College Tuition and Fees: Changes in the 1995-96 to 1999-2000 Period
Compared With Median Household Income (Correspondence, 09/26/2000,
GAO/HEHS-00-198R).

Pursuant to a congressional request, GAO provided information on college
tuition and fees, focusing on the changes in the 1995-1996 and 1999-2000
period compared with median household income.

GAO noted that: (1) in the 4 years since GAO's 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; (2) 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 Consumer
Price Index; and (3) 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.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-00-198R
     TITLE:  College Tuition and Fees: Changes in the 1995-96 to
	     1999-2000 Period Compared With Median Household Income
      DATE:  09/26/2000
   SUBJECT:  Education or training costs
	     Higher education
	     College students
	     Inflation
	     Income statistics
	     Comparative analysis

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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 affordable 1 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).

B- 286237 GAO/ HEHS- 00- 198R Cost of College 2 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 3 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 4 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 5 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 6 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 7 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 8 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 GAO/ HEHS- 00- 198R Cost of College 9 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, 5 tuition 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.

B- 286237 GAO/ HEHS- 00- 198R Cost of College 10 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)
*** End of document ***