State Support Critical for Keeping Public Tuition Affordable, Study Finds

A decline in state appropriations at four-year public institutions of higher education was the single most important factor associated with increases in tuition, according to a report released in February by the National Center for Education Statistics (NCES) within the U.S. Department of Education 



The Study of College Costs and Prices, 1988-89 to 1997-98 shows that changes in tuition and fees — what colleges charge and the costs they incur to educate students — are related in only limited ways and that many factors have been causing the continued tuition increases at public and private institutions over and above inflation. 



Mandated by Congress, the study used data from the Integrated Postsecondary Education Data System to examine two main issues: the relationship between college prices (tuition the family and student pay) and costs (what the institution spends), and the relationship of federal and institutional aid to price increases. 



Overall, from 1988-89 through 1997-98, tuition charges in both the public and private sectors rose faster than inflation. The study found that tuition increases at private institutions were related to factors such as providing more institutional financial aid to students and increases in faculty salaries, along with decreases in endowment revenue and private gifts. 



Some findings among public institutions between 1988-89 and 1997-98 include: 

• Among public bachelor's institutions, in-state undergraduate tuition and fees for full-year, full-time students increased each year by an average of 4.3 percent. The same measure for other public institutions — comprehensive, research/doctoral and 2-year institutions — was 4.2 percent, 4.1 percent and 3.4 percent, respectively. 
• Meanwhile, the level of state appropriations as a proportion of total revenue decreased for all types of public institutions, including 11.3 percent for comprehensive, 9.8 percent for research/doctoral, 6.9 percent for bachelor's, and 3.2 percent for 2-year institutions. 
• The level of state appropriations per full-time equivalent (FTE) student at public research/doctoral institutions decreased an average of $825 annually (1 percent), while tuition per FTE student increased an average of $1,682 (4.4 percent). The same measure for federal appropriations was a decrease of $50 annually (2.9 percent). On average, federal and state appropriations and tuition combined for 51.3 percent of these institutions' total revenues per FTE student per year. 
• Federal and state appropriations at public research/doctoral institutions have decreased steadily as tuition has continued to increase. In 1988-89, the average level of state appropriations of total revenue at these institutions was 48.7 percent; these appropriations averaged less each year, hitting a low of 38.9 percent in 1997-98. Federal appropriations also declined from 1.1 percent in 1988-89 to 0.7 percent in 1997-98. 
• Tuition, which registered 18.4 percent in 1988-89 according to the same measure, progressively averaged more each year, reaching 23.8 percent in 1997-98.  
• 71.5 percent of first-time, full-time undergraduates at Bachelors-granting institutions received some type of financial aid, while 68.5 percent of similar students at research/doctoral institutions and 56.8 percent of community college students also received aid. 

Given the limitations of the study, the relationship between tuition charges and increases in student financial aid could not be fully addressed. However, the study did find that increases in institutional aid were related to increases in tuition at some small public and private 4-year colleges. 



A Study of College Costs and Prices is a follow-up report to the 1998 Congressionally-mandated study Straight Talk About College Costs and Prices by the National Commission on the Cost of Higher Education and is available at: http://nces.ed.gov/das/epubs/2002157/  



Separately, the National Association of College & University Business Officers found that the cost of an undergraduate education is greater than the price of tuition and related fees nearly universally across institutions. The difference is made up by state, local and federal support, drawdowns on endowments, private contributions, other activities, etc. (see Explaining College Costs: NACUBO's Methodology for Identifying the Costs of Delivering Undergraduate Education: http://www.nacubo.org/public_policy/cost_of_college/)