The Current Trends in College Pricing and Student Aid

Finding consistent sources of accurate data for many industries is not easy. Higher education is no exception. For those in the know, the College Board’s annual Trends in College Pricing and Student Aid report is a valuable resource, providing college pricing and other data for more than two decades.

At the same time, it’s important to note that much of the data in the report is based on averages. I am not a fan of using averages in reports, particularly when millions of widely varying data points are used. However, when reports such as the College Board’s have been consistently prepared over many years, averages may be a more consistent measurement to utilize.

Highlighting this year’s report is the following information regarding the average published tuition and fees for full-time undergraduate students in 2020-2021:

  • Public two-year in-district: $3,770 (a $70 increase year-over-year)
  • Public four-year in-state: $10,560 (a $120 increase year-over-year)
  • Public four-year out-of-state: $27,020 (a $250 increase year-over-year)
  • Private nonprofit four-year: $37,650 (a $770 increase year-over-year)

As we all know, tuition and fees are not all of the costs of college attendance. In 2020-2021, the average estimated budgets (tuition and fees, room and board, allowances for books and supplies, transportation, and other personal expenses) for full-time undergraduate students are:

  • Public two-year in-district: $18,550
  • Public four-year in-state: $26,820
  • Public four-year out-of-state: $43,280
  • Private nonprofit four-year: $54,880

While the increment in overall costs appears to be in the $15,000-$17,000 range depending on the institution category, these non-tuition and fees costs of attendance are substantial, particularly for students attending public institutions.

Tuition and fees at public institutions are subsidized by the states, and it’s fair to say that there is quite a bit of variability regarding the total subsidies provided by the states to their public institutions. In 2020-2021, the average published tuition and fees for full-time undergraduate students at public institutions range from:

  • $1,430 in California to $8,600 in Vermont for two-year in-district students
  • $5,790 in Wyoming to $17,510 in Vermont for four-year in-state students

Grant aid from the states has been able to cover tuition and fees for first-time, full-time undergraduate students at public two-year colleges since 2009-2010. However, tuition and fees are not the only costs incurred by a college student. The College Board researchers report that in 2020-2021, the net price (costs less grant aid) paid by first-time, full-time undergraduate students was:

  • $8,860 for room and board and $5,700 for books, supplies, and other at public two-year institutions
  • $3,230 for tuition and fees, $11,620 for room and board, $4,640 for other at public four-year institutions
  • $15,990 for tuition and fees, $13,120 for room and board, $4,110 for other at private four-year

Despite the fact that the “average” state grant covers tuition and fees for two-year, in-district students, the net price paid for room and board, and books, supplies, and other personal expenses is $14,560 per year. While some may argue that “traditional” students living at home with their parents may not have to pay the room and board estimate and can limit their costs to $5,700 per year for books, supplies and personal expenses, the fact is that students whose parents are unable to assist with some financial support for college will have to use a combination of Pell grants and loans to cover nearly $15,000 per year for in-district, public two-year colleges.

Those costs increase to $19,490 per year for in-state students attending public four-year institutions and $33,220 for private four-year colleges and universities. It should be noted that the grant aid from private four-year colleges and universities has exceeded 50 percent for several years, reducing the tuition and fees substantially from their “sticker price.”

In a country where the median household annual income was $68,400 in 2020, these college costs are intimidating. It’s no wonder that college attendance decreases as a percentage of the population from the highest-earning to the lowest-earning quintile. Just to provide some perspective, the 2019 mean family income by quintile was:

  • Lowest 20 percent – $22,840
  • Second 20 percent – $53,820
  • Third 20 percent – $86,260
  • Fourth 20 percent – $131,610
  • Highest 20 percent – $289,140

The financial aid data reported by the College Board does not match the current year, 2020-2021, because the Department of Education reports data later than colleges and universities. While the report provides data on undergraduate and graduate financial aid, my discussion is limited to the undergraduate data since it matches with the tuition and fees and other cost of attendance data previously reported.

Once again, the data provided in the report utilizes averages, which may or may not represent the personal situation of an individual considering college. In almost all cases, the report uses averages based on an full-time equivalent (FTE) student.

Students may be eligible for financial aid when it is determined that their attendance status qualifies them to be half-time, three-quarters time, or full-time. At institutions with a majority of students attending part-time, an FTE average may or may not be representative of a typical student.

In 2019-20, undergraduate students received an average of $14,940 per FTE student in financial aid: $9,850 in grants, $4,090 in federal loans, $920 in education tax credits and deductions, and $80 in Federal Work Study. In 2019-20, average benefits from the Post-9/11 GI Bill program were nearly $16,000 compared with $4,170 per Pell Grant recipient.

In 2017-18, 52 percent of Pell Grant recipients were dependent students. Over 70 percent of this group came from families with annual incomes below $40,000.

While both programs cover the cost of attendance beyond tuition and fees, graduate students are ineligible for Pell Grants while graduate students who are veterans may be eligible for GI Bill funds. Without more data, it’s difficult to use this as a meaningful comparison.

As of March 2020, 55 percent of borrowers with outstanding education debt owed less than $20,000. Similarly, 45 percent of the outstanding federal education loan debt was held by the 10 percent of borrowers owing $80,000 or more.

In 2018-19, 56 percent of bachelor’s degree recipients from public and private nonprofit four-year colleges and universities graduated with debt and had an average debt level of $28,800. Including the 44 percent of graduates who did not borrow money to attend college, the average debt per bachelor’s degree recipient was $16,100 for the two sectors combined.

Loans, including federal and nonfederal, fell from 43 percent of the funds undergraduate students used to supplement their own and family resources in 2009-10 to 32 percent in 2019-20. However, the primary reason that the loan percentage dropped was not because family incomes increased. Because of the competition among institutions for quality students, institutional grants for undergraduates increased from 47 percent of total funding in 2009-10 to 62 percent in 2019-20 (institutional grants grew by 12 percent over that same period from 37 percent of all grants to 49 percent of all grants).

One might infer that by adding 32 percent of costs covered by loans and 62 percent of costs covered by grants, that only 6 percent of funding for undergraduates comes from parents and/or self-pay. However, given that the report stated that 44 percent of undergraduate graduates do not borrow, it’s almost impossible to determine from the data provided in the report how much of the cost of an undergraduate education is funded by parents or students themselves.

There is an incredible amount of data collected, analyzed, and presented in the College Board report. If you are a researcher studying student financial aid, the data ties to all of the federal student aid programs by year from total dollars disbursed by program to many of the averages per FTE student.

While I agree that GI Bill funding contributes and should be listed as a significant source of funds, I am not sure that it should be included as part of overall federal grant aid. GI Bill funding is similar to corporate tuition benefit programs (while providing a higher average contribution per beneficiary) and is limited to a small percentage of the population — namely, military veterans.

By including GI Bill funding in the federal grant funds category, the increase in GI Bill utilization offsets the decline in utilization of Pell Grants over the past decade. Private and employer grants have averaged around 12 percent of total grant aid for every year over the same period. There are more than a few observers of the higher education industry who believe that employers should contribute more in the future if we want to reduce the amount of loans that students and their families have to repay.

It’s my experience that few people will go behind the sound bites in the executive summary and utilize more of the report’s data for other comparisons. When you do, it’s important to carefully note the definitions utilized in order to make sure that apples-to-apples comparisons of the data are possible.

For example, 6.7 million students received Pell Grants in 2019-20, and the average grant was $4,170. An additional 728,000 students received GI Bill veterans benefits in 2019-20 for an average grant of $15,910.

Pell Grants are limited to undergraduates. The GI Bill can be used by veterans for undergraduate and graduate programs. Graduate programs are generally more expensive per credit hour than undergraduate programs.

Making a comparison of the average funding per student is not accurate when one program includes grad and undergrad students and the other program does not. The same comment could apply to corporate grants, although it’s my understanding that corporate reimbursement for undergraduate programs is non-taxable up to $5,500 per year, whereas corporate reimbursement for graduate programs is considered taxable income. Nonetheless, there is no apparent breakout in the data, and maybe that is data that is not collected by the Department of Education.

There are other data reported that contrast with some of the data reported by major newspapers. While many of us have seen articles decrying the fact that student loan debt outstanding now totals $1.5 trillion, fewer know that 45 percent of the outstanding debt is held by the 10 percent of borrowers who owe $80,000 or more.

Most of those high-balance borrowers are grad students who will likely repay their loans over time. Federal student loan default rates are actually higher for students with low loan balances (meaning that they have most likely not graduated from college).

For example, among borrowers entering repayment in 2010-11, the three-year default rate ranged from 24 percent for those owing $5,000 or less to 7 percent for those owing $40,000 or more. Two-thirds of those who defaulted owed $10,000 or less. Based on the annual cost of attendance data reported, many of those low balance loan holders must be non-completers.

Another data point worth discussing is the average institutional grant per first-time, full-time undergraduate student at private, non-profit four-year institutions. After adjusting for inflation, the average grew from $9,550 per FTE in 2006-07 to $17,250 per FTE in 2017-18.

At the same time, the percentage of first-time, full-time undergraduate students receiving these grants increased from 73 percent to 82 percent. In addition to increasing the grant by 81 percent after adjusting for inflation, the percentage of students receiving the grant increased as well, thereby increasing financial pressures on those institutions.

The timing of the publication of the latest College Board Trends in College Pricing and Student Aid report is interesting. On one hand, the United States is a week away from a highly contested election. Democratic presidential candidate Biden’s platform includes a version of funding for free college to families whose annual incomes are below $125,000. His platform also includes increasing income taxes on families whose annual incomes exceed $400,000.

In addition, Mr. Biden has stated that he will act more decisively in combating the COVID-19 pandemic. Meanwhile, the higher education lobby has stated that colleges and universities need another $120 billion to cover the financial hit caused by COVID-19. Republicans have voted against that level of funding.

While control of Congress and the White House could change the attitude toward funding for higher education, state legislatures control the purse strings for public institutions. At the same time, there are increasing calls for companies to focus less on hiring employees based on degrees, and focus on experiences, competencies, and learning. Increasing training dollars doesn’t appear to be a focus of candidate Biden, but President Trump’s administration has increased its funding of training initiatives.

While the outcome of the elections may influence the level of funding for higher education, it will be difficult to change the evidence that today’s students and their families are much more aware of the costs of higher education as well as the return on investment. Clearly, students and families paying for an on-campus experience but receiving an online experience for the same price are not happy.

The numbers of first-time, full-time freshmen decreased rather substantially this fall. The small increase in Fall 2020 enrollment reported by the for-profit sector is most likely due to their investments in online education as well as their focus on enrolling non-traditional students, not 18- to 24-year-olds.

To paraphrase the late U.K. Prime Minister Harold Macmillan’s 1960 speech, “The wind of change is blowing through this [sector] and whether we like it or not, this growing discontent is a political fact. We must all accept it as a fact, and our national policies must take account of it.” It will be interesting to see which way the wind blows.

Subjects of Interest


Higher Education

Independent Schools


Student Persistence