GAO/HEHS-00-198R Cost of College

United States General Accounting Office

Washington, DC 20548

Health, Education, and

Human Services Division

B-286237

September 26, 2000

The Honorable William F. Goodling

Chairman, Committee on Education

and the Workforce

House of Representatives

Subject: College Tuition and Fees: Changes in the 1995-96 to 1999-2000 Period

Compared With Median Household Income

Dear Mr. Chairman:

Paying for a college education ranks as one of the most costly expenditures

American families face. Our previous reports show that attending college had

become less affordable1 for the average American family as increases in tuition

and fees outpaced household incomes. In September 1998, we reported that,

during the 5-year period from academic years 1990-91 through 1995-96, the

average annual charges for tuition and fees for a full-time resident (in-state)

undergraduate student rose 43.8 percent compared with an increase of 15.4

percent in the Consumer Price Index (CPI) and 13.8 percent in median household

income in current dollars.2

This difference continued a pattern that had been

apparent for a much longer period. As we reported earlier, from academic year

1980-81 through 1994-95 the average annual tuition and fees for resident

undergraduates at 4-year public colleges and universities rose nearly 3 times as

much as median household income—234 percent compared with 82 percent.3

You recently asked that we follow up on our previous reports to determine

changes in college affordability at public and private 4-year colleges and public 2-

year colleges in the last 5 years. We focused our work on comparing changes in

1

"College affordability" as used in this report is measured by dividing the average college tuition

and fees for each type of school by the median household income for that year. When tuition and

fees become a larger percentage of median household income, college is considered to be less

affordable.

2

Higher Education: Tuition Increases and Colleges’ Efforts to Contain Costs (GAO/HEHS-98-227,

Sept. 30, 1998).

3

Higher Education: Tuition Increasing Faster Than Household Income and Public Colleges' Costs

(GAO/HEHS-96-154, Aug. 15, 1996).
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2 GAO/HEHS-00-198R Cost of College

college tuition and fees, median household income, and the CPI for academic

years 1995-96 through 1999-2000. We did not consider other factors, such as the

availability of scholarships and interest rates on student loans, which also affect

affordability. In conducting this work, we obtained tuition and fee data on public

and private 4-year colleges and on public 2-year colleges from the College Board.

For our comparison of increases in tuition and fees, median household income,

and consumer prices, we used median household income data from the Census

Bureau and CPI data prepared by the Bureau of Labor Statistics. We conducted

our review in August and September 2000 in accordance with generally accepted

government auditing standards. We did not obtain comments on this letter from

the Department of Education or other entities because we used published data

from reliable sources as the basis for our work.

In summary, in the 4 years since our last report on tuition increases, private

colleges have continued to become less affordable when compared to median

household income while public colleges have become slightly more affordable.

Four-year private college tuition and fees increased 31 percent in the 5 years

ending in academic year 1999-2000, a faster rate than median household income

and the CPI. The 25-percent increase at both 2-year and 4-year public colleges

was slightly less than the increase in median household income but about twice

the increase of the CPI, as shown in figure 1.4

4

Throughout this letter, we use calendar year figures for household income and the CPI and

academic year figures for tuition. Household income figures are available by calendar year, and

tuition figures are available by academic year. We consistently matched household income and

CPI data with the earlier portion of the academic year in our analyses. For example, for academic

year 1999-2000, we used income and CPI figures for 1999. We estimated income data for 1999

using Census Bureau data.
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3 GAO/HEHS-00-198R Cost of College

Figure 1: Cumulative Change in Tuition and Fees, Median Household Income, and

CPI, Academic Years 1995-96 to 1999-2000

Sources: Tuition and fees data are from the College Board’s Trends in College

Pricing 1999. Median household income data are from the Census Bureau, and CPI

data are from the Bureau of Labor Statistics.
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4 GAO/HEHS-00-198R Cost of College

Tuition and Fees Continue to Rise in Recent Years

The cumulative increase in tuition and fees in the recent 5-year period has been

about 25 percent at both 2-year and 4-year public colleges and over 31 percent at

private 4-year colleges, as shown in figure 2.

Figure 2: Cumulative Change in Tuition and Fees, Academic Years 1995-96 to

1999-2000

Source: Tuition and fees data are from the College Board’s Trends in College

Pricing 1999.
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5 GAO/HEHS-00-198R Cost of College

However, the relationship among the annual percentage increases in tuition and

fees at the three types of schools considered has been highly variable in the last 5

years. As shown in figure 3, there is neither a consistent trend in the annual

percentage change in tuition and fees for a given type of school nor a consistent

relationship in the annual percentage change among the types of schools. For

example, 2-year public colleges had the greatest percentage increase in three of

those years and the lowest increase in the other two years. Comparing the two

types of 4-year colleges, public 4-year colleges had a slightly greater percentage

increase in the first two years of the period, while private 4-year college increases

were markedly greater during the last three years.

Figure 3: Annual Percentage Change in Tuition and Fees, Academic Years 1995-96

to 1999-2000

Source: Tuition and fees data are from the College Board’s Trends in College

Pricing 1999.
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6 GAO/HEHS-00-198R Cost of College

Household Income Levels Rose Faster Than the CPI

Median household income has shown substantial improvement during the recent

5-year period, rising by more than 4 percent each year. Moreover, household

income exceeded the percentage increase in the CPI in each of the last 5 years

(see fig. 4) and rose at twice the rate of the CPI for the 5-year period (25.4 percent

compared with 12.4 percent).

Figure 4: Annual Percentage Change in Median Household Income and CPI,

1995 to 1999

Sources: Median household income data are from the Census Bureau; CPI data

are from the Bureau of Labor Statistics.
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7 GAO/HEHS-00-198R Cost of College

The Recent 5-Year Period Was One of Mixed Trends in Affordability

Compared with median household income, tuition and fees at 4-year public

colleges became less affordable in the 1995-96 to 1997-98 period, but affordability

improved markedly in each of the subsequent 2 years because median household

income rose faster than tuition and fees. As a result, these colleges were slightly

more affordable in 1999-2000 than they were in any of the five previous years, as

shown in figure 5.

Figure 5: Four-Year Public College Tuition and Fees as a Percentage of Median

Household Income, Academic Years 1994-95 to 1999-2000

Sources: Tuition and fees data are from the College Board’s Trends in College

Pricing 1999; median household income data are from the Census Bureau.
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8 GAO/HEHS-00-198R Cost of College

The picture is somewhat different at 4-year private colleges. As shown in figure 6,

affordability at these colleges continued to decline during the recent 5-year period

as tuition generally increased at a faster rate than median household income.

Figure 6: Four-Year Private College Tuition and Fees as a Percentage of Median

Household Income, Academic Years 1994-95 to 1999-2000

Sources: Tuition and fees data are from the College Board’s Trends in College

Pricing 1999; median household income data are from the Census Bureau.
B-286237

9 GAO/HEHS-00-198R Cost of College

Tuition and Fees in Constant Dollars Have Doubled Since 1980

Even when adjusted for inflation, annual tuition and fees for all types of colleges

have more than doubled since 1980. As shown in figure 7, in academic year 1999-

2000, average tuition and fees at 4-year private colleges were more than 4 times as

much as those at 4-year public colleges ($15,380 compared with $3,356). Although

the percentage increases in tuition and fees at private 4-year colleges and public

colleges were roughly the same when adjusted for inflation,5tuition and fees at 4-

year private colleges were much higher than public colleges in 1980. Thus, the

dollar amount of the increase was much larger at 4-year private colleges over this

20-year period.

Figure 7: Average Tuition and Fees in Constant Dollars, Academic Years 1980-81

to 1999-2000

Source: Tuition and fees data are from the College Board’s Trends in College

Pricing 1999.

----

5

The increase in tuition and fees in constant dollars at private 4-year colleges was 122 percent

while the increase was 117 percent at both 2-year and 4-year public colleges during the 20-year

period ending in 1999-2000.
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10 GAO/HEHS-00-198R Cost of College

We are sending copies of this letter to the Honorable Richard W. Riley, the

Secretary of Education; appropriate congressional committees; and others who

are interested. If you or your staff have any questions or wish to discuss this

letter further, please contact me or Diana Pietrowiak, Assistant Director, at (202)

512-6239. Robert Miller, Charles Novak, and Charles Shervey also contributed to

this letter.

Sincerely yours,

Barbara D. Bovbjerg

Associate Director, Education, Workforce,

and Income Security Issues

(102007)