The Rise in Tuition Is Slowing, But College Still Costs More

Tuition prices aren't increasing as rapidly, but what students actually pay is still on the rise.

New data show tuition prices aren't increasing as rapidly, but what students actually pay is still on the rise because financial aid hasn't kept pace.
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Reports that the rapid increase in tuition and fees may be slowing come as welcome news to students and families struggling to find ways to pay for a college education. But that's just the sticker price – what students actually pay to attend college appears to be on the rise, according to new data from the College Board.

[READ: College Tuition Prices Grow at Slowest Rate in More Than 30 Years]

While the published tuition and fees at public and private colleges still increased in 2013, the growth was smaller than it has been in past years. At public, four-year colleges, for example, published tuition and fees increased by 2.9 percent – the smallest one-year increase since the mid-1970s. But net prices – what students and families actually pay after grant aid, scholarships and tax credits are subtracted – have increased since 2010 because the growth in financial aid has not kept pace with the increase in college tuition.

"For a while, grant aid rose really rapidly and cushioned price increases," says Sandy Baum, a co-author of three reports the College Board released on Wednesday. "Now, it's not rising anymore in any significant way. So that means when the price goes up, students have to pay most of that price increase, which wasn't true a few years ago."

For the current academic year, the average published in-state tuition at public, four-year colleges and universities is $8,893, and the average net price is about $3,120, according to three College Board reports on trends in higher education. But because federal grants, such as Pell Grants and Academic Competitiveness Grants, nearly doubled between 2008-09 and 2010-11, the average net price for students and families was actually much lower throughout the height of the recession. In 2007-08, the average net price (adjusted for 2013 dollars) was $2,590 and declined to about $1,940 in 2009-10.

[CHARTS: Just How Fast Has College Tuition Grown?]

But since then, tuition and fees continued to increase, although at a slightly slower pace, and federal grant aid declined by 10 percent, at a time when many families were still recovering from financial strains brought on by the recession.

The situation is similar at private institutions. The average tuition prices increased by 3.8 percent between 2012-13 and 2013-14, to $30,090. But the average net price also increased, from $11,930 in 2012-13 to $12,460 in 2013-14.

"Some parents are able to provide their children with the financial resources necessary to pay tuition and fees ... without serious difficulty," says the College Board report on trends in student aid. "For many others, postsecondary education would be out of the question without generous subsidies from the government, their colleges and universities, or other sources."

And as increases in the cost of college – including tuition, fees, room and board, and school supplies – continue to outpace gains in family income, more students fall into the second category.

During the recession, net prices were not as high, partially because the federal government rapidly increased its support, largely in the form of Pell Grants, which nearly doubled in one year, Baum says.

[ALSO: Most States Spend Less Per Student Now Than Before the Recession]

"Those subsidies are pretty much still there, but they're not going to keep increasing them at any significant rate," Baum says.

Andrew Kelly, director of the Center on Higher Education Reform at the American Enterprise Institute, said that the one-time massive bump in federal aid to help struggling families during the recession cushioned the increase in tuition and kept net prices low, but only temporarily eased the pain.

"We spent a ton of money, which kept net prices low for a bit. But the increase in federal spending has been completely eroded by rising tuition prices," Kelly writes in a blog post on the College Board reports. "Now the flood of federal cash has plateaued, and sticker prices remain high and growing (albeit more slowly). Hence, net prices are rising."