College Prices on the Rise ... Again!

College prices in the U.S. have again increased faster than the rate of inflation, extending a decades-long pattern of higher-education costs.

Tuition and fees at private nonprofit colleges climbed 3.7 percent on average to $31,231 this academic year, according to a report today by the College Board. For in-state residents at four-year public schools, costs rose 2.9 percent to $9,139. Inflation, measured by the personal consumption expenditures index, rose 1.4 percent in the year through September.

The good news is that increases this year are smaller than the average for the past five-, 10- and 30-year periods, and more public school students saw no increase at all, the New York-based College Board said. The bad news is that cumulative undergraduate debt is rising as real incomes haven't grown for more than a decade except for top earners, said Sandy Baum and Jennifer Ma, the report's authors.

"College price increases are not accelerating. But they are accumulating," Baum and Ma wrote. The widening gap in pay between college and high school graduates is more about "declining wages at the lower end of the distribution, as opposed to increases for those with a college education."

As families continue to struggle to afford college, the Obama Administration plans to introduce a ratings system to show which colleges provide the most value, with metrics such as graduation rates and average student debt.

Room, Board

Including room and board, costs average $18,943 for in-state students at public schools and $32,762 for out-of state residents. At private schools, the bill is $42,419. Those amounts don't include items that aren't directly billed by the school, such as transportation, books and laundry.

A decade ago, tuition and fees jumped 10.4 percent for in-state students at four-year public colleges and 5.8 percent at private schools, according to the nonprofit College Board, which administers the SAT entrance exam and whose members include universities.

Tuition and fees have been outpacing overall inflation for decades.

Costs didn't rise for about 12 percent of full-time students at four-year public colleges, up from 4 percent a decade ago, according to the College Board.

After accounting for financial-aid grants, which about two-thirds of full-time students receive, actual costs are lower than the published prices.

 

Total Borrowing

The total amount borrowed for college by all students, $106 billion, declined 13 percent in 2013-2014 from three years earlier, according to the report. More than 90 percent of the loans were government backed.

Some of the drop in borrowing may reflect the decline in college enrollment, including at for-profit colleges, where students typically borrow more than their nonprofit counterparts, Baum said in an interview. Some students may also be more cautious about taking on education debt, she said.

Higher education enrollment, including at two-year colleges, declined in 2013 for a second straight year, the U.S. Census Bureau said in a September report.

In a separate study, cumulative student debt for class of 2013 graduates at nonprofit colleges who borrowed was $28,400, up from $27,850 a year earlier, according to The Institute for College Access & Success, an Oakland, California-based advocacy group.

About 69 percent of college seniors at those four-year schools graduated with student debt, TICAS said today. Last year, the group's report included for-profit schools.

To contact the reporter on this story: Janet Lorin in New York at jlorin@bloomberg.net

To contact the editors responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net Chris Staiti