Today, the College Board released its annual sets of trends reports, one on college pricing and one on student aid. Dense, chart-filled works, the documents tell a story of what today’s postsecondary students are facing. But each report typically carries a message with it, one that often tries to dampen the sense of unabated cost escalation.
This year’s desired headline is 2.9 percent. That’s the change in published tuition and fees at four-year public institutions from last academic year to this one in current dollars. Though an increase, it’s described as the smallest percentage increase in the last 30 years.
But herein lies the difficulty with percentage increases and college costs. One of the benefits of decades worth of uninterrupted price increases is that eventually the same size price hike leads to a smaller percentage change. And sure enough, that 30-year-low in percentage terms is actually a $247 increase in published tuition—the 19th lowest in the past three decades (or 12th highest if you want to look at in a more pessimistic light). In fact, it's larger in real terms than any single year increase that families at public four-year colleges felt from 1971-72 to 2000-01.
In fairness, that $247 increase is the lowest that families have faced in current dollars since the 2000-2001 year. But following on the heels of over a decade of stark increases, it means the base price families are paying is $5,400 more in current dollars than it was at the turn of the century. In that regard, the $247 only feels like some relief from charitable schools only when compared to some theoretical higher price they could have been charged.
Private nonprofit 4-year colleges provide an even better illustration of the wonders of the percentage increase bait and switch. From 2011-12 to 2012-13, published prices in current dollars went up 4.0 percent. But this year, they went up only 3.8 percent. A victory for families, right? Hardly. Published prices went up exactly $1 less than they did the year before--$1,106 versus $1,105. But thanks to prior jumps, that 3.8 percent increase was the third lowest in 30 years, even if the dollar change was the sixth highest in 30 years.
Understanding the dollar versus percentage dynamic is especially important for interpreting charts like the one below. What it shows is the average annual change in tuition and fees over a ten year period, adjusted for inflation. So from 1983-84 to 1993-94, the average real increase in tuition and fees at public four-year colleges was 4.3 percent. By contrast, in the past decade, which we tend to think of as a time of excessively high cost increases, the average annual change at public four-year colleges was just 4.2 percent. If it’s about the same as historical trends, then we’re not seeing bad behavior. It’s just how things go—death, taxes, college costs, as the cliché would go.
But again, smaller absolute changes on a lower base lead to higher percentage increases than they would on a larger amount. And sure enough, this chart essentially lets colleges off the hook through their own increases. Here’s the same chart recreated below, only instead of percentage changes, it shows how much tuition and fees changed when measured relative to the base year of 1983-84. In other words, if the base year is 100 and the following year is 103, then the change is 3. And each type of college has its own base year. So a change of 6 points for a community college is still going to be less of a dollar change than 6 points for a nonprofit college.
Suddenly that last decade does not look quite so rosy. Rather, it rightly shows that the amount costs have been going up at public 4-year schools actually exceeds older decades by a good bit. The chart below makes the same point framed a different way by showing the change in the cost of tuition and fees from the start to end of each decade. These figures also are measured in comparison to the base year of 100 for 1983-84, which represents a different dollar amount for each type of school.
The last decade has not been a good time for families. Incomes are down and have not really recovered except for those at the top of the income spectrum. Meanwhile, state budget struggles, unabated spending at private nonprofit colleges, and a host of other reasons have collaborated to keep college tuition on a steady upward path. While this year's figures show that the dollar change is lower in the public sector than it has been in the past couple of years, it's still greater than it was 12 months ago and still above the rate of inflation. That's not good news. That's just less bad news than usual. And we should not be desensitized by price increases to the point where that's acceptable.