Last Updated On: July 1st, 2024
It’s Not All Bad News! Recent Trends in College Tuition Costs and Financial Aid Awards
The Covid pandemic has changed a lot about how we live and learn over the past two years. Much of it has been challenging, but recently there has been some promising news about college costs for students and prospective students. The College Board describes these trends in its annual Trends in College Pricing and Student Aid report that it released in October 2021. Here are a few key takeaways:
College tuition costs increased slightly for the 2021-22 school year, but the increase is less than the rate of inflation. In 2021, the sticker price of tuition increased by a range of 1.3% for two-year public colleges to 2.1% at private four-year universities, while the inflation rate was 3.9%. This means that in inflation-adjusted dollars, tuition declined. After a decade of large increases in college tuition compared to inflation, this is a dramatic change—one that students and their parents will welcome.
The average net price paid by families decreased in both absolute and inflation-adjusted dollars, reaching its lowest level since 2006. While sticker price is one indication of college costs, “net price”—the cost families actually pay after receiving financial aid—is a better indicator of the actual costs of college. By this measure, compared to all school years between 2006-07 and 2021-22, the average net tuition and fee price paid by first-time, full-time students was at its lowest during the 2021-22 school year. This means that the average financial aid package offered by most schools more than offset any increases in tuition and fees. According to the College Board, “The total amount of grant aid supporting postsecondary students increased by 133% (after adjusting for inflation) between 2000-01 and 2010-11 and by another 8% between 2010-11 and 2020-21, reaching a total of $138.6 billion.” While grant aid increased, average student loans went down: “Average federal loans per student peaked in 2010-11 for both undergraduate and graduate students. Federal loans per FTE undergraduate student declined to $3,780 in 2020-21, from a peak of $6,160 (in 2020 dollars) in 2010-11.”
There are several likely explanations for this slight decline in net costs and increase in financial aid. First, overall undergraduate college and university enrollment has declined. Almost every state saw enrollment decline at both two and four-year universities, averaging a 3% decrease. As schools compete for a smaller pool of students, they might offer more generous financial aid awards to attract the students who remain. While admission was more competitive than ever at very selective schools, such as the Ivy Leagues, many of these schools have large endowments and were able to meet financial need for all admitted students.
In addition, enrollment in distance learning—both by choice and by necessity—has increased dramatically. According to the College Board’s report, “In fall 2020, 75% of undergraduate students and 71% of graduate students enrolled in distance education courses, compared with 36% of undergraduate and 42% of graduate students in fall 2019.” While online learning can still be expensive, these programs can be more cost-effective for many students. (It’s also possible that some students have dropped out of school because they prefer in-person learning or can’t access the online learning system, but that’s a topic for another blog.)
An influx of government aid has also helped to keep college costs down for students. During a recession, it’s common for government aid to decline when tax revenues go down, and colleges often respond by increasing tuition and fees for students. When the economy was struggling due to Covid in 2020-21, however, the federal government sent billions of dollars to schools through three rounds of the Higher Education Emergency Relief Fund (HEERF). This aid money likely prevented schools from passing the costs of the pandemic on to students.
So, what is the takeaway for current and prospective college students? Some of it is similar to pre-pandemic advice: don’t judge tuition by its sticker price. While the posted tuition and fees for many schools are still very high, even with minimal increases, there are also multiple sources of aid available to help students. With lower enrollment and increased federal funding, many schools are willing and able to help students who simply fill out all the required paperwork and submit it on time. In addition, students whose families continue to suffer economically from the pandemic shouldn’t hesitate to contact someone in their school’s Financial Aid office if they need extra help, and should keep their eyes open for additional scholarship and financial aid opportunities. Students and families should also carefully consider their options before taking on student loan debt; the burdens of these debts have become more apparent in recent years, but many schools are also trying to help students limit their loans. A more negative takeaway is that students should be careful about choosing a school that might be on shaky ground financially, as the pandemic and reduced enrollment may have worsened the existing trend of certain schools merging and shutting down.
For families who have no trouble paying a school’s sticker price, the limited increases in tuition are also welcome news, as the cost of college has likely increased less than the value of the family’s investments. While the Covid pandemic has certainly brought many challenges to students and schools alike, one silver lining is that it may have helped to end the trend of ever-increasing college costs.
Photo by Andrea Piacquadio from Pexels
