The Minnesota Private College Research Foundation’s latest tuition trends report [pdf] points out that average annual tuition and fee increases are growing “at the smallest level in more than 30 years.”
Tuition and fees will go up an average of 4.5 percent in 2010-11 at the 17 private, nonprofit institutions in the Minnesota Private College Council.
But if you look at the cost of average tuition and fees for the institutions at the dawn of the 21st century, it’s a different story. Tuition and fees have jumped 76.6 percent since 2000 — from $17,448 to $30,816 in 2010-11.
9 years of financial aid to undergraduates at Minnesota private college member institutions
Source: Minnesota Private College Research Foundation Analysis of Minnesota Office of Higher Education Report: Financial Aid Awarded to Minnesota Undergraduates (1999-2007)
Click on chart to enlarge
92 percent receive aid
The report emphasizes, however, that 92 percent of private-college students receive some form of aid and “on average, our students end up paying about half of the full tuition price.”
Welcome to the world of the “published price” vs. “net tuition.”
“It’s more accurate to look at the net tuition increases over time rather than the published price increases,” said Paul Cerkvenik, president of the Minnesota Private College Council. Previous research by the foundation found that net tuition increased 54 percent between 1999 and 2007, he said.
If it’s more accurate to look at net tuition, then why keep advertising published prices?
“That’s a good question,” he said. “You’d need to ask individual institutions. There’s a wide range of approaches. … All over the country, the model is driven in part to make sure opportunities for higher education are open to people of all income levels and limited means receiving substantial institutional aid to complete a degree.”
Institutional aid to students [chart 2 in current report, see above] also increased 105 percent in that 1999-2007 period, he said.
Trying to hold down ‘actual costs’
“What I think that reveals is the colleges, in their aid and price discounting policies, are doing a really strong job of trying to hold actual costs down for students,” Cerkvenik said.
Chart 2 also shows that student loans soared 94.6 percent from 1999 to 2007.
The published price vs. net tuition reminds me of the sticker price for an automobile and the negotiated price after discounts, sales and haggling with the dealer. But Cerkvenik isn’t keen on comparing car pricing and private-college tuition.
“Sellers are not trying to ensure that a low-income family gets a Cadillac,” he said, explaining such a family is likely to end up with an inexpensive car.
It’s different in the world of private-college pricing: The lower the family’s income, the higher the financial aid from a private college, he says.
“I’d like to think all students are getting a Cadillac education … whether they’re from a low-income family or a high-income family,” Cerkvenik said.
And the returns from a higher education are supposed to last a lifetime, he says. A car reportedly loses half its value once it leaves the lot.
“The returns on higher education are beyond dispute,” he said.
Staggering increases at public institutions
While tuition and fees are lower at publicly supported institutions in Minnesota, the percentage increase is staggering between 2000-01 and 2009-10. At the University of Minnesota-Twin Cities, average annual tuition and fees soared 107 percent from $4,877 to $11,466, according to data from the Minnesota Office of Higher Education (OHE).
Students in the Minnesota State Colleges and Universities (MnSCU) system saw high double-digit increases over the decade: Tuition and fees increased 79 percent at two-year colleges (from $2,480 to $4,708) and 90 percent at four-year universities ($3,258-$6,639). And Wednesday, MnSCU announced a 4.4 percent increase at its 25 two-year institutions and 4.8 percent at its seven universities for 2010-11.
“The Board of Trustees remains committed to keeping tuition as affordable as possible, but this increase is necessary,” Chancellor James H. McCormick said in a news release. “State appropriations have dropped substantially in recent years from covering about 66 percent of the cost in 2002 to an expected 43 percent this year. That means tuition will pay the other 57 percent.”
Per-capita income fails to keep pace
If you’re wondering why tuition and fee increases left a deep hole in your budget in the 21st century, consider that Minnesota’s per-capita income grew 28 percent from $32,970 in 2000-01 to $42,238 in 2008-09, according to the OHE data.
So, why is the cost of a higher education outpacing income, inflation and assorted indexes?
“Higher education is staff-intensive,” Cerkvenik said. “I think it’s probably in the ballpark to say that 70 percent or more of the costs are in staff. One thing everybody is facing is rising health-insurance costs. I know they increased 14 percent here (in his office) last year. … So, the cost drivers … are just related to the nature of the enterprise, which is people-intensive.”
Check out the council’s report. It includes a list of the colleges and their published tuition and fees, room and board, and comprehensive charges. Carleton College’s comprehensive rate is the priciest: $52,110. Bethany Lutheran is the lowest: $27,450. Remember: These are the rates before the financial aid, the discounts, scholarships and loans.