College Board: Despite Higher Tuitions, Young Adults Increasingly Attending College

WASHINGTON – Despite stagnant incomes and steadily rising tuitions, more students are pursuing college degrees because the return on investment has never been greater. In addition, it’s a good use of time during a down economy.

That’s what the lead researcher of two reports on economic trends in higher education said Tuesday during a conference to discuss the reports, which are being released today.

“Of course, college doesn’t pay off for everyone,” said Dr. Sandy Baum, an independent policy analyst for the College Board and Professor of Economics Emerita at Skidmore College. “But people understand that, if they want to have good prospects throughout their lives, it’s worth it to ake the sacrifice now and go to college to get the long-run benefits.”

“What else are you going to do with yourself?” Baum said, referring to job prospects during a bleak economy. “People can’t find good opportunities in the labor market and therefore decide to go back to school.”

Baum made her remarks to provide context and perspective on the 2011 versions of the College Board’s annual companion reports, titled “Trends in College Pricing” and “Trends in Student Aid.”

The pricing report shows that tuition at public four-year universities rose 8.3 percent for the 2011-12 school year, or jumped $631 to $8,244. However, it notes that much of the increase is attributable to the 21-percent tuition hikes in California, which enrolls about one-tenth of the nation’s full-time public four-year college students. Without California, the report states, the increase for public four-year colleges would be 7 percent.

Similarly, the report found, the increase for public two-year institutions was 8.7 percent including California, and 7.4 percent without California, for an average of $2,963, up $236 from last year.

Published tuition and fees at private nonprofit four-year colleges went up 4.5 percent, or up $1,235 to $28,500, and estimated published tuition and fees at private for-profit colleges rose 3.2 percent higher than last school year, or up $447 to $14,487.

“The story here is prices continue to rise more rapidly at public colleges than private colleges,” Baum said.

However, Baum, said, the net tuition—or what students actually pay—is lower than it was five years ago, due to an increase in grant aid and federal tax credits.

“That obviously makes a big difference in how students are paying for college,” Baum said, citing the fact that the maximum Pell Grant amount has been increased under the Obama administration, specifically from $4,689 in 2008-09 to $5,416 in 2009-10 and $5,550 in 2010-11.

The student aid report shows that the number of Pell Grant recipients grew from 32 to 35 percent of the college population from 2009-10 to 2010-11, or from 25.1 million to 26 million.

Baum said one of the most surprising findings of the student aid report is that American families benefited immensely from the American Opportunity Tax Credit, which increased total tax savings for college students and their parents who claimed education credits and tuition deductions from $6.6 billion in 2008 to $14.7 billion in 2009.

The pricing report also tracks long-term trends. It found that, in the past decade, published tuition and fees for in-state students at public four-year colleges and universities increased an average of 5.6 percent per year beyond the rate of general inflation—more so than in previous decades, which saw annual increases of between 3 and 5 percent.

Baum attributed the more recent price increases to the fact that states are struggling fiscally and thus appropriating less for colleges and universities—a situation that she says might have been even more dire were it not for the 2009 Recovery Act.

“But the real story is combining those total appropriation dollars with growth in enrollment,” Baum said, citing overall growth in enrollment in various sectors of higher education, particularly at public two-year universities.

Charts in the pricing report show that enrollment in public four-year universities has grown from 6.8 million to 7.7 million from 2005 through 2009 and that growth in the public two-year universities has grown from 4.9 million to 7.1 million during the same period.

The growth has been more modest in the private nonprofit four-year sector, which saw enrollment increase from 3.4 million in 2005 to 3.7 million in 2009.

The for-profit sector, on the other hand, has seen serious growth, going from 1.3 million to 2005 to 2.2 million in 2009.

In related news, Obama administration officials on Tuesday said that the president is set to announce a plan Wednesday to speed up implementation of student loan reforms meant to lower student loan payments.

Specifically, said U.S. Secretary of Education Arne Duncan and White House Domestic Policy Director Melody Barnes, the president will unveil a plan where monthly student loan repayments will be capped at 10 percent of discretionary income starting next year, as opposed to 2014.

Barnes and Duncan said 1.6 million student loan borrowers could benefit from the measure, which will be done through regulatory authority of the U.S. Department of Education.

“This will be a big help to current college students and recent college graduates who are entering one of the toughest job markets in history,” Duncan said. Another element of the plan will enable students to consolidate their bank-based and direct student loans, reducing interest fees by as much as .5 percent.

Though the measures were billed as an effort to help struggling college students and recent graduates, it also had a political tone. Barnes said the measure was necessary because Americans’ “can’t wait for congressional Republicans to act” to ease their financial burdens.