College Costs Jumped $1,000 in 2009

The total sticker price of a year at a typical university rose by more than $1,000 in 2009, even though living costs, as measured by the consumer price index, fell.

The average asking price for tuition, room, board, books, and all other expenses at public universities jumped by $1,062, or 5.8 percent, to $19,388 for the academic year that has just started. The total student budget for private colleges rose by $1,638, or 4.4 percent, to $39,028, the College Board reported today as a part of its annual analyses of college prices and financial aid trends.

The tuition prices have risen even faster than recent and significant increases in federal grants and education tax breaks, the College Board calculates. That means the net out-of-pocket costs of a year at college rose several hundred dollars in 2009, while families struggled through a recession.

"Families are facing these prices with incomes that are not making any progress at all," Sandy Baum, a College Board analyst, noted. Considering how public colleges and universities, especially, have had their state subsidies slashed over the years, however, Baum said the tuition increases could easily have been worse.

But there was a little less-bad news in the reports, too. Community colleges, which educate about 50 percent of all college students, are still a bargain. Their average tuition is just $2,544 a year, up only $172 from last year. Despite the recession, which has forced reductions in state and private scholarship programs and increases in tuition, the total amount of grants and tax benefits has been rising. Governments, charities, employers, and schools handed out an estimated $71.2 billion worth of scholarships last year, an increase of almost $4 billion over 2007. And the federal government has increased the size and numbers of federal Pell grants and education tax breaks for this academic year. Education benefits for veterans also have been dramatically improved.

As a result, at least half of all students pay much less than the sticker prices because they have grants and tax breaks to defray their costs. Half of all full-time community college students receive some help with their college bills. The College Board figures the typical community college student gets about $3,000 worth of grants and tax breaks a year, which generally covers tuition plus about half of the typical annual $1,122 for books and supplies.

And 58 percent of all full-time students at public universities receive grants, tax breaks, or other discounts. The College Board says that brings the average net cost of a year at a public college down by $5,400, to a total of about $14,000. Unfortunately, that net cost still is up more than $700 from last year. More than three quarters of students at private schools get grants and other aid, averaging $14,400. That brings their out-of-pocket costs down to about $25,400, a total that is up about $1,000 from 2008.

A significant amount of scholarships are now distributed to students with good grades—no matter how wealthy or needy they are—which means middle- and upper-income students often don't have to pay full sticker prices, Baum said. At public universities, the average low-income student pays about $9,400 after grants for tuition, fees, room, and board. Students from working-class families pay a little less than $13,000. Upper-middle-class families pay about $15,500, and those from families in the top 25 percent of income pay a little less than $17,000.One silver lining of the recession and credit crunch: Students and parents have started to fund their college bills with less expensive loans. The total amount of private education loans, which typically have high adjustable rates, fell by half to about $11 billion last year. Meanwhile, the federal loan programs grew by about $15 billion. Baum said the shift to federal loans would reduce financial stresses on families because federal loans have easier repayment options, such as the new income-based loan payments, and forgiveness programs for teachers and other public servants. The interest rates also tend to be lower. Students can get federal loans that charge anywhere from 5 to about 7 percent, depending on their incomes and their lenders' fees. Parents who don't have bad credit can borrow the full cost of their child's education for about 9 percent through the federal PLUS program.

The consumer price index estimates that energy, food, and other costs are 1.3 percent lower now than last fall. But spokesmen for colleges said they had to raise their prices to make up for declines in their endowments and state appropriations. States cut their outlays to public universities by about $4 billion, or almost 5 percent, last year, and are expected to pare even more again this year. Also, many colleges set their prices at least nine months in advance. In 2008, the CPI was up 3.8 percent.

David Shulenburger, vice president for academic affairs for the Association of Public and Land-grant Universities, asked parents and students to be understanding. States are sending 12 percent fewer dollars (after adjusting for inflation) per student to public universities today than they did a decade ago. He said his members have been cutting staff and reducing costs to avoid larger tuition increases.

But the College Board also documented startling increases in other costs, such as a 6 percent increase in the average cost of dorm and cafeteria contracts.

Joseph Spina, executive director of the National Association of College and University Food Services, said his members are being told by college administrators to cut their costs while charging high enough prices to send surplus money to support classes. "Food service on campus is often asked to help with the budget situation to make sure there is a return," he said.

• Searching for a college? Get our complete rankings of America's Best Colleges.