Every state in the U.S. provides free education to its residents from grades K-12. Some states have added Pre-K to that free education continuum, and others have added funding for free community college tuition. The higher education initiatives aim to improve college affordability for certain students.
Unlike other countries, the U.S. does not have a national Ministry of Education that regulates and directs the 98,577 public K-12 schools that educate the majority of our population. Even less regulated are the 30,492 private K-12 schools. If your child attends public schools, you don’t think about tuition until it’s time to consider college.
I generally use College Navigator, a tool hosted by the U.S. Department of Education, for fast answers to questions about college enrollment, tuition pricing, and financial aid.
Many sources provide college data sorted, aggregated, and illustrated in ways useful to insiders and outsiders. The College Board’s annual Trends in College Pricing and Student Aid report is one of those sources. Published each fall for more than two decades, it provides the most recently published enrollment, tuition, and financial aid data compared to previous years.
I last wrote about the report in October 2020, just before the presidential election. The country was still adjusting to the COVID-19 pandemic, as were our colleges. Presidential candidate Biden called for free college for families with incomes below $125,000.
President Biden’s free college goal never happened. However, his administration canceled billions in student loan debt and unsuccessfully tried to cancel more. College enrollments have been declining for more than a decade, even before the pandemic and the more recent FAFSA debacle. I thought I would look at the current trends in pricing, aid, and enrollments. Tables, charts, and figures printed below are sourced from the October 2024 College Board report.
Published Average Tuition and Fees
The average tuition and fees at public two-year and four-year institutions increased less than the general inflation rate of 3.1% in 2024-25. The researchers note that this continues a trend that started during the pandemic. Table CP-1 below shows the comparative pricing between sectors and payor status (in-state vs. out-of-state).
While the private non-profit four-year sector showed an average 3.9% increase in list price for 2024-2025, that high increase has not been the norm for the sector. In Figure CP-2 below, you can see that the average list price has decreased for the two-year public and four-year public institutions over the past decade (2014-2015 through 2024-2025) and increased by only 4.4% in the aggregate for the four-year non-profits.
The researchers note that for all three sectors, published tuition and fees peaked in 2019-2020 and declined between that year and 2024-2025, while the Consumer Price Index (CPI) increased by 23% during the same five-year period. How atypical was that relationship?
Over 30 years, the list price fluctuated wildly between the three sectors, the only consistent being the low increase for the last decade. In Figure CP-4 below, you can view the changes isolated to tuition and fees only, tuition and fees, housing, and food. As total enrollments declined, the market competition for students drove lower-than-inflation increases from 2014-15 through 2024-25.
Average Net Price
Colleges and universities generally don’t publish their net price, the list price of tuition and fees minus the institutional, federal, and state grants a student might receive. However, the net price is published on College Navigator. I’ve written about it frequently, including my most recent article about tuition-free financial aid.
While most of my articles about net price specifically include net prices for individual institutions or groups of institutions, the College Board publishes those averages based on its three key groups – public two-year colleges in the district, public four-year colleges in-state, and private non-profit four-year colleges.
Figure CP-8 below provides a view of the average net price for full-time undergrads at public two-year colleges in the district. While the published cost of attendance (COA) exceeds $20,000, students who live at home and do not need to cover housing and food costs can attend college for free because grant aid exceeds the published tuition and fees.
First-time, full-time first-year students needing to cover housing and food costs will pay an average of $9,680 after grant aid. An additional $6,130 in allowances for books, supplies, transportation, and other costs could also be incurred in 2024-2025. Lower-income students who borrow loans to cover these costs are less likely to graduate.
Figure CP-9 below displays the average published and net prices for full-time, in-state undergrads at public four-year institutions from 2006-07 through 2024-25. The average net price for these institutions when tuition and fees are a student’s primary costs is only $2,480. Adding food, housing, and other incidentals drives that net price to $20,780.
I’m not sure about the percentage of private, four-year, non-profit college students who commute to campus from their parents’ homes. It’s likely a much lower percentage than the number of commuting students at two-year public colleges. Nonetheless, to compare two-year public to four-year public to four-year non-profit private, we should look at the average net tuition and fees only.
Figure CP-10 below displays the published COA, average net COA, published tuition and fees, net COA, and net tuition and fees for four-year private colleges. Thanks to a prevalence of tuition discounting among private non-profits, the average grant in 2024-25 is $26,840, which has been relatively flat for the past decade, keeping pace with the published tuition and fees.
Because of the size of the institutional grants, net tuition and fees averaged $16,510 in 2024-25. Net COA is much higher at $36,150. As mentioned earlier, this number decreased each of the past three years.
Average Net Prices by College Selectivity
Researchers at the College Board have produced this report for decades. However, standing on their laurels and producing the same report limits its usefulness. The same can be said for not understanding the higher education market. Therefore, they also produced reports reviewing net price by college selectivity.
Figure CP-11 below illustrates the average net tuition and fees paid by full-time dependent students attending selective public four-year institutions. In 2019-2020, that number was $1,840 for students with annual family incomes under $40,000. It increased to $14,240 for students whose families earned $160,000 or more.
The researchers note that in 2019-20, over 75% of the lowest-income students at very selective institutions received enough grant aid to cover their tuition and fees. That said, grants don’t cover the enormous room and board and other costs for students from the lowest income brackets.
Figure CP-12 illustrates the average net tuition and fees paid by full-time dependent students attending very selective private non-profit four-year institutions. The net tuition and fees for students in the lowest income bracket were $13,410 in 2019-20. The net tuition and fees for students in the highest brackets were $39,250 in 2019-20.
These numbers for the very selective private non-profit institutions align more with the elite private colleges and universities that I profiled in my August 2023 article. They clearly do not represent the grant aid policies of the Ivy Plus institutions where students in the lowest income quintiles pay virtually nothing.
State and Local Funding
The cost of public institutions is dependent on how much subsidies the state (and counties/districts) provide. The report’s researchers provide several illustrative graphs and tables.
Figure CP-13A below shows the corresponding increases in tuition over time whenever state and local funding declined. The most notable period was around the 2008 recession. State funding dipped for approximately three years and steadily rebounded from 2011 through 2022. In 2022-23, state funding averaged $11,040, the same amount as in 2021-22. This graph includes the funding per FTE student, which is important since student enrollment increased by 25%, and funding per student increased by 23% over the 30-year timetable.
Tuition and fees have remained flat at public institutions since 2018-19. With COVID-19 funding no longer available, some states may have to cut back on their future subsidies to public higher education institutions.
Not all states are equal from a wealth perspective or a population perspective. As a result, the national averages for public colleges will vary by state. The College Board researchers provide charts and tables illustrating state funding over time.
Figure CP-14 below ranks the state funding per FTE student in 2022-23 from lowest to highest. It also provides a 10-year percentage change in FTE funding per student in the graph below the first.
These charts also provide the average for the United States. States to the right of the U.S. provide funding higher than the average, while states to the left provide less. New Hampshire and Vermont have been at the lowest amount for decades, even though New Hampshire increased its 10-year funding average by 96% during this period.
Lastly, there are three major components to public institution revenue: federal appropriations and grants, state and local appropriations, and net tuition revenue. Figure CP-15 illustrates the components of those revenues per FTE student in 2021-22.
Net tuition revenue declined at all types of public institutions between 2016-17 and 2021-22, thanks to federal and state appropriations increases during the same period. State appropriations increased the most at public two-year colleges during that period, increasing from $5,490 per FTE student to $9,160 per FTE student.
Education and Related Expenditures
The College Board researchers track education and related expenditures per FTE student. These include spending on instruction, student services, and the education share of spending on academic and administrative support, as well as operations and maintenance.
The researchers consider these expenditures to be the institution’s cost of providing education to students. A portion of these expenditures is covered by net tuition revenues (what the student pays), and the remainder is subsidized.
Figure CP-16 below highlights the total E&R expenditures for each type of institution as well as the portions covered by net tuition and subsidies. The greatest subsidies are with private non-profit doctoral institutions and public bachelor’s institutions. The table below the chart provides the relative percentage of costs covered by subsidies and net tuition.
I noted that the lowest subsidy is for private non-profit master’s institutions. Students at these institutions cover the highest percentage of costs with net tuition. The lower subsidy is embarrassing when you examine the relative ROI of most master’s degrees.
Enrollment Patterns
Everyone with a basic understanding of economics is familiar with the major tenets of supply and demand. When demand is high, and supply is low, it’s easier to increase prices. When demand and supply are high, it’s not easy to increase prices. When demand decreases and supply is high, prices may also decline.
The researchers provide an excellent overview of college enrollments over the past two decades in Figure CP-18 below. From fall 2002 to fall 2011, total college enrollments increased by 4.3 million (26%) to 20.9 million students. Since that 2011 peak, total enrollments have declined by 2.4 million (11%) to 18.5 million students in fall 2022.
Part-time undergraduates have held steady at 33-32%, while full-time undergraduates began the period at 53% and finished it at 51%. Graduate students increased over the period from 14% to 17% and total 3.2 million in fall 2022.
Figure CP-19 below displays fall enrollment by sector and by the level of the program for the period of 2000-2022, with a focus on the last four years (2019-2022). The sector that has borne the brunt of the enrollment declines since the peak in fall 2010 is the public two-year sector, with a decline of nearly 2 million students.
Public four-years have managed to increase enrollment by less than five percent and private non-profit four-years have increased total enrollment by 8.3%. Both of those sectors have declined in total enrollment since 2019. For-profits have declined total enrollment by more than 50% since 2000 but have held steady since 2019. I note that the percentage of students attending part-time has barely budged regardless of the sector.
The researchers note that the IPEDs source data from the Department of Education is only available through fall 2022. The National Student Clearinghouse publishes data through fall 2023 and shows that total enrollment increased year over year by 2.6% in the public two-year, 0.5% in the public four-year, 0.7% in the private non-profit four-year, and 3.2% in the for-profit four-year sector.
If you want to find out in which states public enrollment has declined since the fall of 2019, the College Board researchers have displayed that in Figure CP-20A and Figure CP-20B below. As stated previously, the national average showed a 4% decline. There are only 7 states that experienced an increase in public four-year enrollment during the same period.
Some of the states experiencing the largest declines (like Kansas and West Virginia), have been in the news for their attempts at reducing costs through elimination of low enrollment programs or by consolidating public institutions.
Student Financial Aid
Understanding how students manage to pay for the cost of attending college is important. There are federal, state, and private grants and loan programs and institutional grants. Table SA-1 below provides an overview of the biggest programs and their totals by selected years since 1993-94. It makes sense that some funding would decline as enrollments declined.
The drop in loan utilization surprised me, given the Biden administration’s focus on canceling student loans. Since the fall of 2018, all loan programs except Grad PLUS (graduate enrollments have increased) have declined.
Federal grants have declined over the same period, including the highly touted and revamped veterans’ programs. State grants, likely for community colleges, have increased 17% over the past decade. Institutional grants have increased 31% over the same period.
Loans receive all the attention in the press, but Figure SA-2 below illustrates how loans decreased from 38% of the funds used to cover undergraduates’ cost of attendance in 2013-14 to 28% in 2023-24. Grants increased from 53% to 67% over the same period. Loans and grants were equal funding percentages in 2003-04, with loans edging up until beginning to decline relative to grants in 2008-09.
The percentage of funding covered by loans also decreased for grad students from 68% of funding in 2013-14 to 61% of funding in 2023-24. Grants increased from 29% to 37% over the same period.
The cumulative amount borrowed is another interesting data point for those who believe that all students have student loans. According to Figure SA-16 below, thanks to either their parents’ wealth, their employer providing tuition reimbursement, or their attendance at low-cost colleges, 36% of all undergraduate students had no cumulative debt.
Cumulative borrowing varies by race, with Asians having the highest percentage of non-borrowers (49%) and Blacks having the lowest percentage (13%).
Pell Grants are need-based grants funded by the federal government. Students from the poorest families are eligible. Figure SA-17B below illustrates that the number of Pell recipients and total Pell expenditures have fallen over the past decade. Recipients have fallen from 9.4 million to 6.4 million, and funding has fallen by $18.5 billion.
Pell Grant recipients haven’t fallen because our lower-income citizens have gained wealth. On the contrary, Pell recipients have decreased because the net price of college is still too costly for a Pell recipient. Figure SA-18 below illustrates this in the public and private four-year sectors.
The maximum Pell Grant slowly increased from $6,730 in 2004-05 to $7,395 in 2024-24. Public four-year in-state tuition and fees increased from $8,530 to $11,610 during that period. A Pell Grant is not enough to cover tuition and fees.
However, assuming state grants and institutional grants might cover published tuition and fees for low-income students, the public four-year in-state tuition, fees, housing, and food costs increased over the same period, with a gap between these costs and tuition and fees ranging from $10,390 in 2004-05 to $13,310 in 2024-25.
Private colleges and universities have higher published tuition and fees ranging from $33,340 to $43,350 over the period. The gap between private non-profit four-year tuition, fees, housing, and food costs and their published tuition and fees ranged from $12,340 to $15,250 over the period. While Pell Grant recipients may find grant coverage for tuition and fees, there are few institutions outside of the Ivy Plus that will award grants for housing, food, and other costs.
Institutions have been the primary suppliers of grants in terms of total dollars. The researchers illustrate the average institutional grant aid change by sector in Figure SA-21A below. The largest average increase per FTE was at private four-year non-profits, where the average increased from $10,670 in 2006-07 to $20,860 in 2021-22.
Even public institutions doubled their grants over the same period, with public four-year grants increasing from $1,780 to $4,170 and public two-year grants increasing from $220 to $520.
Figure SA-21B below illustrates the percentage of first-time, full-time undergraduates who received institutional aid over the past 15 years. The percentage has held relatively flat for the past 10 years with the private, non-profit four-year institutions, moving from 80% in 2013-14 to 83% in 2021-22. Over the same period, public institutions have increased their percentages at higher rates, with the four-year publics increasing from 47% to 62%.
Final Thoughts
In the years of steady growth of higher education enrollments, colleges and universities increased their published prices and net prices at rates that exceeded the annual consumer price index inflation.
After enrollment peaked in 2010-11, the percentage of students receiving grants and the average grant value increased. Publicity related to student loans triggered declines in the number of students borrowing and the number and percentage of students receiving Pell grants.
Non-elite higher education has a pricing perception problem and an ROI problem. Many of our lowest-income students cannot afford to attend college unless they borrow money using loans, and the evidence is clear that many have walked away from attending college.
The continued competition for student enrollment has continued the trend of offering institutional grants to almost everyone attending a private four-year institution. The percentage of recipients at public four-year institutions continues to increase.
I posed a question at the beginning: “Is the Market Driving Affordability?” In some ways, the answer is yes. Non-elite four-year colleges and universities continue to compete for students and offer grants that hopefully make their net prices attractive.
At the same time, total college enrollments have declined. Based on the Pell recipient data, the biggest decline in the market has been with low-income students. Is there a solution? Attending a low-cost two-year college is one solution. Enrollments at these institutions have struggled since the pandemic, even though the average net price of tuition and fees only is zero (or less than zero).
We continue to read about companies and federal, state, and local governments that continue to reclassify jobs to a college degree that does not require status. I believe those reclassifications are window-dressing. Successful people will need a degree, critical thinking skills, and other skills, like the ability to work with artificial intelligence tools.
Rarely does a week pass when you don’t read about a college shutting its doors due to low enrollment. The pace of closures and the number of closures are predicted to increase. Will enough colleges and universities close to reduce the excess capacity? Thanks to many subsidies, it’s unlikely to occur anytime soon.
Will more colleges and universities close because of market pressures? Perhaps, but very few entrants to the market are offering a more affordable education, a higher-quality product, and a shorter time to complete a degree. The time to really worry is when that happens and happens at scale.
