College Finances Begin to Bounce Back from Recession, But Students Continue to Pay for Most Institutional Costs

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College and university finances have largely rebounded from the 2008 recession, but students still shoulder the bulk of education-related costs at most postsecondary institutions through tuition, according to a new report by the Delta Cost Project at the American Institutes for Research (AIR).

College and university finances have largely rebounded from the 2008 recession, but students still shoulder the bulk of education-related costs at most postsecondary institutions through tuition, according to a new report by the Delta Cost Project at the American Institutes for Research (AIR).

“The news for higher education finance in 2013 is generally positive: Per-student spending on education increased at all types of public and private institutions,” said Steven Hurlburt, a senior researcher at AIR and co-author of the report. “But one of the more unfortunate outcomes of the recession is that colleges and universities were unwilling or unable to restructure costs and shifted them onto students instead.”

The publication of “Trends in College Spending: 2003-2013” coincides with President Obama’s final State of the Union address, which is expected to trumpet the economic recovery since he took office in 2008. The recovery has not mitigated the ongoing student loan crisis, which exists partly because of the escalating price of a college degree.

While spending increased across all types of private and public institutions from 2012 to 2013, public and private research universities and master’s institutions largely bounced back from the recession, according to the report. At public four-year colleges and universities, average spending rose by 2-3 percent, the largest increase since the start of the recession in 2008.

For the first time since 2008, public four-year colleges and universities did not shift additional educational costs onto students. Student tuition covered 62 percent of total average educational costs at public research universities, and 57 percent at public master’s-granting institutions. Student tuition contributed half of all educational costs at public bachelor’s granting institutions. At community colleges, the tuition share of educational costs actually declined from the year before, from 39 to 38 percent.

But the recent stabilization comes after four years of sharp increases in the portion of college costs footed by students. Since 2008, tuition’s share of educational costs rose by about 10 percentage points at public four-year colleges and universities.

The authors used 2003-2013 data compiled by the Delta Cost Project from information institutions reported to the U.S. Department of Education.

Other key findings:

  •     One bright spot of the recession was the ability of colleges and universities to graduate a flood of new students who otherwise might not have enrolled. Throughout higher education, degree productivity was up sharply for the third consecutive year, reaching a decade-long high in 2013. Community colleges saw the largest boost in productivity, adding seven more degrees or certificates per 100 students than in 2003. During that same period, public institutions improved most, producing three more degrees or certificates per 100 students than they had a decade earlier.
  •     After four years of significant declines, sharp cuts in state and local appropriations subsided in 2013. State and local funding per student increased 5 percent at community colleges and 1 percent at public bachelor’s-granting colleges. Even so, state and local funding stayed well below pre-recession levels. The largest decline was at public research universities, where funding was 28 percent lower in 2013 than in 2008, a loss of $2,900 per student.
  •     Student services—including career counseling, academic advising and mental health treatment—ranked among the fastest growing spending categories in higher education. At private institutions and public research and master’s institutions, spending per student in these services increased by 20 percent between 2003 and 2013.

“Trends in College Spending: 2003-2013” can be viewed at http://www.deltacostproject.org and http://www.air.org.

About AIR
Established in 1946, with headquarters in Washington, D.C., the American Institutes for Research (AIR) is a nonpartisan, not-for-profit organization that conducts behavioral and social science research and delivers technical assistance both domestically and internationally in the areas of health, education and workforce productivity. For more information, visit http://www.air.org.

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Andrew Brownstein
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