Private College Tuition Hikes at 27-Year Low

The rapid increase in college tuitions nationwide slowed this year, suggesting that the steep sticker price of private institutions may be straining the limits of what politicians and the public will tolerate, economists said Tuesday.

Tuition at private four-year colleges and universities rose 4.6% this fall, according to the College Board.

Although the increase was the lowest in 27 years, the break for parents and students is limited--tuition continues to rise at more than twice the rate of inflation.

But the change in the trend may be significant, experts say.

“There’s a lot more pressure from alumni and the government. More people are saying, ‘One hundred and thirty thousand dollars for four years? That’s a lot of money,’ ” said Morton Owen Schapiro, USC’s vice president of planning and a higher education economist. “It’s harder to say that you need a 6% increase in tuition when the school has an endowment in the billions of dollars and it’s increasing 20% a year.”

With states more willing to increase subsidies, public colleges and universities across the country raised tuition and fees 3.5% on average, according to the College Board’s annual survey of 2,700 institutions. Last year, public university fees rose 4%, and private tuition 5%.

California’s public colleges and universities were a notable exception, rolling back fees for the second year in a row.

So the $3,683 in fees for California residents enrolled this fall at UCLA was actually $180 cheaper than last year. The all-inclusive costs of attendance, including room and board in the dorms, books and personal expenses remained about the same, roughly $15,000.

The cost of enrolling in the nation’s elite private institutions was twice as high or more.

MIT raised its tuition and fees to an even $25,000 for this scholastic year, the survey showed. Factoring in room and board and other expenses, the total cost of attending came to $34,700.

Princeton, Yale, Harvard and other Ivy League schools posted similar sticker prices. Private institutions in California were not far behind, with Pomona College estimating its all-inclusive costs at $33,520, Stanford charging $33,467, USC $32,778, and Pepperdine $31,880.

Most students, however, do not pay the full price, given the widespread tuition discounting and financial aid packages available to poor students and even middle-class students from families earning as much as $100,000 a year.

Patricia A. McGuire, president of Trinity College in Washington, said that 35% of the school’s entering freshmen have all of their costs covered by discounts, grants and loans.

“Colleges and universities are making a great effort to work with families,” she said.

At the same time, most increases in financial aid are taking the form of loans, said Lawrence Gladieux, the College Board’s chief policy analyst. “More students,” he said, “are paying for the cost of higher education out of future income.”

Gaston Caperton, president of the College Board, defended the annual fee hikes, saying that college expenses are too often exaggerated by the public, which focuses on a few elite schools.

The average tuition at four-year private institutions is $15,380 this year, he said. Public universities average $3,356 and community colleges are cheaper still.

He said there has been too much focus on the cost of college and too little on the lifetime returns for four years of investment.

Because a college graduate today earns about twice as much as a worker with only a high school diploma, he said, “a college education is worth about $1 million over a lifetime.”

The cost of attending a four-year college has more than doubled since 1980, even after adjusting for inflation. This year’s 4.6% increase among private four-year colleges again outstrips inflation, which is running about 2%, as measured by the consumer price index.

David L. Warren, president of the National Assn. of Independent Colleges and Universities, said he was delighted that the average increase remained below 5%. He calculated that this year’s increase among private institutions was the lowest rate in 27 years.

“It’s a corner-turning moment for us,” Warren said.

Private institutions have reined in escalating expenses by hiring outside contractors to manage campus food services and by joining forces to negotiate better rates on electric bills.

Although rising costs put private colleges under pressure to raise tuition, economists believe that increases are more closely tied to supply and demand--and political pressure.

Economists such as Schapiro and Michael S. McPherson, president of Macalester College, see a growing stratification of higher education: a thin layer of elite colleges and universities that can charge whatever they want, and a lower tier of colleges much more sensitive to market forces.

In the lower tier, some private colleges have to scramble to fill classes by discounting tuition as parents question whether private education is worth it.

“So if you don’t have that many people paying the big sticker price and you are giving much of the money back in need-based or merit aid, why increase your price?” Schapiro asked.

Although elite schools have plenty of students willing to pay top dollar, McPherson said, “they have grown very sensitive to the pressures from both Washington and their own boards of trustees.”

Politicians alarmed about soaring tuition control government subsidies passed on to private institutions in the form of financial aid.

Furthermore, McPherson said, “many members of college boards of trustees tend to be of the right age to have kids going to college or have friends with kids going to college.”

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Weiss reported from Los Angeles and Cooper from Washington, D.C.

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College Costs

College tuition and fees continue to creep upward, despite low inflation. The exceptions are California public institutions, which have rolled back fees two years in a row with increased subsidies from taxpayers. These numbers do not include room, board, books and other expenses. Some examples:

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Note: For California public institutions, fees listed are for state residents. Fees for non-California residents are much higher. Most UC, Cal State and community college campuses tack on special user fees, accounting for slight variations in prices.

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Source: The College Board, University of California, California State University and Los Angeles Community College District.