Survey: Private college tuition to rise 4.3%, a 37-year low
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Tuition and fees at U.S. private colleges will rise an average of 4.3% in the new school year, the smallest increase in at least 37 years, the National Assn. of Independent Colleges and Universities says in its annual survey.
But costs may accelerate again in the next few years as colleges face up to shrunken endowments in the aftermath of the stock market crash, some analysts warn.
The association’s annual survey covers 350 private, non-profit colleges and universities. The 4.3% average increase in tuition and fees compares with a 6% annual average over the last decade, the group says. The survey doesn’t cover room and board costs.
The smaller-than-average rise suggests that institutions are trying to hold the line to help families struggling in the deep recession, the group says. But restraint in tuition hikes may become more difficult once the reality of investment losses on college endowment funds kicks in, as Bloomberg News notes:
Some private colleges with large endowment losses are likely to have larger tuition increases in the next two school years as budgets become further constrained, said John Isaacson, whose headhunting firm specializes in higher education. Private schools rely on endowment income as well as tuition for operating money, Isaacson said. Because many universities spend endowment income based on a three-year average investment return, the fiscal year ending this month would include two years with high returns, he said. That means spending from endowments is likely to decrease more in the next two years at schools that rely heavily on endowment income, he said. [Cost-cutting] decisions made during the last school year -- construction delays, salary freezes and tightened spending controls -- are “low-hanging fruit,†Isaacson said. “The next phase is harder†and may include bigger tuition increases.
The association’s survey asks only for the planned percentage rise in tuition and fees, not the dollar amounts. As a benchmark, the group cites the College Board’s average published tuition and fees at private four-year colleges and universities, which totaled $25,143 in the school year just completed.
The association also cites the College Board’s estimate that ‘on average, full-time students at private institutions received about $10,200 of grants and tax benefits’ last year.
-- Tom Petruno