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Price Increases at Public Universities Slow Down

Finally, there is some welcome news for college-bound students and their families. No, the cost of higher education isn't going down—but it's not going up quite as fast as it has in recent years, the College Board reported Wednesday.

The published price of tuition and fees for in-state students at public four-year colleges rose just 2.9 percent from 2012-13 to 2013-14, reaching an average of $8,893. The change represents the smallest one-year increase since 1975-76. Adjusting for inflation, the increase is 0.9 percent, the lowest since 2000-01.

The average annual growth in cost has been nearly twice that in the past decade, with a 4.8 percent spike last year.

"The news is not as bad as it has been in previous years," said Sandy Baum, coauthor of the "Trends in College Pricing" report, in a press call previewing the findings last week with reporters. "It does seem as though the spiral [of college pricing] is moderating—not turning around, not ending—but moderating."

The most recent one-year price increase was 3.8 percent at private, nonprofit four-year institutions and 3.5 percent for public two-year colleges, also lower than in recent years.

"I'm not sure this represents a long-term trend," said David Hawkins, the director of public policy and research for the National Association for College Admission Counseling, of the more moderate price hike. "It is possible that as institutions adopt new technology, price points become clear, and government support stabilizes that we may start to see a slow down...So many institutions are price sensitive."

As colleges enter a more competitive market, they can personalize their appeal to students, but sticker price matters. "It really does come down to seeing the option as affordable," said Hawkins.

Rory O'Sullivan, the policy director for Young Invincibles, a Washington-based advocacy group representing young people, said the news about prices is welcome. "But we shouldn't be kidding ourselves," he said. "We still have a long ways to go to make sure college is affordable."

As Aid Slows, Net Price Rises

Still, grant aid from the government and higher education institutions is slowing down, according to the companion "Trends in Financial Aid" report, also released Wednesday by the College Board. That means that the net price students are paying is rising in all sectors.

Between 2009-10 and 2013-14, the average net price for in-state, four-year college students increased from $1,940 (in 2013 dollars) to about $3,120 and up from $3,050 last year, the College Board finds.

There is a conflict with policymakers trying to control college costs, encourage access, but not increasing financial aid and grants, said Hawkins.

"You have to subsidize [higher education] to make it broadly available and affordable," he said.

The sharp increases in financial aid to help families pay for higher education seen in previous years were not evident in this year's report. While total grant aid to college students increased 29 percent between 2008-90 and 2009-10, and another 12 percent in 2010-11, it did not grow from 2010-11 to 2012-13, the report showed.

Federal grant aid to undergraduate students more than doubled in constant dollars in the past decade, increasing from 21 to 24 percent of the total $185 billion in total undergraduate aid.

Much of this expansion is from the federal Pell Grant program, which gave 8.8 million low-income students money to attend college in 2012-13, more than double the number of recipients from 1992-93. Pell Grants are given based on financial need. On average, recipients come from homes where the household income is $30,000. Nearly 23 percent of undergraduates in 2002 received a Pell grant, while 36 percent did so in the most recent year's report.

Pell Grant money is available, but not increasing enough to cushion the cost students are paying, said Baum, who also coauthored the "Trends in Financial Aid" report.

States Budgets Have Been Hit

Different students pay different prices to attend college, depending on their family's income and where they live. State grant aid and how it is distributed varies widely by state, Baum notes. The good news for low-income students is that more states (74 percent) are basing their college aid on need, compared with 71 percent in last year's report. Institutions, too, are ramping up money they give to students in need, according to Baum.

Still a National Association of State Student Grant and Aid Programs report released earlier this year shows the amount of non-need-based state aid given to college students has doubled in the past decade, said Joseph Yeado, a higher education research and policy analyst for the Education Trust. There is an ongoing trend of privatization in higher education, as institutions and states fail to prioritize aid to students based on need-based aid.

"They are shifting a public good to a private good," he said.

While state appropriations have clearly hurt the budgets of public institutions, Yeado said colleges still have some level of control and should be doing more to increase access for low-income students.

"Colleges don't have their hands tied on financial aid, price, or student success," he said. "State appropriation [cuts] provide some political cover for institutions, but [colleges] could and should take a more active role to educate all students."

The College Board report also examined student debt and found that 60 percent of students who earned a bachelor's degree left school in debt. And among that group, the average amount owed was $26,500.

Over the past decade, more students are going to college, causing the total number of borrowers to grow by 69 percent. Yet, Baum said the total borrowing level fell 6 percent from $117 billion to $110.3 billion from 2011-12 to 2012-13. This is the second year of a decline in loan volume. 

"It's encouraging if borrowing is going down, but I don't think that will take attention away from the debt crisis," said O' Sullivan. "The problem is still big."

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