EPI's weekly illustration of education data trends — January 18, 2018

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Trends in Net Price at Public and Private Four-Year Institutions, 1992-93 to 2043-44

 

In the past, EPI has illustrated past and estimated tuition and fee costs based on data provided by The College Board and the US Department of Education. For this EPIGraph, we focus exclusively on net cost: the actual price that families must pay after all institutional (including tuition discounting), grant, and scholarship aid is subtracted from the actual cost of attendance.

Both graphics below provide a view of the historical cost of attendance and the net price. As well, EPI conducted an estimate based on the increases over the past 25 years (after adjusting for inflation) to provide a rough multiplier to determine what, at current historical rates, the prices may be 25 years in the future (2043-44).

For public, four-year institutions, the published cost of attendance in 2017-18 was $20,770, with a net price of $14,940. Thus, on average, students received about $7,000 in reductions from the published cost to their actual cost, representing a 28 percent reduction. In 1992-93, that reduction was only 18 percent, and we estimate in 2043-44 the reduction could be as high as 37 percent. In that year, we estimate published cost of attendance to be $42,460 with a net price of $26,731.

At private, four-year institutions, the story is similar, noting that the percentage increases may be lower but the actual dollar amount is higher. In 2017-18, the published price at these institutions was $46,950 with a net price of $26,740. This is a reduction of 43 percent (compared to 28 percent at the publics) between published and net price. In 1992-93, that reduction was 27 percent (compared to 18 percent for publics), and we estimate a 56 percent reduction in 2043-44. In that year, we estimate published prices to hit $84,198 and a net price of $37,241.

What do all these data mean? Obviously, college is expected to get much, much more expensive over time. After adjusting for inflation, it will cost public students almost $27k in today’s money for a year of school, and over $37k for private school students. However, the difference between the net price in public and private institutions is closing over time. In 1992-93, the net price of the private was 130 percent higher than the public. In 2017-18 that differential declined to 79 percent higher. And we estimate that the difference may reduce to 39 percent by 2043-44. So, relatively speaking, privates will become a better deal than public institutions. Over time, we’ve seen the published price increase 104 percent compared to 79 percent in net price.

These figures definitely showcase how institutions have taken advantage of tuition discounting. Because of need-based aid and institution aid, institutions have become more accustomed to post higher prices but be able to take higher discounts to students and families. Think car sales. It is the same model. This car will cost you $30,000, but we will give you discount A (military service), discount B (previous owner or alum), and discount C (good student discount) and you’ll only have to pay $25,000. Higher education has learned well. And, to be fair, the game is complicated with federal and institutional methodologies for assigning aid.

One important point: the net price for publics will actually go up in actual dollars than private institutions, changing a historical trend.

SOURCE: EPI analysis of College Board data (https://trends.collegeboard.org/college-pricing).