleges, 2001-2002.

The College Board's second report, Trends in Student Aid 2001, indicates that student aid reached more than $74 billion in 2000-2001, an increase of 7.1 percent over the preceding year (or 3.5 percent after adjusting for inflation). This aid, from federal, state, and institutional sources, was available to students and their families in 2000-2001 to assist with the expenses of attending college. It is almost double the amount of aid that was available a decade ago after adjusting for inflation.1

Tuition Prices2

The College Board's data show the following increases in college tuition and fees:

At four-year private institutions, students are paying $890 more ($17,123 vs. $16,233, a 5.5 percent increase);
at four-year public institutions, students are paying $267 more ($3,754 vs. $3,487, a 7.7 percent increase);
at two-year private institutions, students are paying $414 more ($7,953 vs. $7,539, a 5.5 percent increase); and
at two-year public institutions, students are paying $96 more ($1,738 vs. $1,642, a 5.8 percent increase).
Students who attend out-of-state or out-of-district colleges often face additional charges that increase their expenses for tuition and fees beyond the listed averages. This year, tuition and fee charges for out-of-state or out-of-district students at public institutions average $3,319 at two-year colleges, and $5,764 at public four-year colleges.

Room and Board

A review of additional data from Trends in College Pricing 2001 indicates that students living on campus will pay on average between 3.9 percent and 6.6 percent more than last year for room and board, in the following amounts:

At four-year private colleges, $6,455 vs. $6,168, or $287 more than in 2000-01 (4.7 percent increase);
at four-year public colleges, $5,254 vs. $4,931, or $323 more than in 2000-01 (6.6 percent increase);
at two-year private institutions, $5,278 vs. $5,079, or $199 more than in 2000-01 (3.9 percent increase).
The Trends in College Pricing 2001 report contains sample annual budgets that highlight average tuition and fees, plus institutional estimates of room and board, books, supplies, transportation, and personal expenses. According to the survey, estimates for a sample budget range from $10,367 for a student who lives at home and commutes to a two-year public college, to $26,070 for a student in on-campus housing at a four-year private institution (see Exhibit 2).

Financial Aid

While a record of more than $74 billion was available in student financial aid, loans now represent 58 percent of all aid, compared to just over 41 percent in 1980-81 (see Exhibit 3).

The College Board's analysis also shows that the purchasing power of Pell Grants remains far below what it was in the 1970s. Today, Pell Grants cover only 40 percent of average fixed costs (tuition and fees, room and board) at four-year public colleges and 15 percent at four-year private colleges (see Exhibit 4).

"We must take a leading role in convincing the public and our elected officials to restore the purchasing power of the Pell Grant," Caperton said.

Keeping Prices in Perspective

Caperton, however, urged Americans to keep this year's college tuition prices in perspective, noting that more than 40 percent of students who attend four-year institutions still pay less than $4,000 for tuition and fees (see Exhibit 5).

He also noted that most students who attend higher priced colleges receive significant student aid to help offset the costs. And he encouraged families to consider the value of local community colleges, pointing out that annual tuition at two-year public institutions averages less than $2,000 -- less than $200 per month.

"In addition, the value of a college education is clear," noted Caperton. He cited Census Bureau statistics that have consistently shown the annual income for a person with a college degree is more than 80 percent higher than for a high school graduate. "In both learning potential and earning potential, you cannot beat the value of a college education," Caperton asserted (see Exhibit 6).

Saving for College

This year, there are more ways than ever to save wisely for a college education. Currently, 48 states offer either a college savings plan or a prepaid tuition plan, and eight of these states offer both options. By the end of 2002, all 50 states will offer at least one type of plan.

"It is crucial that families plan ahead and save whatever they can for their children's higher education," Caperton added. "The investment can really pay off, since the lifetime gap in earning potential between a high school graduate and a four-year college graduate exceeds $1 million."

Caperton, who has been president of the College Board for more than two years, recently heeded his own advice and purchased prepaid tuition plans in West Virginia for two granddaughters.

Caperton also urged colleges and universities to keep students and families well informed about the variety of ways to finance higher education. Finally, Caperton encouraged students and families to be informed higher education consumers. He added that a good start would be reviewing financial aid information on the College Board's web site, www.collegeboard.com and researching information on state prepaid tuition and savings plans on the web site of the National Association of State Treasurers, www.collegesavings.org.

To view correlating Exhibits, please visit the College Board web site at: http://www.collegeboard.org/press/html/index.html.

1Trends in College Pricing 2001 reports tuition and fees for the current academic year, 2001-2002. Trends in Student Aid 2001 provides the most complete data available on federal, state, and institutional aid to students for the academic years 1987-88 through the most recently completed academic year, 2000-01. Trends in Student Aid 2001 does not include projections of aid to students in 2001-2002.

2Note: Because it is impossible to forecast future inflation rates or the price of college tuition and fees, the College Board does not participate in the projection of any such figures.

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Produced for The College Board

Contact:

Jennifer Topiel/Janice Gams, 212-713-8052
John Hamill/Chiara Coletti, 212-713-8052

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