Higher Education: Tuition Increasing Faster Than Household Income and
Public Colleges' Costs (Chapter Report, 08/15/96, GAO/HEHS-96-154).

Pursuant to congressional requests, GAO provided information on: (1)
changes in college tuition levels relative to increases in consumer
prices and families' ability to pay; (2) the extent that increased
expenditures for instruction, administration, research, and other
services have contributed to the increase in colleges' overall
expenditures; (3) how tuition levels at public colleges and universities
vary among the states and the factors that account for the differences;
and (4) what actions states and institutions have taken to deal with
affordability issues.

GAO found that: (1) between 1980 and 1995, average tuition at 4-year
public colleges for in-state, full-time students increased 234 percent,
while median household income increased 82 percent and the Consumer
Price Index increased 74 percent; (2) the increase in colleges'
expenditures and a greater dependency on tuition as a revenue source
were the two factors most responsible for the tuition increase; (3)
tuition revenues increased from 16 percent to 23 percent during this
period, mainly because the revenue share provided by states decreased 14
percent; (4) student grant aid has not kept pace with tuition levels, so
students and their families are relying more heavily on loans and
personal finances; (5) increases in instruction, administrative, and
research costs accounted for more than two-thirds of the 121 percent
increase in total college expenditures; (6) expenditures for
scholarships and fellowships, student services, and plant operations and
maintenance, which also rose faster than inflation, accounted for about
one-fourth of the increase; (7) for school year 1995-96, in-state
student tuition at 4-year public colleges ranged from $1,524 to $5,521,
with a nationwide average of $2,865; (8) states' level of financial
support to colleges accounted for most of the variation in tuition
levels, but there was a strong correlation between state and local tax
rates, median household income, and colleges' expenditures per student
and state tuition levels; and (9) states and colleges are taking actions
to address college affordability issues, such as limiting tuition
increases, providing payment alternatives, and speeding academic
progress.

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

 REPORTNUM:  HEHS-96-154
     TITLE:  Higher Education: Tuition Increasing Faster Than Household 
             Income and Public Colleges' Costs
      DATE:  08/15/96
   SUBJECT:  Colleges/universities
             Administrative costs
             Teacher salaries
             Maintenance costs
             Income statistics
             Student financial aid
             State budgets
             Inflation
             Higher education
IDENTIFIER:  Pell Grant
             Consumer Price Index
             Higher Education Price Index
             Dept. of Education Integrated Postsecondary Education Data 
             System
             Supplemental Educational Opportunity Grant
             State Student Incentive Grant
             International Baccalaureate Program
             College-Level Examination Program
             Oregon Proficiency-Based Admissions Standard System
             Ohio Early College Mathematics Placement Testing Program
             
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Cover
================================================================ COVER


Report to Congressional Requesters

August 1996

HIGHER EDUCATION - TUITION
INCREASING FASTER THAN HOUSEHOLD
INCOME AND PUBLIC COLLEGES' COSTS

GAO/HEHS-96-154

Rising College Tuition and Costs

(104828)


Abbreviations
=============================================================== ABBREV

  AP - advanced placement
  CPI - Consumer Price Index
  FTE - full-time-equivalent
  HEPI - Higher Education Price Index
  IB - International Baccalaureate
  IPEDS - Integrated Postsecondary Education Data System
  PASS - Proficiency-Based Admissions Standard System
  SHEEO - State Higher Education Executive Officers Association
  SUNY - State University of New York

Letter
=============================================================== LETTER


B-271081

August 15, 1996

Congressional Requesters

As you requested, we have studied the history of increases in college
and university tuition and other related postsecondary education
costs (names of requesters are listed at the end of this letter). 
Our report discusses the increase in college tuition and related fees
at 4-year public colleges and universities from school year 1980-81
through 1994-95 and schools' expenditures over the same period.  The
report also discusses variations in tuition charges among states in
school year 1995-96 and initiatives that some states and colleges
have undertaken to hold down tuition increases, make paying for
college easier, and streamline processes to help keep total charges
lower. 

We are sending copies of this report to the Secretary of Education,
appropriate congressional committees, and other interested parties. 
If you have any questions about this report, please call me at (202)
512-7014.  Other major contributors are listed in appendix III. 

Carlotta C.  Joyner
Director, Education and
 Employment Issues

List of Requesters

The Honorable Richard M.  Burr
The Honorable Stephen E.  Buyer
The Honorable Chaka Fattah
The Honorable Martin Frost
The Honorable Gene Green
The Honorable Peter Hoekstra
The Honorable Andrew Jacobs, Jr.
The Honorable Tim Johnson
The Honorable Marcy Kaptur
The Honorable Sue W.  Kelly
The Honorable Scott L.  Klug
The Honorable Frank A.  LoBiondo
The Honorable William P.  Luther
The Honorable Edward J.  Markey
The Honorable William J.  Martini
The Honorable Andrea H.  Seastrand
The Honorable Christopher Shays
The Honorable Nick Smith
The Honorable Robert A.  Underwood
The Honorable Gerald B.H.  Solomon
The Honorable Dave Weldon
The Honorable Dick Zimmer
House of Representatives

The Honorable Carol Moseley-Braun
United States Senate


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

Paying for a college education, even at public 4-year colleges and
universities, now ranks as one of the most costly investments for
American families.  A 1995 survey of college freshmen found that
concern about college affordability was the highest it has been in
the last 30 years.  The escalation in college tuition (including
related fees) has affected not only students and their parents, but
also American taxpayers at both the federal and state levels. 
Federally supported student financial aid increased from $11.8
billion in fiscal year 1980 to $31.4 billion in 1993.  During the
same period, annual state funding for higher education grew from
$19.2 billion to $39.8 billion. 

Even with these funding increases, some experts in the higher
education community are concerned that the nation's colleges and
universities are rapidly approaching or are already in a fiscal
crisis.  For example, many schools have a substantial backlog of
deferred physical maintenance that may be getting harder to ignore. 
Others may need to expand their capacity or limit enrollment to deal
with projected increases in student demand.  State legislatures, on
the other hand, are increasingly appropriating funds to meet other
social needs, such as Medicaid, prisons, and elementary and secondary
education programs, and are not inclined to increase state taxes to
meet public colleges' and universities' financial needs. 

Twenty-three Members of Congress asked GAO for information on (1) the
extent to which tuition levels have changed relative to increases in
consumer prices and families' ability to pay; (2) the extent to which
schools' increased expenditures for instruction, administration,
research, and other expenditures have contributed to the increase in
schools' overall expenditures; (3) how tuition levels at public
colleges and universities vary among the states and what factors help
account for the differences; and (4) the kinds of actions states and
institutions have taken to deal with affordability issues.  To
address these objectives, GAO reviewed the literature; interviewed
various school officials and other people knowledgeable about college
finance and policy issues; and analyzed data on school revenues,
expenditures, and tuition levels.  For purposes of this report, GAO
focused its study on schools that most students attend--public 4-year
colleges and universities. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

Of the approximately 9 million students enrolled in 4-year colleges
and universities each year, about two-thirds attend state-supported
schools.  Their education is supported partly by tax dollars and
partly by tuition.  In school year 1993-94, the states'
appropriations to public colleges and universities provided about 42
percent of revenues; the students' share was about 23 percent; and
the remainder came from other sources, such as endowments, grants,
gifts, and contracts. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

From school year 1980-81 through 1994-95, tuition at 4-year public
colleges and universities increased 234 percent.  In contrast, median
household income, a measure of families' ability to pay for tuition,
rose 82 percent.  This increase in tuition also substantially
exceeded the 74-percent increase in the cost of consumer goods--as
measured by the Consumer Price Index (CPI)--that families use their
incomes to purchase. 

The two factors most responsible for the increase in tuition were the
rise in schools' expenditures and schools' greater dependency on
tuition as a source of revenue.  Schools' expenditures per student
increased 121 percent from school year 1980-81 through 1993-94, half
again as much as inflation.  Increases in instruction,
administration, and research expenditures accounted for more than
two-thirds of this increase.  The increased spending for instruction
was driven largely by increases in faculty salaries, which rose 97
percent during the period.  Also during this period, the share of
schools' revenues provided by tuition rose from 16 percent to 23
percent, as the share of revenue provided by state appropriations
declined by 14 percentage points. 

Moving from nationwide statistics, GAO found wide variation in
tuition charges among states in school year 1995-96.  Although the
nationwide average tuition for in-state students at 4-year public
schools was $2,865, the state averages ranged from $1,524 to $5,521. 
The explanation, in part, for these variations is states' level of
support (that is, how much money per student a state appropriates for
its 4-year public schools). 

To deal with students' increasing financial burden, colleges have
undertaken a variety of initiatives, including holding down tuition
increases, making paying for college easier, and streamlining
students' progress to graduation to keep their total charges lower. 
Because some of these efforts are in the early stages of planning and
implementation, little has been done to analyze or evaluate their
effectiveness. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      COLLEGE HAS BECOME LESS
      AFFORDABLE
-------------------------------------------------------- Chapter 0:4.1

From school year 1980-81 through 1994-95, tuition at 4-year public
colleges and universities has risen nearly three times as much as
median household income, making attendance less affordable for many
students.  The increase in tuition is primarily related to two
factors:  schools' expenditures have risen substantially in the last
15 years, and states' funding of higher education has not kept pace
with these rising expenditures. 

Moreover, increases in grant aid--primarily federal Pell grants--have
not kept up with tuition increases at 4-year public colleges and
universities.  As a result, in addition to paying higher prices,
college students and their parents are having to rely more heavily on
loans and personal finances.  For example, in fiscal year 1980, the
average student loan was $518; in fiscal year 1995, it rose to
$2,417, an increase of 367 percent. 


      TUITION HAS PROVIDED A
      LARGER SHARE OF SCHOOLS'
      REVENUES AS SCHOOLS'
      EXPENDITURES HAVE INCREASED
-------------------------------------------------------- Chapter 0:4.2

From school year 1980-81 through 1993-94, 4-year public colleges and
universities increased their spending by 121 percent--an increase of
about $7,900 per student.  During the same period, the portion of
schools' revenues provided by tuition increased from 16 percent to 23
percent. 

The primary factor fueling the growth in schools' expenditures was an
increase in schools' largest cost component--instruction
expenditures.  Faculty salaries represented most of the 106-percent
increase in instruction expenditures during the period.  Some of the
cost growth, according to existing research, was the result of
schools' competition with one another and with industry for high-
quality scholars and researchers.  In addition, average salaries have
increased as schools' faculties have grown older and a greater part
of this workforce has reached the full professor level.  Other
instruction expenditures contributing to the increase in this cost
component were attributed mostly to growth in spending for faculty
fringe benefits and instructional supplies and equipment. 

A second major factor driving the increase in school expenditures was
the 131-percent increase for administrative activities.  Although
available data were insufficient to determine what caused
administrative expenditures to increase, researchers suggest a number
of reasons, including an increase in the costs of complying with
federal laws, such as hazardous waste disposal laws and title IX of
the Education Amendments of 1972, which prohibits discrimination on
the basis of sex in educational programs or activities (including
collegiate sports). 

Schools' expenditures for research increased 157 percent during the
14-year period.  Some analysts maintain that the funds schools
received for research grants and contracts were insufficient to cover
their research expenditures, especially indirect costs, and that
state appropriations or tuition were used to subsidize a portion of
research costs.  Other analysts maintain that increased expenditures
for research did not contribute to increases in tuition and state
appropriations.  Nationwide data on colleges' research expenditures
and revenues were not sufficient to determine the validity of either
position. 

Another important factor contributing to the rise in tuition from
school year 1980-81 through 1993-94 was the increase in the portion
of schools' revenues paid for by tuition, which rose from 16 percent
to 23 percent.  This occurred, in part, because state appropriations
fell from 56 percent to 42 percent of schools' revenues, and
increased school revenue from other funding sources financed only
about half of this decline.  Had the portion of school revenues from
each funding source remained constant at the 1980-81 level, tuition
could have been 30 percent lower than it was at the end of this
period. 


      TUITION VARIES WIDELY AMONG
      STATES
-------------------------------------------------------- Chapter 0:4.3

Tuition levels at the nation's 4-year public colleges and
universities for undergraduate in-state students ranged from $1,524
to $5,521 in school year 1995-96.  The nationwide average was $2,865. 
In general, schools with the highest average tuitions were in the
northeastern states, and schools with the lowest average tuitions
were in states in the South and the West.  GAO's analysis showed that
four factors were associated with 78 percent of the variation in
average state tuition levels, although these factors are not
necessarily causes of tuition being high or low.  Specifically,
states with lower tuitions generally had relatively low state and
local tax rates, low median household incomes, low college
expenditures per student, and relatively high per capita state
appropriations for higher education. 


      VARYING APPROACHES TAKEN TO
      EASING THE FINANCIAL BURDEN
-------------------------------------------------------- Chapter 0:4.4

States and 4-year public schools are taking or planning a variety of
actions to address the financial burden of paying for college.  Some
of these initiatives focus directly on charges students incur and on
alternative ways of paying for them.  For example, some states and
schools are limiting tuition charges, offering tuition prepayment and
other savings plans, or arranging for tuition payments to be spread
over the school year. 

Other initiatives address students' costs indirectly by attempting to
expedite students' progress towards completing their degree
requirements.  These approaches commonly focus on ways to facilitate
students' transferring credits from one school to another (including
credits for college-level courses taken by high school students);
reducing the number of credits that programs require for a degree;
improving academic counseling to help students both avoid unnecessary
delays in choosing a major and more efficiently sequence their
courses; and advising high school juniors of courses they should take
during their senior year to become better prepared for college-level
work. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO is making no recommendations in this report. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

The Department of Education reviewed a draft of this report and had
no comments. 


INTRODUCTION
============================================================ Chapter 1

Average tuition\1 for a resident undergraduate student to attend a
public 4-year college or university (referred to throughout this
report as a "public college") rose from $804 per year in school year
1980-81 to $2,689 in 1994-95, an increase of 234 percent.  During
approximately the same period, the median household income rose 82
percent.  This was a reversal from the 1970s, when the cumulative
percentage increase in the Consumer Price Index (CPI) exceeded that
of the percentage increase in college tuition. 

The rising cost of college continues to be an issue of widespread
concern.  Studies and polls show fears about being able to afford a
college education--and, in particular, about the debt that students
and their families must often incur to pay for college.  A 1995
survey of college freshmen, for example, found that 71 percent of the
students surveyed expressed concern that they might not be able to
pay for the schooling required for their intended careers.\2

Research indicates that the reasons for this concern show no sign of
abating in the near future.  In a 1995 survey, a majority of the
heads of state legislative higher education committees said that
their states' current funding level for public colleges was
inadequate to meet higher education's future needs and that
legislatures were unlikely to increase funding for higher education
in the next 3 to 5 years.\3 Only 9 percent said that increasing state
taxes was a likely option for providing more funds for state
colleges.  Given this, the states' continuing demands for social
services, and limited state revenue, states may shift even more of
the college cost burden to students and their parents. 

Although college students may be paying significantly more for their
education than their predecessors did 10 or 15 years ago, the
earnings advantage of college graduates over those not getting
college degrees has also grown substantially.  According to a recent
analysis of U.S.  Census Bureau data by an economist with the
University of Chicago, a graduated college student in 1980 earned
about 43 percent more per hour than a person with a high school
diploma.  By 1994, this earnings advantage had increased to 73
percent. 


--------------------
\1 Throughout this report, "tuition" refers to in-state (state
resident), full-time undergraduate tuition and required fees; it does
not include charges for room and board, which may be significant at
some schools. 

\2 Alexander W.  Astin, William S.  Korn, Kathryn M.  Mahoney, and
Linda J.  Sax, The American Freshman:  National Norms for Fall 1995
(Los Angeles:  Cooperative Institutional Research Program, American
Council on Education, and University of California, 1995). 

\3 Sandra S.  Ruppert, The Politics of Remedy:  State Legislative
Views on Higher Education (Washington, D.C.:  National Education
Association, 1996). 


   PUBLIC HIGHER EDUCATION:  MANY
   STUDENTS, MULTIPLE FUNDING
   SOURCES
---------------------------------------------------------- Chapter 1:1

State-supported 4-year colleges and universities are a substantial
public enterprise.  During the 1993-94 school year, for example, they
served about 5.9 million students and had expenditures totaling about
$94 billion.  Federal student financial aid support that year for all
schools totaled about $31.4 billion, including about $12 billion in
grants and federally guaranteed loans for students enrolled in public
colleges.  While private colleges and universities also have a major
role in American higher education, public colleges have the lion's
share of students--about two-thirds of the students in 4-year
schools. 

Although tuition and related fees may be the most visible cost of
higher education to students, tuition pays for only about one-fourth
of educational and general expenditures at public colleges.  On
average, the nation's public colleges' expenditures totaled over
$14,000 per student during the 1993-94 school year.\4 Tuition funded
about 23 percent of this amount (see fig.  1.1).  Almost twice as
much, 42 percent, came from state general funds.  The remainder came
from a variety of other sources, such as endowments, grants, gifts,
and contracts. 

   Figure 1.1:  Sources of Revenue
   for 4-Year Public Colleges,
   School Year 1993-94

   (See figure in printed
   edition.)


--------------------
\4 At the time we conducted our work, the 1993-94 school year was the
most recent year for which comparative information on college costs
was available. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:2

This study, undertaken at the request of 23 Members of Congress,
provides information that should be of help in understanding rising
tuition levels and the increasing costs of operating public colleges
as the Congress begins its deliberations on the reauthorization of
the Higher Education Act of 1965, as amended.  Although private
college tuition has also risen dramatically and some of these schools
have tuition exceeding $20,000 per year, we focused our review on
public colleges because a majority of students attend these schools. 
As a result of discussions with requesters' staffs, we focused our
work on these questions: 

  -- To what extent have tuition levels at public colleges changed
     over time relative to increases in consumer prices and families'
     ability to pay? 

  -- To what extent have instruction, administration, research, and
     other expenditures each contributed to the schools' rising
     costs? 

  -- How do tuition levels vary among states, and what factors help
     explain the differences? 

  -- What kinds of actions have states and public colleges taken to
     deal with affordability issues? 

Our analysis of tuition, college and university expenditures, and
states' efforts to make college more affordable is based on data
maintained by the U.S.  Department of Education and other sources,
contacts with state and school officials, and discussions with
representatives of higher education organizations and individuals
familiar with higher education issues.  Appendix I describes our
objectives, scope, and methodology in more detail. 

We provided the Department of Education a draft copy of this report. 
The Department had no comments. 

Our work was conducted from October 1995 to July 1996 in accordance
with generally accepted government auditing standards. 


COLLEGE HAS BECOME LESS AFFORDABLE
SINCE 1980
============================================================ Chapter 2

During the last 15 years, tuition at public colleges has risen almost
three times more than household incomes have.  This rise reflects two
main trends:  public college expenditures have generally risen more
than inflation, and states have paid a lower portion of expenditures
with appropriated funds.  During this same period, growth in grant
aid to students has not matched the increase in tuition.  As a result
of these factors, many students and their families have borrowed more
to finance the cost of college. 


   TUITION HAS RISEN NEARLY THREE
   TIMES MORE THAN HOUSEHOLD
   INCOME
---------------------------------------------------------- Chapter 2:1

From school year 1980-81 through 1994-95, increases in tuition at
public colleges considerably outpaced increases in both median
household income and inflation.\5 From school year 1980-81 through
1994-95, the average tuition for full-time, in-state students
increased from $804 per year to $2,689, or 234 percent.  During
approximately the same period, median household income rose 82
percent, from $17,710 to $32,264,\6 and the cost of living--as
measured by CPI--rose 74 percent.  Computed on an annualized basis,
the rates of increase were about 9.0 percent for tuition, 4.4 percent
for median household income, and 4.0 percent for CPI. 

Figure 2.1 compares the cumulative percentage increase in tuition,
median household income, and consumer prices over the 15-year period
beginning with school year 1980-81.  As figure 2.1 shows, the
cumulative percentage increase in tuition was almost 3 times more
than the percentage increases in household income and consumer
prices.  The rate of increase has been especially pronounced since
1990. 

   Figure 2.1:  Comparative
   Increases in Tuition, Median
   Household Income, and Consumer
   Prices, School Years 1980-81 to
   1994-95

   (See figure in printed
   edition.)

Note:  Median household income figures are for calendar years.  A
median household income figure was not available for 1995. 

As a result of these increases, paying for tuition now takes about
twice the proportion of household income as it did in 1980.  As a
proportion of median household income, average tuition cost has grown
from 4.5 percent in school year 1980-81 to 8.3 percent in 1994-95. 


--------------------
\5 In our analysis of students' costs, we focused on tuition, which
included related fees.  We excluded certain other costs, which can be
substantial, that students incur while attending college, such as
room and board, books and supplies, and transportation.  Data on
these kinds of costs were not consistently included in the readily
available databases we used in our analysis. 

\6 These median household income figures are for calendar years 1980
and 1994, respectively. 


   AS SCHOOLS' EXPENDITURES HAVE
   INCREASED, TUITION HAS PROVIDED
   A LARGER SHARE OF SCHOOLS'
   REVENUES
---------------------------------------------------------- Chapter 2:2

The two factors most responsible for the 234-percent increase in
tuition from school year 1980-81 to 1993-94 were (1) an increase of
121 percent in schools' expenditures and (2) an increase from 16
percent to 23 percent in the portion of schools' funding provided by
tuition. 


      SCHOOL EXPENDITURES HAVE
      INCREASED SIGNIFICANTLY
-------------------------------------------------------- Chapter 2:2.1

School expenditures have significantly outpaced inflation.  In school
year 1980-81, the nation's public colleges spent an average of $6,540
per full-time-equivalent (FTE) student.\7 By 1993-94 (the last school
year for which comparative data were available), FTE expenditures had
grown to $14,483, an increase of 121 percent.  During the same
period, CPI rose 69 percent. 

Possible reasons, other than inflation, for this rise in schools'
expenditures are many and varied.  Chapter 3 further discusses
schools' expenditures, and chapter 4 discusses the correlation
between states' average costs and state tuition levels. 


--------------------
\7 Throughout chapter 2, the cost data include graduate students as
well as undergraduate students.  The available databases did not
permit the two to be separated. 


      TUITION HAS PROVIDED A
      LARGER SHARE OF PUBLIC
      COLLEGES' REVENUE
-------------------------------------------------------- Chapter 2:2.2

From school year 1980-81 through 1993-94, tuition funded a
progressively larger portion and state appropriations funded a
diminishing portion of public colleges' revenues.  Even though state
appropriations increased 96 percent during the period, schools'
revenues from tuition and other sources rose more rapidly.  Figure
2.2 shows how funding sources were split among tuition, state
appropriations, and other sources of funding\8 during 4 school years: 
1980-81, 1985-86, 1990-91, and 1993-94. 

   Figure 2.2:  Comparison of
   Revenue From Major Funding
   Sources for 4-Year Public
   Colleges, School Years 1980-81,
   1985-86, 1990-91, and 1993-94

   (See figure in printed
   edition.)

Note:  Not included are Pell grant receipts from the federal
government, auxiliary enterprise, independent operation, and hospital
revenue. 

As a proportion of schools' revenues, state appropriations fell from
56 percent in school year 1980-81 to 42 percent in 1993-94.  During
this same period, the portion of school revenue provided by tuition
rose from 16 percent to 23 percent, and the portion provided by other
funding sources rose from 28 percent to 35 percent.  Had the portion
of schools' revenue provided by each funding source remained at
1980-81 levels, tuition levels would have been 30 percent lower than
they actually were at the end of the period because tuition would
have provided 30 percent less of school revenues (that is, 16 percent
instead of 23 percent). 

One factor researchers say affects the level of state support is the
competition for state funds from other state programs, most notably
elementary and secondary education, health care, prisons, and
welfare.  Spending on these four areas is largely mandated by federal
and state laws, court orders, and voter initiatives.  Higher
education funding is considered discretionary spending and is,
therefore, more vulnerable to funding reductions than spending for
these items. 

This vulnerability has been particularly evident when economic
downturns have put stress on state finances.  Tuition increases since
school year 1980-81 have generally been the greatest when national
economic conditions were poor and the states were more limited in
their ability to generate tax revenues.  For example, following the
1981-82 and 1990-91 recessions, tuition at public colleges increased
annually by 8 percentage points more than consumer prices, as
measured by CPI.  In contrast, in better economic times, such as the
mid- and late-1980s, states increased their financial support for
higher education, and annual tuition increases tended to exceed
consumer price increases by 2.4 to 5 percentage points. 


--------------------
\8 Other sources of funding include research and other grants and
contracts, sales of educational services, endowment income, and local
and federal appropriations. 


   GRANT AID TO STUDENTS HAS NOT
   KEPT PACE, CAUSING GREATER
   RELIANCE ON LOANS
---------------------------------------------------------- Chapter 2:3

Grant aid available to students and their families has not kept pace
with tuition increases.  One of the largest sources of this aid is
federal Pell grants, which are awarded to students who meet certain
tests of financial need.  In school year 1994-95, the average Pell
grant per FTE student was $409, an increase of 72 percent over
1980-81.\9 However, tuition rose more than three times as fast during
the same period. 

To pay for rapidly rising tuition and other college expenses,
students and parents have increasingly relied on loans to finance
college educations.  The volume of loans provided to students at
public colleges by the Department of Education's major student loan
programs rose 435 percent during the 15-year period, from an
estimated $2.2 billion in fiscal year 1980 to an estimated $11.5
billion in fiscal year 1995.  While part of the increase resulted
because more students were taking out loans in 1994-95 than in
1980-81, much of it was the result of the increased size of loans. 
The annual average student loan at 4-year public schools rose from
$518 per FTE student in fiscal year 1980 to $2,417 in fiscal year
1995, an increase of 367 percent.  But since not all students had
student loans, the average loan amount was higher--$3,282--and some
borrowers received more than one loan. 

Figure 2.3 shows the relationship between the average amount of
federal student loans, Pell grants per FTE student, and tuition
levels at public colleges in school years 1980-81 through 1995-96. 
Using 1980-81 as a base year, average federal student loan amounts
showed larger percentage increases than tuition beginning in 1986,
while the rate of Pell grant increases lagged behind both in recent
years. 

   Figure 2.3:  Comparison of
   Increases in Annual Tuition and
   Loan and Grant Amounts at
   4-Year Public Colleges, School
   Years 1980-81 Through 1995-96

   (See figure in printed
   edition.)

Note:  A figure for Pell grants was not available for 1995-96. 
Federal student loan figures are for federal fiscal years, not school
years. 


--------------------
\9 The average Pell grant per FTE student at 4-year public colleges
was $1,571 in school year 1994-95. 


FACTORS CONTRIBUTING TO INCREASES
IN SCHOOL EXPENDITURES
============================================================ Chapter 3

From school year 1980-81 through 1993-94, public colleges increased
their spending on a per-student basis by 121 percent, due largely to
a 90-percent increase in the amount spent on the goods and services
they purchased, such as computer expenditures and instructors'
salaries.\10 The three types of expenditures that accounted for over
two-thirds of all college expenditures in 1980-81--instruction,
administration, and research--also accounted for over two-thirds of
the increase in expenditures during the 1980-81 to 1993-94 period. 

Although state appropriations and tuition payments are the primary
funding sources for most public colleges' instruction and
administrative expenditures, research expenditures are largely funded
by government and private grants and contracts.  However, the degree
to which state appropriations and tuition receipts are used to fund
research cannot be readily determined on a national level with
existing data, and the influence of these expenditures on tuition
levels is the subject of much debate. 


--------------------
\10 Our calculations were based on FTE students, to whom we refer as
"students" in this chapter. 


   AMOUNT SCHOOLS SPENT ON GOODS
   AND SERVICES INCREASED MORE
   THAN INFLATION
---------------------------------------------------------- Chapter 3:1

From school year 1980-81 through 1993-94, public colleges increased
their expenditures from about $6,500 per student to nearly $14,500,
or by about 121 percent.  This increase was about 30 to 50 percentage
points higher than inflation, depending on the price index used. 

Schools' expenditures increased 52 percentage points more than the
69-percent increase in CPI during the 1980-81 to 1993-94 period.  One
reason why schools' expenditures rose more than CPI is that schools
spend their funds on a different group of components than is measured
by CPI:  Whereas CPI measures increases in the prices of such items
as food, clothing, housing, and health care, schools spend their
monies on such items as faculty and administrator salaries, fringe
benefits, and library materials. 

Some researchers believe a better measure of school cost increases is
the Higher Education Price Index (HEPI)--an index specifically
designed to measure changes in the prices of goods and services
commonly purchased by higher education institutions.  Items that HEPI
measures include faculty and administrators' salaries, fringe
benefits, communication and data processing services, supplies and
materials, library acquisitions, and utilities. 

The HEPI measurement includes 2-year and 4-year public and private
colleges and universities and, therefore, the expenditures of public
colleges may have increased somewhat more or less than the
expenditures for all schools.  Nonetheless, many researchers believe
that HEPI is a better measurement of the increases in prices of the
types of goods and services purchased by public colleges than is CPI,
which measures the increase in a market basket of consumer goods.  As
shown in figure 3.1, the increases in HEPI consistently outpaced
increases in CPI from school year 1980-81 through 1993-94, with HEPI
rising 90 percent compared with CPI's 69-percent increase.  Also, the
HEPI increase is equivalent to about three-fourths of the 121-percent
increase in schools' expenditures during the period. 

   Figure 3.1:  Comparison of
   Increases in Per-Student
   Expenditures at Public Colleges
   With Increases in HEPI and CPI,
   School Years 1980-81 Through
   1993-94

   (See figure in printed
   edition.)

The 31-percentage point difference between the increase in public
colleges' expenditures and the increase in HEPI can be attributed to
either an increase in the volume of goods and services schools
purchased or a more expensive mix of goods and services purchased--
for example, more computers and fewer adding machines.  While about
three-fourths of schools' overall increases in expenditures were due
to higher prices paid as reflected in HEPI, data were insufficient to
analyze the reasons for the increases in the remaining expenditures. 


   THREE MAJOR COMPONENTS HAD
   LARGEST IMPACT ON INCREASING
   SCHOOL EXPENDITURES
---------------------------------------------------------- Chapter 3:2

To gain a better understanding of why increases in school
expenditures have outpaced increases in inflation, we analyzed
changes in the individual components of schools' expenditures.  In
general, we found that three components--instruction, administration,
and research expenditures--
were the most influential in driving up school expenditures (see fig. 
3.2). 

   Figure 3.2:  Components' Shares
   of the $7,984 Increase in
   4-Year Public Colleges' Costs
   per FTE Student, School Year
   1980-81 to 1993-94

   (See figure in printed
   edition.)

\a Includes plant operations and maintenance. 

\b Includes scholarships and fellowships, but not Pell grants. 


      INCREASE IN INSTRUCTION
      EXPENDITURES WAS A MAJOR
      FACTOR IN GROWTH OF SCHOOL
      EXPENDITURES
-------------------------------------------------------- Chapter 3:2.1

In terms of expenditures per student, school spending for instruction
was the largest single factor contributing to the increase in school
expenditures from school year 1980-81 through 1993-94.  During this
period, public colleges increased their spending from $2,719 to
$5,669 per student--an increase of $2,950, or 108 percent.  The
largest component of instructional expenditures was the increase in
salaries and wages.\11 The average salary for faculty at public
colleges increased by $23,646 (97 percent), from $24,373 in 1980-81
to $48,019 in 1993-94. 

According to the literature we reviewed, average faculty salaries
have increased, in part, because schools have been competing with one
another and industry for high-quality scholars and researchers.  The
average salary has also increased because the faculty workforce has
been aging.  A greater proportion of faculty are at the full
professor level, and this has resulted in a gradual increase in the
average salary over the last 10 to 15 years.  However, some higher
education policy analysts have pointed out that the increase in
faculty salaries during the 1980s and 1990s has merely returned
salary levels to where they were in the early 1970s, in real terms. 
Faculty salaries did not keep up with inflation from 1973 to 1982 and
did not start to experience any real growth until 1983. 

The literature we reviewed also suggested another reason for the
increase in instructional costs:  the decline in faculty productivity
in terms of teaching workload.  Faculty are spending less time in the
classroom and more doing research and, partly as a consequence,
colleges and universities are hiring more faculty.  This additional
hiring drives up instructional costs, which in turn results in higher
tuition.  Some believe the underlying cause of this phenomenon is the
reward system that values research over teaching, particularly with
regard to granting tenure.  To address this issue, a number of states
have conducted or initiated studies on faculty workload and
productivity.  To review these studies and more thoroughly evaluate
this complex issue was beyond the scope of our work. 

In addition to the increases in faculty salaries, other factors have
contributed to the increase in instructional expenditures.  For
example, faculty fringe benefits have increased substantially--by 162
percent from 1980-81 to 1993-94.  Schools are also spending more for
instructional supplies and equipment.  A modern science curriculum,
for example, calls for the use of more sophisticated laboratory
equipment, such as electron microscopes, and this equipment is more
costly to purchase and maintain than the equipment used in the past. 


--------------------
\11 In 1993-94, $3,994 (about 70 percent) of the $5,669 average
per-student instruction expenditures were for salaries and wages. 


      GROWTH IN SCHOOL
      ADMINISTRATIVE EXPENDITURES
      OUTPACED INFLATION
-------------------------------------------------------- Chapter 3:2.2

Increased administrative expenditures was another significant factor
causing school expenditures to outpace inflation from school year
1980-81 through 1993-94.  During this period, these expenditures grew
about 131 percent, or 41 percentage points more than HEPI increased. 
School administrative expenditures increased $1,284 per student, from
$979 in 1980-81 to $2,263 in 1993-94. 

Although the literature contains no consensus on what constitutes
administrative expenditures, the Department of Education defines them
as institutional and academic support expenditures, excluding
expenditures for libraries.\12 Institutional support includes
expenditures for such items as general administrative services,
executive direction and planning, legal and fiscal operations, and
public relations/development.  Academic support includes expenditures
for museums, galleries, audiovisual services, academic computing
support, ancillary support, academic administration, personnel
development, and course and curriculum development. 

According to Department of Education data, approximately 56 percent
of administrative expenditures in 1993-94 were for salaries and
wages.  Because we were unable to obtain nationwide data on the
numbers of administrative personnel or their salaries for 1980-81, we
could not determine how much of the increase in administrative
expenditures could have been attributed to increased staff, as
distinguished from higher salaries.  However, the administrative and
institutional services personnel component of HEPI increased by 108
percent from 1980-81 to 1993-94, which indicates that a large portion
of the growth in administrative costs was likely due to an increase
in salaries. 

The literature we reviewed offered a number of reasons for the
increase in administrative expenditures, including additional
expenditures for recruiting students, expanded student financial aid
programs, and administrative computing services.  Another reason
cited in the literature was that schools have increased their
administrative budgets to ensure compliance with such federal
statutes as hazardous waste disposal laws; the Equal Employment
Opportunity Act; title IX of the Education Amendments of 1972 (which
prohibits discrimination on the basis of sex in educational programs
or activities, including collegiate sports for women); and the
Americans with Disabilities Act of 1990 (which prohibits
discrimination on the basis of disability in public services,
programs, or activities). 


--------------------
\12 Some of the literature we reviewed also includes student services
as a part of administrative expenditures.  For our calculations, we
used the Department's definition. 


      RESEARCH EXPENDITURES ROSE
      SUBSTANTIALLY, BUT THEIR
      EFFECT ON TUITION IS UNCLEAR
-------------------------------------------------------- Chapter 3:2.3

Research expenditures at public colleges increased $1,439 per student
(157 percent), from $914 in school year 1980-81 to $2,353 in 1993-94. 
It is unclear whether the growth in research expenditures contributed
to the increase in net college research expenditures (research
expenditures that exceeded amounts received from research grants and
contracts).  In any case, whether increased net research expenditures
contributed to the increase in tuition prices is a matter of debate
within the higher education community.  We could not determine the
extent that net college research expenditures may have changed on a
nationwide basis because such information was not readily available
from the Department of Education. 

Schools receive funds from government and private grants and
contracts to pay for specific research projects.  For example,
federal government research contracts pay for direct costs
specifically identified with a particular research project as well as
for certain indirect costs for associated administrative and
facilities expenses.  For every dollar spent for the direct costs of
colleges' research, subject to certain exclusions, the government
pays an additional amount to cover its share of the colleges'
indirect costs.  Since 1991, schools have been limited to a
26-percent cap on federal reimbursements for certain indirect costs. 
Previously, the level of reimbursement for indirect costs varied
among institutions, with some having overall rates greater than 60
percent.\13

The extent to which colleges and universities use their own funds to
pay for research is a matter of controversy within the higher
education community.  Some contend that schools are not collecting
sufficient grant or contract monies to fully pay for their
expenditures on research projects, especially for indirect costs, and
that, therefore, tuition and state appropriations are being used to
subsidize research. 

Although there is anecdotal information on this issue, neither side
of this controversy has presented comprehensive, factual data in
support of its position.  Furthermore, nationwide data collected by
the Department of Education through its Integrated Postsecondary
Education Data System (IPEDS) surveys are aggregated at too high a
level to be useful in settling this issue. 


--------------------
\13 We have conducted several studies on various issues regarding
indirect research costs; these reports are listed at the end of this
report. 


      MOST OTHER SCHOOL
      EXPENDITURES ALSO ROSE
      SIGNIFICANTLY
-------------------------------------------------------- Chapter 3:2.4

In addition to instructional, administrative, and research
expenditures, a number of other types of school expenditures have
also risen faster than the rate of inflation.  These expenditures
include scholarships and fellowships, student services, and plant
operation and maintenance.  While the average dollar-per-student
increases for each of these categories are relatively small,
collectively they account for about one-fourth of the total
per-student increase in school expenditures. 


         SCHOLARSHIPS AND
         FELLOWSHIPS
------------------------------------------------------ Chapter 3:2.4.1

Expenditures by public colleges for scholarships and fellowships
(excluding Pell grants) experienced the fastest rate of growth of all
expenditure items in terms of percentage increases.  In school year
1980-81, schools spent $219 per student; in 1993-94, this amount had
grown to $759, an increase of $541 per student, or 247 percent. 

Expenditures for scholarships and fellowships include funds the
school gives in the form of outright grants, trainee stipends, and
tuition and fee waivers.  Also included are federal grant programs
for which the recipients and award amounts are determined by the
school, such as Supplemental Educational Opportunity Grants and State
Student Incentive Grants; monies expended for scholarships and grants
from funds provided by state and local governments and private
sources; and institutional funds, including matching funds for
federal, state, or local grant programs.  Scholarships and
fellowships are like research in that, to the degree they are funded
by outside revenue sources, they do not increase colleges' net
expenditures.  As in the case of research expenditures, we could not
determine the extent that net expenditures for scholarships and
fellowships may have changed on a nationwide basis, because such
information was not readily available from the Department of
Education. 

Although these expenditures had the largest percentage increase from
school year 1980-81 through 1993-94, the $541 per-student increase in
spending represented only about 7 percent of the $7,944 total
increase in per-student spending for the period.  In addition,
although these expenditures are included in our calculation of
schools' expenditures, the increase in schools' net expenditures for
scholarships and fellowships is reduced by the funds received from
the federal government and private sources for scholarships and
fellowships. 


         STUDENT SERVICES
------------------------------------------------------ Chapter 3:2.4.2

School spending on student services more than doubled from school
year 1980-81 through 1993-94.  Total expenditures for student
services increased from $322 per student in 1980-81 to $723 in
1993-94, an increase of $401 or 125 percent.  As in the case of
institutional and academic support, a significant portion (53
percent) of the expenditures for the student services function
consists of salaries and wages. 

Student services include funds expended for admissions, registrar
activities, career guidance, counseling, financial aid
administration, student health services, and any other activity that
contributes to students' emotional and physical well-being and to
their intellectual, cultural, and social development outside the
context of the formal instructional program. 

The literature we reviewed offered a number of reasons for the growth
in spending for student services.  One reason given is that student
demographics have been changing.  A growing number of students
attending college are older, and many of them attend on a part-time
basis.  These students tend to need more remedial services,
counseling, and administrative support.  Another reason offered is
that students in general appear to want and expect more personal
counseling, tutoring, and mentoring, all of which require more
support staff and facilities. 


         PLANT OPERATION AND
         MAINTENANCE
------------------------------------------------------ Chapter 3:2.4.3

Expenditures for operating and maintaining physical plants include
funds spent for the operation and upkeep of grounds and facilities
used for general and educational purposes, utilities, fire
protection, property insurance, and similar functions.  School
expenditures for plant operation and maintenance increased by $495
(72 percent) per student, from $684 per student in school year
1980-81 to $1,179 in 1993-94. 

School expenditures for operation and maintenance grew at a slower
rate than HEPI (a 72-percent increase versus a 90-percent increase)
during this period.  However, if the findings of a report issued in
1989 are still valid, school expenditures on plant operation and
maintenance may become a much larger factor fueling tuition and cost
increases in the future.\14 According to this study, the 209
institutions surveyed deferred $4 of needed maintenance for every $1
spent in 1988, and repairs and renovations considered "priority" or
"urgent" totaled an estimated $20.5 billion through 1988.\15 This
study was being updated at the time of our review, and an official
participating in the study said that deferred maintenance had grown
to about $26 billion. 


--------------------
\14 Sean C.  Rush and Sandra L.  Johnson, The Decaying American
Campus:  A Ticking Time Bomb (Alexandria, Va.:  Association of
Physical Plant Administrators of Universities and Colleges and the
National Association of College and University Business Officers,
1989). 

\15 The schools in this study included both public and private
colleges and universities. 


         OTHER COST COMPONENTS
------------------------------------------------------ Chapter 3:2.4.4

Other items on which schools spend money include libraries; public
service; debt service on academic and administrative buildings;
monies deposited into institutional loan funds; transfers into
endowment funds; and additions, renewals, and replacements of plants
(land, buildings, machinery, and furniture).  Institutional
expenditures for these kinds of items, which we termed "other cost
components" for our analysis, increased by $835 per student (119
percent), from $703 in school year 1980-81 to $1,538 in 1993-94. 


TUITION AT 4-YEAR PUBLIC COLLEGES
VARIES WIDELY AMONG STATES
============================================================ Chapter 4

Nationwide, average tuition for resident, undergraduate full-time
students at public colleges was $2,865 for school year 1995-96, but
tuition levels varied considerably by state, ranging from $1,524 in
Hawaii to $5,521 in Vermont.  These variations reflected both fiscal
and demographic characteristics of the states and their public
schools. 

We identified four economic characteristics that were closely related
to state tuition levels:  in-state students were likely to incur
lower tuition charges if, relative to other states, the states in
which they lived had low tax rates, high per-student appropriations
for higher education, low per-student college expenditures, and low
median household income.  These four characteristics were associated
with 78 percent of the variation in tuition levels among states. 


   AVERAGE TUITION LEVELS RANGE
   WIDELY AMONG STATES
---------------------------------------------------------- Chapter 4:1

The average tuition levels at public colleges for in-state
undergraduate students varied widely among states in school year
1995-96.  In four states (Vermont, Pennsylvania, New Hampshire, and
Massachusetts) tuition levels were 40 percent or more above the
national average tuition of $2,865 for the year, while in Hawaii,
North Carolina, and Idaho, tuition levels were 40 percent or more
below the national average.  (See table 4.1.) However, major
increases have been approved for tuition at the University of
Hawaii's 10 campuses for school year 1996-97.  For example, tuition
for full-time, resident undergraduate students at the University of
Hawaii's flagship campus in Manoa will increase from $1,534 to $2,832
a year, or 85 percent. 



                         Table 4.1
          
                Average In-State, Full-Time
           Undergraduate Tuition at 4-Year Public
               Colleges, School Year 1995-96

State                                      Average tuition
--------------------------------------  ------------------
Vermont                                             $5,521
Pennsylvania                                         4,693
New Hampshire                                        4,537
Massachusetts                                        4,177
Virginia                                             3,965
Delaware                                             3,962
New Jersey                                           3,848
Connecticut                                          3,828
Michigan                                             3,789
New York                                             3,697
Ohio                                                 3,664
Rhode Island                                         3,619
Maryland                                             3,572
Maine                                                3,562
Illinois                                             3,388
Oregon                                               3,241
Minnesota                                            3,108
South Carolina                                       3,103
Indiana                                              3,040
Missouri                                             3,007
California                                           2,918
U.S. average                                         2,865
Washington                                           2,726
Iowa                                                 2,565
Wisconsin                                            2,555
South Dakota                                         2,549
Alaska                                               2,502
Colorado                                             2,458
Mississippi                                          2,443
Montana                                              2,346
Nebraska                                             2,294
Alabama                                              2,234
North Dakota                                         2,211
Kentucky                                             2,160
Louisiana                                            2,139
Kansas                                               2,110
Georgia                                              2,076
Arkansas                                             2,062
Utah                                                 2,007
Wyoming                                              2,005
Tennessee                                            2,001
West Virginia                                        1,992
Arizona                                              1,943
New Mexico                                           1,938
Texas                                                1,832
Nevada                                               1,830
Florida                                              1,790
Oklahoma                                             1,741
Idaho                                                1,714
North Carolina                                       1,622
Hawaii                                               1,524
----------------------------------------------------------
Note:  These figures are weighted by the estimated number of
in-state, full-time undergraduates enrolled at each 4-year public
school in fall of 1994.  We did not validate the data used to
calculate these estimates.  Data used in our calculations came from
either the College Board or the institutions. 

Tuition charges tended to vary by geographic region, as illustrated
in figure 4.1.  For example, most of the states with the highest
in-state tuition levels were in the Northeast.  In contrast, the 10
states with the lowest tuition were in the southern and western
states. 

   Figure 4.1:  Average In-State
   Undergraduate Tuition at 4-Year
   Public Colleges by Geographic
   Region, School Year 1995-96

   (See figure in printed
   edition.)


   STATE CHARACTERISTICS CLOSELY
   CORRELATED TO TUITION
   DIFFERENCES
---------------------------------------------------------- Chapter 4:2

We analyzed various characteristics common to states to determine how
much each of them helped account for the differences in tuition
levels among states.  We found that, collectively, four of these
characteristics accounted for 78 percent of the state differences in
tuition levels.  Using the methodology discussed in appendix II, we
found that states tended to have lower tuition if they had

  -- relatively low state and local taxes as a percentage of the
     state's tax capacity,

  -- larger per-student state appropriations to public colleges,

  -- lower per-student expenditures by public colleges, and

  -- lower median household income. 

Though our analysis shows there is significant correlation between
these four characteristics and state tuition levels, these
characteristics cannot be said to cause tuition levels to be high or
low in any state.  However, a discussion of the correlations can
provide help in understanding the variations in tuition levels among
states. 

Most of the other characteristics we considered did not relate as
closely to the differences in tuition levels among states as the four
listed above.  Also, we eliminated from our analysis several state
characteristics we judged to be most probably the result of in-state
undergraduate tuition levels, even if they were highly
correlated--for example, undergraduate tuition for out-of-state
students.  See appendix II for a detailed description of the
correlation between the four characteristics. 


      HIGH TUITION OFTEN
      ACCOMPANIES HIGH STATE TAXES
-------------------------------------------------------- Chapter 4:2.1

There is a strong correlation between high composite tax rates and
high tuition levels.\16 For example, 9 of the 10 states with the
highest composite tax rates had tuition levels above the 50-state
average, and 9 of the 10 states with the lowest composite tax rates
had below-average tuition levels.  This might seem counterintuitive
at first.  But if tuition is considered a "use tax or fee" for
attending a state-supported college or university, then it might be
expected that this tax or fee tends to be high in states where other
taxes are high. 


--------------------
\16 The composite tax rate is the weighted average of 27 commonly
used state, county, and local tax rates, including tax rates on
income, sales, real property, gasoline, tobacco, and alcohol. 


      TUITION LEVELS ARE HIGHLY
      RELATED TO THE LEVEL OF
      STATE SUPPORT
-------------------------------------------------------- Chapter 4:2.2

The variation in tuition levels among states is also related to
differences in the levels of state support for higher education. 
Tuition tends to be lower in states that provide high levels of
per-student financial support to their public colleges.  To some
degree, the amount of state support, in turn, is a function of the
states' tuition philosophies. 

On a nationwide basis, state appropriations provided on average about
42 percent of public college revenues, and tuition, about 23 percent,
in school year 1993-94 (see table 4.2).  However, in the 10 states in
which state appropriations provided 50 percent or more of public
schools' revenues, the average tuition was about $2,000, or 21
percent below the national average of $2,525 for the year. 
Conversely, in the eight states in which state appropriations
provided 35 percent or less of public colleges' revenues, the average
tuition was about $3,500, or about 38 percent above the national
average that year. 



                         Table 4.2
          
           Comparison of the Percentage of Public
                 College Revenue From State
              Appropriations With Revenue From
                Tuition, School Year 1993-94

                         State                     Average
                  appropriatio                   full-time
                       ns as a  Tuition as a      resident
                    percentage    percentage  undergraduat
State             of revenue\a  of revenue\b   e tuition\c
----------------  ------------  ------------  ------------
Vermont                     13            44        $5,167
New Hampshire               23            38         3,850
Delaware                    26            36         3,620
Colorado                    27            26         2,246
Pennsylvania                31            31         4,280
Oregon                      34            16         2,844
Washington                  35            15         2,329
Virginia                    35            20         3,637
Utah                        36            12         1,854
Rhode Island                36            32         3,184
Michigan                    36            22         3,431
Ohio                        37            25         3,259
North Dakota                38            18         2,088
Montana                     41            20         1,889
Maryland                    41            24         3,100
Minnesota                   41            15         2,748
Louisiana                   41            18         2,176
Wisconsin                   42            17         2,289
New Mexico                  42             9         1,721
California                  42            15         2,528
==========================================================
U.S. average                42            23         2,525
Indiana                     43            21         2,616
Maine                       43            24         3,156
Alabama                     43            13         1,986
Arizona                     43            21         1,817
Missouri                    43            22         2,454
Massachusetts               44            32         4,066
Illinois                    44            17         3,027
Iowa                        44            12         2,352
Mississippi                 45            16         2,355
South Carolina              45            16         2,888
Nevada                      45            15         1,503
South Dakota                46            23         2,228
Texas                       46            13         1,509
Kansas                      47            16         1,856
Connecticut                 48            28         3,480
Wyoming                     49            13         1,648
West Virginia               49            24         1,855
Oklahoma                    49            15         1,640
Kentucky                    50            16         1,912
Idaho                       50            16         1,503
New York                    51            18         2,899
Tennessee                   51            14         1,802
New Jersey                  51            14         3,087
Nebraska                    51            13         1,954
Arkansas                    52            14         1,803
Florida                     52            14         1,782
North Carolina              52            12         1,405
Georgia                     53            15         1,881
Alaska                      54            13         1,930
Hawaii                      63             8         1,455
----------------------------------------------------------
\a These figures represent state appropriations to 4-year state
colleges and universities (excluding revenue from grants and
contracts received from state governmental sources) as a percentage
of current fund revenue, excluding Pell grant receipts from the
federal government, auxiliary enterprise, hospital, and independent
operation revenue. 

\b These figures are for tuition for out-of-state and graduate
students, as well as for in-state undergraduates, as a percentage of
current fund revenue, excluding Pell grant receipts from the federal
government, auxiliary enterprise, hospital, and independent operation
revenue. 

\c These averages are weighted by the estimated number of
state-resident, full-time undergraduates enrolled at each state
4-year college in the fall of 1993.  We did not verify the data used
to calculate these estimates.  The source of data used to compute
these figures was IPEDS. 

Differences in states' tuition subsidy levels relate to a number of
factors, one of which involves the states' general philosophies
regarding tuition.  A 1993 survey of state higher education financial
officers on state tuition policies found that a majority of states
followed one of several basic philosophies in making decisions about
tuition levels, although the states varied in the type of philosophy
they followed.\17 For example, eight states subscribe to a "low
tuition" philosophy in order to maximize student access to public
college.  The state constitutions of two of these states, Arizona and
Wyoming, specify that university instruction be as nearly free as
possible.  In contrast, five states reported following a "high
tuition" philosophy in the belief that students who have the ability
to pay should bear a larger proportion of their education
expenditures.  Under this policy, some of the tuition revenues are
used to provide financial aid to students with lesser financial means
to help ensure that the high tuition does not adversely affect
access. 

Seven states set their tuition at levels comparable to tuition
charged by similar institutions (such as a research university
comparing itself with another research university rather than a
teachers college) or they index their schools' tuition to various
economic variables, such as HEPI or personal income levels.  For
example, South Dakota's policy is to index resident tuition and fees
to the prior year's HEPI.  Alaska's tuition levels are indexed to the
average HEPI over the last 3 years. 

The remaining states said they either had a "moderate tuition"
philosophy of trying to maintain a proportional sharing of
expenditures between the state and student, had no underlying
statewide philosophy for setting tuition, or left these decisions up
to the individual schools. 


--------------------
\17 Charles S.  Lenth, The Tuition Dilemma--State Policies in Pricing
Higher Education (Denver, Colo.:  State Higher Education Executive
Officers, 1993). 


      CORRELATION BETWEEN TUITION
      LEVELS AND SCHOOLS'
      PER-STUDENT EXPENDITURES
-------------------------------------------------------- Chapter 4:2.3

We found a significant positive correlation between states' average
tuition levels and expenditures per enrolled student at public
colleges.  In other words, the less a state's schools spent per
college student, the lower the tuition was likely to be.  For
example, the seven states with the lowest expenditures per student
had tuition below the national average during the 1993-94 school
year.  (See table 4.3.)



                         Table 4.3
          
          Estimated Average 1993-94 Public College
           Education-Related Expenditures per FTE
           Student Compared With Average 1993-94
                          Tuition

                    Education-
                       related       Average  Tuition as a
                   expenditure   1993-94 in-    percentage
                       per FTE         state            of
State                student\a       tuition  expenditures
----------------  ------------  ------------  ------------
South Dakota            $5,604        $2,228            40
Oklahoma                 5,836         1,640            28
Montana                  5,942         1,889            32
Louisiana                5,989         2,176            36
West Virginia            6,229         1,855            30
Utah                     6,625         1,854            28
Georgia                  6,965         1,881            27
New Hampshire            6,991         3,850            55
Idaho                    7,035         1,503            21
Arkansas                 7,122         1,803            25
North Dakota             7,263         2,088            29
New Mexico               7,404         1,721            23
Nebraska                 7,416         1,954            26
Connecticut              7,878         3,480            44
Missouri                 7,988         2,454            31
Colorado                 8,051         2,246            28
Kentucky                 8,109         1,912            24
Wisconsin                8,115         2,289            28
Virginia                 8,141         3,637            45
Florida                  8,190         1,782            22
Maine                    8,226         3,156            38
Mississippi              8,229         2,355            29
Arizona                  8,236         1,817            22
Illinois                 8,328         3,027            36
Kansas                   8,455         1,856            22
Alabama                  8,460         1,986            23
Minnesota                8,566         2,748            32
Rhode Island             8,662         3,184            37
Oregon                   8,678         2,844            33
Ohio                     8,816         3,259            37
==========================================================
U.S. average\b           8,892         2,525            28
Indiana                  8,921         2,616            29
Tennessee                8,940         1,802            20
Nevada                   8,955         1,503            17
Michigan                 9,052         3,431            38
Massachusetts            9,126         4,066            45
North Carolina           9,168         1,405            15
South Carolina           9,225         2,888            31
Wyoming                  9,234         1,648            18
Texas                    9,249         1,509            16
Iowa                     9,543         2,352            25
New York                 9,671         2,899            30
Maryland                 9,778         3,100            32
New Jersey               9,795         3,087            32
Alaska                   9,890         1,930            20
Vermont                 10,302         5,167            50
Washington              10,303         2,329            23
Pennsylvania            10,749         4,280            40
Delaware                11,876         3,620            30
California              11,965         2,528            21
Hawaii                  11,994         1,455            12
----------------------------------------------------------
\a These figures include instruction, student services, and a portion
of other expenditures, excluding research, public service, and
scholarships and fellowships, weighted by the estimated number of
fall, full-time, in-state undergraduate students at each 4-year
public college. 

\b These figures are averages for 4-year public colleges and
universities, weighted by the estimated number of full-time, in-state
undergraduate students at each 4-year public college. 

However, there were several notable exceptions to this low
expenditures/low tuition relationship.  Hawaii's public colleges, for
example, had the highest expenditures per student but the lowest
tuition.  Not surprisingly, Hawaii identified itself as a state with
a low tuition policy in the 1993 study.  The explanation for this
anomaly is that Hawaii's unusually high level of state funding
support more than compensates for its high expenditures per student
and thus enables it to keep tuition rates low. 

However, Hawaii's schools may not have the lowest tuition level in
school year 1996-97.  The state approved an 84.6-percent increase in
resident, undergraduate tuition at the University of Hawaii's Manoa
campus, which accounts for most of the resident undergraduate
students attending a 4-year public college in the state.  The
increase came after the governor of Hawaii ordered the University to
cut $48 million, over 2 years, from its $313 million budget to help
cover a state-revenue shortfall. 

Although we found a positive correlation between states' tuition
levels and the total per-student cost of providing a college
education, individual cost components varied in their correlation to
tuition.  For example, high tuition states typically had higher
expenditures for student services, such as admissions, financial aid
administration, and counseling.  Similarly, high tuition states
tended to have higher expenditures per student for certain
administrative functions, such as general administrative support,
executive direction and planning, legal and fiscal operations, and
public relations/development.  On the other hand, in states where
public colleges spent more per student on research and public
service, tuition levels were generally lower. 


      LEVEL OF HOUSEHOLD INCOME
      RELATED TO TUITION LEVELS
-------------------------------------------------------- Chapter 4:2.4

Public colleges in states with low median household incomes tended to
set tuition at a level below the national average.  For example, the
six states with the lowest median income (Alabama, Arkansas,
Kentucky, Mississippi, Tennessee, and West Virginia) all had tuition
levels more than 10 percent below the national average in school year
1993-94.  States with lower median household incomes may set
below-average tuition levels in recognition of their residents' lower
average income levels.  In fact, the 1993 survey of state higher
education financial officers showed that state personal or disposable
income is considered by 20 states in setting tuition levels. 


STATES AND SCHOOLS TAKE VARYING
APPROACHES TO EASING THE COST
BURDEN
============================================================ Chapter 5

States and schools are taking a wide range of actions to address the
growing burden of paying for college.  The actions we identified were
of three main types:  limiting tuition increases, expediting
students' progress toward their degrees, and providing payment
alternatives that may lower costs for participants or mitigate
students' difficulty in paying those costs.  The approaches ranged
from long-standing, widely available programs (such as giving
students an opportunity to earn college credits while still in high
school) to very recent arrangements (such as guaranteeing completion
of a degree in 4 years, if students follow certain school-
specified conditions). 

The arrangements we describe are not intended to be a comprehensive
inventory of state and school efforts but, rather, to provide a sense
of the range and general flavor of those efforts.  Though our focus
is on the benefits of programs to students, some of these
efforts--particularly those that expedite students' progress toward
earning a degree--also benefit schools and the states. 


   LIMITING TUITION INCREASES
---------------------------------------------------------- Chapter 5:1

Many of the states and schools we contacted said that they were
attempting to keep tuition increases as small as possible through
general cost-cutting measures, while some states were taking more
definitive steps by setting prescribed limits on tuition levels.  We
identified two principal approaches that were being applied in
setting tuition levels. 


      NO TUITION INCREASES FROM
      THE PREVIOUS YEAR
-------------------------------------------------------- Chapter 5:1.1

Some states report holding tuition at existing levels, or even
reducing it.  For example, the Virginia Council of Higher Education,
the governing body for Virginia's state-operated colleges and
universities, recommended to the state legislature that tuition be
held constant in school years 1996-97 and 1997-98.  A Council
official explained that tuition, rather than additional state support
to schools, had borne the brunt of efforts to help schools offset
their increasing expenditures from the mid-1980s through school year
1993-94. 

The Massachusetts Higher Education Coordinating Council cut school
year 1996-97 tuition for state residents by 5 percent at 4-year state
colleges.  The Committee asked school administrators to make similar
reductions in fees set by the institutions.  According to a
Massachusetts official, the fees are about equal to tuition payments. 


      INFLATION-RELATED TUITION
      INCREASES
-------------------------------------------------------- Chapter 5:1.2

Other states and schools are tying their tuition charges to changes
in the cost of living.  For example, the tuition level at the
University of Colorado at Boulder was set specifically to reflect the
rate of inflation.  For school year 1995-96, this school's tuition
for out-of-state students increased by 4.3 percent, which was equal
to the increases in the Denver-Boulder CPI.  In-state tuition
increased even less.  Because the Colorado legislature wanted to
minimize the effect of inflation on resident students, it increased
state funding to hold down the resident tuition increase to 2.3
percent. 

The state of Washington shifted from setting tuition based on
schools' expenditures to a policy that limits tuition increases to
about 4 percent in the 1995-96 and 1996-97 school year budgets, with
some variation among schools.  The change is intended to hold tuition
increases to a rate close to the rate of inflation. 

Where schools themselves have tuition-setting authority, states may
create inducements for them to limit tuition increases.  For example,
the Pennsylvania legislature appropriated $24 million in fiscal year
1995-96 for distribution to public colleges that restricted tuition
increases to 4.5 percent or less.  About $143 per full-time resident
student was allocated for schools that complied. 

Michigan enacted a different type of incentive, providing for a
credit equal to 4 percent of tuition, up to $250, to be deducted from
the state income tax liability of residents paying tuition at state
schools whose tuition increases do not exceed the change in CPI. 
Before this legislative revision, Michigan State University approved
a policy guaranteeing that tuition increases would not exceed
inflation for the 4 years required to complete a baccalaureate degree
for freshmen classes entering the school in school years 1995-96 and
1996-97.  The guarantee is contingent on state appropriations for the
school's general fund keeping pace with inflation. 


   LOWERING TOTAL COSTS FOR
   COLLEGE BY SPEEDING ACADEMIC
   PROGRESS
---------------------------------------------------------- Chapter 5:2

Some actions and programs can lower students' costs without directly
addressing the issue of rising tuition.  We identified a variety of
state and school initiatives to help expedite students' progress
toward their degrees.  These actions, according to experts, can
result in substantial savings for students, schools, and states by
reducing both college costs and the length of time students forgo
earnings.  State and national data show that many students take
longer than 4 years to complete their degrees.  For example, a 1994
University of Illinois study found that about half the degree
recipients at Illinois who entered as freshmen needed more than 4
years to finish.  And, according to a 1995 State University of New
York (SUNY) report, 60 percent of the university's students, and 45
percent of students nationally, receive their bachelors degrees
within 6 years. 

We found similar results analyzing Department of Education national
data on the proportion of seniors who did not graduate during their
fourth year.  At public 4-year institutions in 1992-93, fewer than
half the full-time, fourth-year students finished their baccalaureate
degrees by the end of their senior year.\18 Although many students
may take longer for reasons of their own choosing (such as taking
less than a full load of course work), actions to help students move
through a degree program as expeditiously as possible may eliminate
some of the institutional obstacles to reducing students' costs. 

We identified various strategies states and schools were using to
help students move more quickly through their undergraduate work: 
limiting degree requirements or program length, working with high
school students to guide them in taking the right preparatory
courses, letting high school students earn college credit through
accelerated courses and other means, facilitating the transfer of
courses taken at community colleges, and improving academic advising. 
Although some of these efforts have been in place for a number of
years, none of the studies we reviewed determined the effectiveness
of the programs in shortening the time students take or reducing the
cost they incur to obtain their undergraduate degrees. 


--------------------
\18 Our national calculations are based on Department data that do
not indicate whether students who were full time at 4-year public
colleges during the fall term of the year they graduated attended on
a full-time basis throughout their years in college. 


      LIMITING DEGREE REQUIREMENTS
      OR PROGRAM LENGTH
-------------------------------------------------------- Chapter 5:2.1

Reducing the amount of time required for students to complete a
college degree by limiting the number of required credits is one way
schools are lowering their students' costs.  Eight of the 21 states
responding to our call for information through the State Higher
Education Executive Officers' electronic network said they had made
an effort to limit the number of credits students needed to complete
their degree requirements.  And we identified efforts by other states
to reduce maximum degree requirements.  Arizona's three state
universities, for example, are reducing the required number of hours
in 261 undergraduate degree programs from 125 or 126 (and as many as
144) to 120, effective December 1996.  A Board of Regents official
said this change is designed to make it easier for students to
complete a degree in 4 years.  Eighty-five percent of the three
universities' undergraduates were in these programs in school year
1995-96. 

Another effort to reduce the time needed to obtain a degree takes the
form of schools' programs to provide 3- and 4-year degree programs. 
We identified several programs that guarantee students can complete
their requirements for a baccalaureate degree in 4 years--and, in
some cases, in less time.  One such 4-year degree completion program,
at the University of Iowa, is described below.  A University of Iowa
publication advises that resident students can save $9,518 by
graduating in 4 years instead 5 years, which is closer to the current
average. 

An additional value of these programs is derived from the message
they can convey to parents and school staff about the importance of
timely degree completion.  For example, a Colorado official told us
an important benefit of the 4-year program at the University of
Colorado Boulder campus is that it notifies parents of the
feasibility of completing the degree in 4 years and puts departments
on notice that they must ensure course availability. 


-------------------------------------------------------- Chapter 5:2.2

University of Iowa's 4-Year Graduation Plan:  Established in 1995,
the University of Iowa's 4-Year Graduation Plan is available to
students in all except a small proportion of its programs.  Among its
requirements are that the student begin at the university as a
freshman, choose and be adequately prepared for a qualified major at
entry (or at specified later times for certain majors), complete the
necessary number of courses each year, and not change majors in a way
that will undermine completion in 4 years.  In return, the university
agrees to help students graduate in 4 years by waiving or making
substitutions for any unavailable required courses or by paying for
students to take unavailable courses later.  Students meet with their
adviser every semester to review their 4-year plan, ensure they are
still on track, and incorporate any changes that are appropriate. 

When first offered in the 1995-96 school year, the program enrolled
about 50 percent of the fall 1995 entering freshmen.  Because all
participants are still freshmen, it will take 4 years to determine
the program's success in shortening time to graduation. 


-------------------------------------------------------- Chapter 5:2.3

We found a few instances in which states' schools are offering even
shorter degree programs or permitting students to pursue advanced
degrees as undergraduates.  One of these programs, at SUNY Brockport,
is described below. 


-------------------------------------------------------- Chapter 5:2.4

SUNY Brockport's 3-Year Delta Program:  The Delta College Program at
SUNY Brockport provides two academic options for students to complete
a baccalaureate degree with a total of 99 credits in six semesters
(program duration may be prolonged by requirements for certain majors
or by courses required to gain the language, statistics, or computer
competencies).  The shorter completion time is achieved in part by
"deleting duplication of content from advanced secondary courses and
in part by students having the necessary prerequisites to complete
the program in six semesters." All students must complete (1) a
common 42-credit core studies curriculum,(2) 36 hours in a major or
global studies curriculum, and (3) 21 credits of experiential
integrative learning experiences.  The integrative learning credits,
which include a 15-week international experience, are achieved off
campus, partly in summer, and may be for pay.  Students may meet
required language, statistics, and computer competency requirements
either through courses or examinations. 

The program, started in this form in 1995, has a first-year
enrollment of 199 students, of whom 32 are freshmen.  Officials
expect the freshman enrollment to double in the second year. 


-------------------------------------------------------- Chapter 5:2.5

At other schools, students may be able to complete a degree in less
than 4 years by squeezing 4 years of course work into a shorter time. 
Students may shorten the time to obtain their degrees by taking a
heavier course load, passing proficiency tests, attending summer
school, applying college credits achieved before starting their
college education, or some combination of these. 

Emphasis on shortened degree programs has met with some skepticism in
the academic community.  For example, the Virginia Council on Higher
Education's 1993 report, The Continuum of Education, contains a
comprehensive discussion of how students move through the Virginia
educational system and questions the applicability of formal 3-year
degree programs in the U.S.  educational setting.  The report
maintains that the usual senior year in American high schools is not
a rigorous academic experience and concludes that students may not
have adequate preparation to complete college in 3 years or even 4
years unless they take advantage of options for achieving college
credits during their senior year.  However, those who take advantage
of such options can complete most 120-hour degree programs in 3
years. 


      HELPING ENTERING STUDENTS
      AVOID HAVING TO TAKE
      REMEDIAL COURSES
-------------------------------------------------------- Chapter 5:2.6

Responding to concerns about students' inadequate preparation for
college, some schools have implemented programs to minimize the
number of remedial classes students take at 4-year schools.  In
Oregon, for example, nearly 40 percent of all first-time freshmen at
state schools require remedial education in mathematics.  Students
pay for courses such as these but usually do not receive college
credit for them.  In aggregate, students attending Oregon schools
spend an estimated $300,000 annually for remedial education in
mathematics, and $125,000 for remedial writing courses. 

Some states or institutions have developed programs to give high
school students a clearer idea of courses they need to take while in
high school to better prepare themselves for college-level work and
to allow them to appropriately adjust their high school curriculum. 
An example of a program that has been operating for some time is
Ohio's Early College Mathematics Placement Testing Program. 
According to an Ohio official, five states now have similar programs
in place. 


-------------------------------------------------------- Chapter 5:2.7

Ohio's Early College Mathematics Placement Testing Program:  Based on
the premise that if high school juniors were aware of the negative
consequences of needing remedial math in college, they would schedule
appropriate courses in their high school senior year, Ohio's Early
College Mathematics Placement Testing Program was designed to provide
feedback to high school juniors.  As of 1994, the program included 42
colleges and universities, including all 13 state-supported
universities as well as 2-year and private schools.  The program,
which began in 1978, is administered by Ohio State University.  The
program provides optional testing to college-bound high school
juniors and provides them information on which to base senior-year
scheduling in preparation for their intended college majors.  As of
1994, about 75 percent of Ohio high schools participated in the
program. 

From the start, the program was followed by a dramatic increase in
the number of high school seniors enrolling in mathematics, and by
improvement in the college mathematics placement test scores of
students entering Ohio State University.  The university reported,
for example, that remedial mathematics placements were down 50
percent (from a high of 43 percent of students).  Moreover, a 1994
report cited strong evidence that students from high schools
participating in the program for several years needed fewer remedial
courses than would otherwise have been expected.  The report
suggested that the program is positively affecting the quality of
instruction at participating high schools.  Ohio has since developed
a similar program for assessing English composition. 


      PROVIDING COLLEGE CREDIT
      THROUGH ACCELERATION
      PROGRAMS
-------------------------------------------------------- Chapter 5:2.8

Programs at some high schools, community colleges, and 4-year schools
provide qualified high school students college credits, which can
accelerate students' progress to a baccalaureate degree. 
Acceleration programs include such approaches as advanced placement
(AP), dual enrollment options and early admissions, the International
Baccalaureate (IB) Program, and achieving college credits through the
College-Level Examination Program.  Table 5.1 describes these
programs. 



                                         Table 5.1
                          
                           Programs Providing Accelerated College
                                           Credit

Program         Description                           Example or scope
--------------  ------------------------------------  ------------------------------------
Advanced        Students participate in one or more   The South Dakota Board of Regents
placement       of 29 specific courses developed      produces a booklet called
                under College Board sponsorship. On   "Acceptance of Advanced Placement
                the basis of their scores on          Examinations," which specifies which
                standardized AP tests, students may   AP examinations are accepted at each
                receive college credit, advanced      state school, what AP score is
                placement, or both. AP programs are   required, and to which college
                taught at the high schools by high    courses the credits apply. A state
                school faculty. Students pay only AP  of Washington official said roughly
                examination fees, considerably less   4.5 percent of Washington high
                than the cost per course of college   school students participate in the
                tuition and fees. Under certain       AP curriculum, most often in
                circumstances, some states--          mathematics, English, biology, or
                Colorado, for example--absorb         chemistry.
                examination fees.

Dual            Under agreements with participating   Under Washington State's Running
enrollment      colleges and universities, qualified  Start Program, students in grades 11
                high school students are eligible to  and 12 attend college courses at any
                take college-level courses, for       of 32 community and technical
                which they receive both college       colleges, or at any of three state
                credit and credit toward high school  universities in cities without a
                graduation. The courses may be        community or technical college main
                taught at a community or 4-year       campus. Because tuition costs are
                school, or at high school, by high    paid with basic education funds for
                school or college faculty.            grades kindergarten through 12,
                Arrangements for paying the costs     students are able to attend tuition
                range from absorption of all normal   free, though they are responsible
                tuition costs by the school           for transportation and books. The
                district, to students' paying for     program began with a pilot in school
                books, supplies, and/or               years 1990-91 and 1991-92 and had
                transportation, to students' paying   more than 7,400 participants--about
                all costs. Under an early admission   3 percent of all high school juniors
                program, a variant of dual            and seniors in public high schools-
                enrollment, students attend a         -by 1994-95. In 1994-95, the program
                postsecondary institution full or     saved students and their families $5
                part time during the last 1 or 2      million in tuition costs.
                years of high school and receive
                both high school and college credit.

International   As is the case with advanced          The University of North Carolina's
Baccalaureate   placement, this program is taught at  Charlotte campus offers up to a
Program         high schools by high school faculty,  year's credit to IB students. Four
                using school district funding. It is  of Charlotte-Mecklenburg's 11 public
                an integrated program of studies,     high schools offer the program, and
                comparable to a comprehensive         IB preparatory programs exist in 4
                advanced placement curriculum, with   middle schools and 2 elementary
                additional requirements for research  schools. In Florida, state
                and social service. The IB Program    regulations require public colleges
                is offered by one or more high        and universities to award up to a
                schools in 32 states and the          year's credit for IB course
                District of Columbia. In most         completion--depending on the level
                states, at least one public college   of test passed and the score
                recognizes the program, though        achieved--and the law provides
                schools differ in their criteria for  scholarships for students with IB
                providing credit. In some states,     diplomas. In addition, the law
                legislatures provide supplementary    provides for increasing high
                funding to high schools that offer    schools' full-time-equivalent count
                the program.                          for funding purposes by a factor
                                                      that reflects IB students' course
                                                      completion.

College-Level   Students may qualify for              Schools accepting credits include
Examination     postsecondary credit by               schools in all 50 states, the
Program         demonstrating college-level           District of Columbia, Guam, Puerto
                achievement on nationally             Rico, the Virgin Islands, and
                standardized tests given monthly      Canada. Participating schools range
                around the country by the College     from community colleges to ivy
                Board. No structured curriculum       league schools.
                exists for the Program. Schools vary
                as to the subjects for which they
                award credit, their cut-off scores,
                how much credit they award, and
                additional requirements they impose.
------------------------------------------------------------------------------------------
Though such programs are widely available, colleges and universities
vary in their acceptance of the credits that students earn. 
According to the College Board, for example, about 50 percent of
colleges and universities offer sophomore standing for students with
qualifying grades on advanced placement examinations.  But the
schools use different formulas for translating those credits to
college credits.  Similarly, schools differ in their acceptance of
dual enrollment and IB Program credits. 

There have been a number of variations of these programs.  One that
involves a fundamental change is the proposed system, currently under
development, for admitting students to Oregon's state colleges and
universities on the basis of demonstrated proficiencies. 


-------------------------------------------------------- Chapter 5:2.9

Oregon's Proficiency-Based Admissions Standard System (PASS): 
Oregon's PASS is a new system of college admission that substitutes
proficiency requirements for traditional time-based proxies for
learning, such as the number of courses completed with a passing
grade.  Among reasons given for the change are lack of uniformity in
preparation students receive in high school even when they take the
same courses, and the large proportion of college students requiring
remedial courses in college.  PASS requires that students demonstrate
specific levels of knowledge and skill in six major content areas
(such as mathematics, science, and the humanities) and nine processes
(reading, writing, communication competence, critical/analytic
thinking, problem solving, technology as a learning tool, teamwork,
systems/integrative thinking, and quality work).  Assessment tools
include tests, tasks such as research papers and speeches, and
teacher verification of proficiency through documented scoring and
common criteria.  PASS is scheduled for implementation in 2001. 


------------------------------------------------------- Chapter 5:2.10

Oregon teachers piloted PASS proficiencies and integrated the PASS
assessment standards with existing high school performance standards
in school year 1995-96.  When PASS is fully implemented in 2001, the
Oregon State System of Higher Education expects to significantly
curtail remedial programs and introductory level courses, and to
create opportunities for students to move more quickly to graduation. 


      FACILITATING THE TRANSFER OF
      COMMUNITY COLLEGE STUDENTS
      TO 4-YEAR SCHOOLS
------------------------------------------------------- Chapter 5:2.11

Community colleges have been designed, in part, to provide affordable
educational access both through their relatively low tuition costs
and their location within commuting distance.  But when students
transfer from community colleges to 4-year schools, their academic
progress may be slowed because their credits do not always fully
satisfy the 4-year schools' requirements.  Sometimes this means that
students must take courses that are similar to ones they have already
completed.  For example, a transfer student's completed courses may
give too few credits or may lack a laboratory component required to
meet the receiving school's requirements.  To the extent that states
are successful in facilitating transfer of credits, students will be
able to achieve an increased portion of their requirements in
lower-cost settings. 

Many states and schools reported that they were working to improve
the transfer of community college credits to 4-year schools. 
Examples of steps taken to improve the transfer of credits included
agreements between colleges and community colleges as well as better
coordination between colleges and high schools on high school
curricula.  Other initiatives to facilitate credit transfer include
written or computerized transfer guides to inform students regarding
course equivalencies and common course numbering systems.  These
steps are part of a comprehensive approach to expediting students'
degree completion included in a Florida statute, as described below. 


------------------------------------------------------- Chapter 5:2.12

Florida's Provisions to Facilitate Transfer of Credits:  Florida law
requires that the state's postsecondary institutions use a common
course designation and numbering system for community colleges and
state universities and colleges, and common course prerequisites and
substitutions except for unique program prerequisites approved by the
Board of Regents.  Further, postsecondary institutions are required
to work with school districts to coordinate high school curricula
with college core courses to prepare high school students for
college-level work. 

The Florida law also calls for state colleges and universities (with
the exception of specified programs) to give upper-division status to
any Florida student with an associate in arts degree or with 60
completed community college credits that include 36 general education
credits.  For most degree programs, at least half of the required
credits must be achievable through courses designated as
lower-division courses offered by Florida community colleges. 
Colleges, universities, and community colleges must also enable
students to earn general education course credits through nationally
standardized or institutionally developed examinations.  In addition,
the law calls for developing a single, statewide computer-assisted
student advising system, accessible by state 4- and 2-year
postsecondary school students as an integral part of the process of
advising and registering students and certifying them for graduation. 

Many of these provisions were contained in a 1995 amendment and are
targeted for completion by the fall semester of 1996.  An official
said that, for the most part, efforts are on track to meet targeted
dates. 


      IMPROVING ACADEMIC ADVISING
------------------------------------------------------- Chapter 5:2.13

To avoid delays in students' completing degree requirements, it is
important that they have the information they need to select a major
and to efficiently schedule course work.  Good academic advising can
help students by providing guidance in selecting a major and properly
sequencing courses and by making students aware of necessary but
infrequently offered courses or of courses that tend to be difficult
to schedule.  A 1992 study of student progress by the Virginia
Polytechnic Institute found that students' most common recommendation
for shortening the time needed to graduate was to improve advising;
one-third of students who were delayed in completing their degree
programs attributed the delay to some extent to the advice they
received.  Similarly, an Illinois Board of Higher Education report
attributed students' delayed degree completion to a lack of guidance
and information on how to achieve their educational goals. 
University officials in two other states commented that bottlenecks
to degree completion often reflect improper course sequencing or
student unawareness that certain courses are not always available. 

To strengthen their academic advising activities, some states are
developing computerized systems that provide students and/or advisers
a list of unmet degree requirements for each student.  According to a
University of Colorado official, the school plans to make its
computerized transcript system, now accessible only to advisers,
accessible to students.  The eventual plan is to develop software
that will calculate a student's remaining course work needs in
response to "what if?" scenarios that users enter into the computer. 


   ALTERNATIVE WAYS OF HELPING
   STUDENTS TO PAY
---------------------------------------------------------- Chapter 5:3

Alternative payment and savings plans, for those who choose to
participate, offer several different approaches to easing the burden
of paying for college.  These arrangements do not focus on lowering
tuition costs; rather, they are intended to offer parents alternative
ways of paying these costs, such as spreading them out over a longer
time frame.  However, these arrangements pose risks to states and
families that participate.  In a prepaid tuition program, for
example, the state or school may be responsible for the difference
between amounts families paid into the plan and actual tuition costs. 
Also, these plans' benefits typically accrue principally to middle-
and upper-income families, which have more discretionary income to
use in such ways, and provide little assistance to students from
low-income families.\19 Three principal types of currently available
alternative payment programs came to our attention--tuition
prepayment programs, college savings plans, and monthly payment
plans. 


--------------------
\19 See College Savings:  Information on State Tuition Prepayment
Programs (GAO/HEHS-95-131, Aug.  3, 1995). 


      TUITION PREPAYMENT PROGRAMS
-------------------------------------------------------- Chapter 5:3.1

The three main kinds of tuition prepayment plans--contract, tuition
credit, and certificate--have some characteristics in common.  Table
5.2 describes examples of each.  In all three, the purchaser pays in
advance for educational benefits that a designated beneficiary will
use in the future.  The program charges roughly the current cost of
the tuition and of other educational benefits.  Purchasers pay either
in a lump sum or in a series of payments. 



                                        Table 5.2
                         
                         Major Types of Tuition Prepayment Plans

               Selected state
               using plan
Type of plan   type            Description
-------------  --------------  ----------------------------------------------------------
Contract       Florida         The purchaser contracts for a predetermined amount of
                               education, with the cost calculated based on current
                               tuition levels. As of January 1995, 327,707 contracts had
                               been purchased through the program, but approximately 14
                               percent had been cancelled. In September 1994, over 12,000
                               students were attending community colleges and 4-year
                               schools and paying at least part of their school expenses
                               using prepaid tuition.

Tuition        Pennsylvania    The purchaser starts an account into which he or she makes
credit                         deposits for prepaid units of education. Between 1993,
                               when the program began, and December 1995, nearly 14,300
                               accounts were opened with a total value of about $45.4
                               million. Because participants must be in the program for
                               at least 4 years, the earliest that credits can be used is
                               September 1997.

Certificate    Massachusetts   Participants purchase certificates from the state
                               redeemable for a percentage of a school's tuition and
                               mandatory fees. However, the state commits to pay only the
                               face value of the certificate plus interest compounded
                               annually at a rate equal to 2 percent above the increase
                               in CPI. The schools absorb the loss if their costs rise
                               more than the value of the certificates. The program began
                               in 1995.
-----------------------------------------------------------------------------------------
Some states are reluctant to risk the possibility that income from
investing the premiums that participants pay into these plans will
not keep pace with the rising cost of education.  We identified two
state programs (Michigan and Wyoming) that have experienced the
effects of this risk.  In Michigan, according to state officials, the
original program was suspended because it proved actuarially unsound. 
A major concern was uncertainty surrounding federal tax liability, on
which a court has since ruled in the state's favor.  After being
suspended for a period, the program was reinstated in response to the
public's interest.  However, the new program is priced considerably
higher and, unlike the earlier program, subject to liquidation if it
becomes actuarially unsound. 

Wyoming operates a contract-type program that is also experiencing
actuarial difficulties.  When participants begin to redeem their
$5,000 unit contracts next year, the accounts' principal plus
accumulated interest will fall considerably short of covering the
cost of tuition, according to a University of Wyoming official.  The
state, in paying the difference, will subsidize these contracts. 


      COLLEGE SAVINGS PLANS
-------------------------------------------------------- Chapter 5:3.2

Among other available savings options, some states have developed
tax-advantaged debt instruments they identify as college savings
bonds.  These bonds are generally zero-coupon bonds, sold at a
discount, with the difference between face value and purchase price
representing interest.  Interest on the bonds is exempt from federal
taxes and, for purchasers who reside in the issuing state, from state
taxes.  Many states see these bond programs as less financially risky
and easier to administer than prepaid tuition programs.  Unlike
prepaid tuition programs, state savings bond programs do not require
that the funds be spent on college expenses.  Illinois, however, pays
a bonus on redemption if the funds are spent at an institution of
higher education. 

Other states have programs that enable participants to save money in
special college savings accounts.  Kentucky, for example, has a
Savings Plan Trust that is administered by the Kentucky Higher
Education Assistance Authority.  Earnings depend on investments the
Trust's fund manager selects and the timing of the investment and
have a guaranteed minimum interest rate of 4 percent.  Students who
use the proceeds of their Trust investments to attend Kentucky
schools receive an additional boost:  Kentucky allows the savings in
the Trust to be excluded from the schools' calculation of state
student aid eligibility. 


      MONTHLY PAYMENT PLANS
-------------------------------------------------------- Chapter 5:3.3

Most schools require tuition payments, including room and board, to
be paid either before or at the time students enroll in school.  Some
states have arrangements for students and their families to spread
out their college payments over the enrollment period rather than
paying them at the beginning of each semester or quarter.  In
Connecticut, for example, a state official said that most 4-year
schools have programs allowing students to spread their payments over
the year.  Eastern Washington University, according to a school
official, contracts with an outside vendor to collect payments over
12 months.  Although the vendor does not charge interest for this
service, it does charge a small fee. 


CONCLUSIONS
============================================================ Chapter 6

A public college education has become less affordable in the last 15
years as tuition has risen nearly three times as fast as household
income.  As a result, the portion of a household's income needed to
pay for college tuition nearly doubled during the period.  The rapid
rise in tuition reflects two key trends over the last 15 years: 
public colleges' expenditures per student rose over 120 percent and
the portion of those costs paid for by tuition rose from 16 to 23
percent.  Students and their families have responded to this
"affordability gap" by drawing more heavily on their own financial
resources and greatly increasing their borrowing. 

On a more positive note, public college tuition is still a "bargain"
in that it pays less than a quarter of the costs colleges incur and,
at an average of $2,865 in 1995-96, it is only a fraction of the
$20,000-a-year tuition charged by some private colleges.  Also,
although federal grant aid has been stagnant in real terms, the
Congress has increased the borrowing limits and expanded the
eligibility for federally guaranteed student and parental loans.  In
addition, many states have made efforts to freeze or hold down the
rate of increase in tuition levels, created college savings and
prepayment programs, or undertaken initiatives to expedite students'
completion of the college degree requirements. 

College could become more affordable in the future if (1) colleges'
expenditures per student declined or grew at a slower rate, (2) a
smaller portion of colleges' expenditures were paid for by tuition,
(3) household incomes increased at a faster rate than that for
tuition charges, or (4) grants became a larger portion of federal
student aid.  However, if none of these changes occur, rising tuition
levels may deter many students from attending college.  For those
that do attend, the debt loads many students and their families
assume may increasingly affect students' career decisions, their
parents' life styles while their children attend college, and
students' life styles after they complete college. 


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

Our objectives were to address the following questions: 

  -- How much have average undergraduate resident tuition levels at
     public colleges increased compared with students' and their
     families' ability to pay for college, as measured by such
     yardsticks as median family income and CPI, and what are the
     principal reasons for the increases in tuition? 

  -- To what extent have increases in college expenditures for
     instruction, administration, research, and other educational
     elements contributed to the schools' cost increases since 1980,
     and why have these expenditures increased? 

  -- To what extent does average undergraduate resident tuition at
     public colleges differ among states, and what factors or
     characteristics (such as state tax levels and median household
     income) are associated with the differences among states? 

  -- How do the costs of providing an education at public colleges
     differ among states, and to what degree are these costs related
     to the average level of tuition charged in each state? 

  -- What are some examples of measures taken by states, colleges,
     and universities to contain increases in tuition at public
     colleges or otherwise help make paying for college less
     burdensome? 


   SCOPE AND LIMITATIONS
--------------------------------------------------------- Appendix I:1

We focused our study on public colleges, which enroll more students
than other kinds of higher education institutions (that is, private
and proprietary--for profit--schools).  Our analysis generally
focused on the period spanning school years 1980-81 through 1993-94. 
However, we were able to obtain tuition data for school year 1995-96,
and some data were available through the 1994-95 school year. 

In our analysis of students' costs, we focused on tuition, which
included related fees.  We excluded certain other costs, which can be
substantial, that students incur while attending college, such as
room and board, books and supplies, and transportation.  Data on
these kinds of costs were not consistently included in the readily
available databases we used in our analysis.  We also excluded the
opportunity costs of attending college--the income students could
have otherwise earned had they not attended college.  The literature
we reviewed provided no empirical analysis of this issue but rather
addressed it mainly in theoretical terms.  While foregone earnings
may be substantial for some students, the lack of empirical data did
not permit us to conduct an analysis of these opportunity costs. 

Where possible, we focused on costs related to enrolled undergraduate
students.  However, the database we used to determine the
expenditures incurred by colleges, the Department of Education's
IPEDS, did not contain sufficient data to permit us to distinguish
costs for undergraduates from costs for other students, such as
graduate and professional students.  Because the information on
colleges' expenditures covers graduate as well as undergraduate
students, our cost data may overstate actual expenditures incurred by
public colleges in educating undergraduates.  In addition, we did not
attempt to determine the extent to which scholarships and fellowships
supported teaching assistants, or to identify the portion of college
expenditures that are federal or state pass-through funds.  We did
not verify the accuracy of the data used in our analyses. 


   METHODOLOGY
--------------------------------------------------------- Appendix I:2

To compare trends in tuition and indicators such as median household
income and inflation, we gathered historical data from IPEDS, the
Bureau of Labor Statistics, the Census Bureau, and Research
Associates of Washington.  Where possible, we used data for school
years, which typically begin July 1 each year.  In some cases,
however, data were not readily available for school years.  In the
case of federal student loan data, for example, we used federal
fiscal year data.  Median household income data were available for
calendar years. 

In estimating the states' average public college cost of providing
education to their resident students, we were limited to the use of
IPEDS data.  Because these data are not sufficient to identify
expenditures separately for undergraduates and graduate or
professional students, the results of our analysis represent
estimates of the cost per enrolled student of providing education. 
We included some IPEDS expenditures entirely; prorated others, based
on the extent of their application to instruction or student
services; and excluded still others.  We calculated expenditures in
each category per estimated FTE student for each public college and
university.  To determine the average state cost, we weighted the
data using the estimated number of in-state, full-time undergraduate
students.  By using this protocol, we tried to avoid overrepresenting
entities such as medical schools, which have few full-time
undergraduates but many graduate students. 

The extent to which we included different cost elements in our
analyses was judgmental, based in part on the degree that these
elements were used to provide instruction and support services to
students rather than, for example, research or community services. 
Accordingly, we included instruction and student services in their
entirety and prorated academic support, institutional support, plant
operation and maintenance, and fund transfers.  We excluded auxiliary
enterprise, hospital, and independent operation expenses because
these expenditures are not directly related to educating students and
generally have offsetting revenues.  We also excluded federal Pell
grants and other scholarships and fellowships provided directly to
students because these help offset students' costs without
significantly adding to the schools' costs of providing education. 

To determine nationwide trends in tuition, we performed statistical
analyses using data from the IPEDS surveys.  Our analysis focused on
data for academic years 1980-81 through 1994-95, the latest year for
which such data were available.  In order to provide more up-to-date
information, we supplemented IPEDS data with tuition data compiled by
the College Board for the 1995-96 academic year.  To obtain tuition
figures for colleges and universities not included in the College
Board data or to resolve apparent inconsistencies, we contacted
school officials.  To determine how tuition trends compared with
changes in consumer prices and in peoples' ability to pay, we used
Census Bureau median household income and Bureau of Labor Statistics
CPI data as comparison indices.  To identify reasons why changes in
tuition have differed from changes in the various economic
indicators, we reviewed research studies and other information
pertaining to college affordability and interviewed officials of
higher education associations and others knowledgeable about higher
education finance issues. 

To determine the extent to which tuition levels varied among the
states, we conducted state-by-state comparisons of the average
undergraduate resident tuition levels using IPEDS and College Board
data.  In calculating state average tuition levels, we weighted each
school's undergraduate tuition charges by the number of its full-time
resident undergraduate students.  Our selection of factors to test
for association with variations in tuition levels among states was
derived from a review of research studies and other relevant
literature.  In addition, we identified state characteristics that
were statistically associated with relatively high tuition rates and
with relatively low tuition rates, analyzing the correlation of
weighted tuition rates with state characteristics, such as schools'
expenditures per student, state appropriations for higher education,
and state funding of student financial aid. 

To identify examples of state and/or school measures to make paying
for college less of a financial burden, we searched the literature
and interviewed state and school officials.  We also contacted
representatives of several higher education trade associations, such
as the American Council on Education, the American Association of
State Colleges and Universities, the College Board, and American
College Testing, as well as individuals with published research or
papers on the topic.  We supplemented this information with material
gathered on our behalf by the State Higher Education Executive
Officers Association (SHEEO) from its members regarding their
practices and programs to make college more affordable or payment
less difficult.  Where readily available, we obtained data on levels
of participation in these programs.  We also attempted to obtain
information on program effectiveness, both in our discussions with
state and school officials and in our request for information through
SHEEO's network. 


ANALYSIS OF STATISTICAL
RELATIONSHIPS BETWEEN STATES'
AVERAGE TUITION AND VARIOUS STATE
CHARACTERISTICS
========================================================== Appendix II

To learn more about differences among states' average tuition
charges, we conducted statistical analyses of states' average tuition
in relation to various state characteristics.  This analysis
identified four variables that together are associated with about 78
percent of the variation among states' average tuition levels: 

  -- State and local tax rates.  We used a measure of each state's
     "tax effort" developed by the U.S.  Advisory Commission on
     Intergovernmental Relations.  The commission calculated national
     average tax rates for 27 commonly used taxes assessed by state,
     county, and local governments, including taxes on income, retail
     sales, property, estate, gifts, and licenses.  Using these
     figures, the commission calculated an index showing how high
     each state's tax rates were compared with the national average
     tax rates.  This composite tax effort index, expressed as a
     percentage of the national average, is equal to the total state
     and local tax revenue for fiscal year 1994 divided by the amount
     of state and local tax revenue the state and localities in the
     state would have received if they had adopted tax rates equal to
     national average state and local tax rates.  We used tax effort
     estimates for 1994 obtained from Research Associates of
     Washington.\20

  -- Public college revenue per student from state appropriations. 
     This figure is the estimated average state appropriation
     received by public colleges during the 1993-94 school year, per
     FTE student.  These figures were weighted by the estimated
     number of full-time, in-state undergraduate students at each
     state college and university in the state.  The data used for
     this calculation were obtained from the IPEDS 1993 fall
     enrollment and school year 1993-94 finance surveys. 

  -- Estimated state average education-related general and current
     expenditures per FTE student for school year 1993-94.  These
     estimates included expenditures for instruction; student
     services; and a prorated portion of other expenditures,
     including academic support, institutional support, plant
     operation, and maintenance.  These averages do not include
     research, public service, or scholarships and fellowships.  We
     calculated these estimates using data from IPEDS' 1993-94
     finance and fall 1993 enrollment surveys. 

  -- Median 1994 household income in the state.  These figures come
     from the U.S.  Bureau of the Census's Current Population
     Reports. 

As discussed in appendix I, our dependent variable was the average
in-state (that is, state resident), full-time undergraduate tuition
for an academic year at public colleges and universities.  We
computed these averages using tuition data obtained from the College
Board or, in some cases, the institutions themselves.  We obtained
fall enrollment data from the IPEDS 1994 fall enrollment survey. 

Each of the four independent variables was highly correlated with
state average tuition.  The state and local tax rate, public college
expenditures per FTE student, and median household income were
positively correlated.  States with higher tax rates, public college
expenditures, and/or median household income were more likely to have
higher average tuition.  One of the three variables--state
appropriations per FTE student--was negatively correlated with
tuition.  States that provided higher appropriations per FTE student
at state colleges and universities were more apt to have lower
average tuition.  The Spearman correlation coefficients\21 and the
related 1-tailed probability statistics are shown in table II.1. 



                         Table II.1
          
               Correlation Statistics Between
          Independent Variables and Average State
                          Tuition

                                               Probability
                                                 that this
                                               correlation
                                                   was the
                                    Spearman     result of
                                 correlation        random
Independent variable             coefficient       factors
------------------------------  ------------  ------------
State and local tax rates              0.486     Less than
                                                     0.001
State appropriations per FTE          -0.481     Less than
 student                                             0.001
Education-related expenditure          0.343         0.007
 per FTE student
Median household income                0.363         0.005
----------------------------------------------------------
Using a step-wise linear multiple regression analysis of these data,
we found that together the four variables accounted for (that is,
were statistically associated with) 78 percent of the variation among
states' average tuition at state colleges and universities.  Table
II.2 shows the extent to which the addition of each variable into the
analysis increased the predictive power of the variables: 

1.  The measure of state and local tax rates was statistically
associated with 23.67 percent of the variation among states' average
tuition (as indicated by R\2 in the table's third column). 

2.  State appropriations per FTE student accounted for another 21.94
percent of the variation. 

3.  Education-related expenditures by public colleges accounted for
29.03 percent. 

4.  Median household income accounted for 3.66 percent. 

In total, these four variables accounted for 78.06 percent of the
variation, with a residual (unaccounted for) variation of 21.94
percent. 

This statistical accounting of the variation among states' average
tuition does not mean that these factors cause or set tuition levels. 
Ultimately, college, university, and/or state policymakers set
tuition levels.  However, as the table shows, these four variables
provide a statistical prediction covering about 78 percent of the
variation in tuition. 



                                         Table II.2
                          
                            Results of Step-Wise Multiple Linear
                            Regression Analysis of Average State
                           Tuition in Relation to Selected State
                                         Variables

                                                                            Probability of
                                                                 Change in             the
Step       Independent variable           Multiple R\2\a      multiple R\2   F statistic\b
---------  -----------------------------  --------------  ----------------  --------------
1          State and local tax rates              0.2367            0.2367       Less than
                                                                                     0.001
2          State appropriations per FTE           0.4561            0.2194       Less than
            student                                                                  0.001
3          Education-related expenditure          0.7463            0.2903       Less than
            per FTE student                                                          0.001
4          Median household income                0.7829            0.0366           0.008
------------------------------------------------------------------------------------------
\a This is the coefficient of determination, a statistic that
indicates how well a linear statistical model fits the data.  If
there is no linear relationship between dependent and independent
variables, R\2 equals 0; if there is a perfect statistical
relationship, R\2 equals 1. 

\b This indicates, for the addition of each variable in the model,
the probability that the statistical relationship between the
variable and the variation in average tuition not accounted for by
preceding variables is due to random factors. 


--------------------
\20 Kent Halstead, State Profiles:  Financing Public Higher Education
1978 to 1995 (Washington, D.C.:  Research Associates of Washington,
1995).  The Commission's methodology is described in its 1993
publication RTS 1991:  State Revenue Capacity and Effort. 

\21 The Spearman correlation coefficient is a commonly used measure
of correlation between two ordinal variables. 


GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================= Appendix III

GAO CONTACTS

Joseph J.  Eglin, Jr., Assistant Director, (202) 512-7009
Charles M.  Novak, Issue Area Manager, (206) 287-4794
Charles H.  Shervey, Evaluator-in-Charge, (206) 654-5594

ACKNOWLEDGMENTS

In addition to the individuals listed above, Susie Anschell and
Benjamin P.  Pfeiffer contributed significantly to this report. 


BIBLIOGRAPHY
============================================================ Chapter 1

Blanco, Cheryl D.  Doing More With Less:  Approaches to Shortening
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Gold, Steven D.  The Fiscal Crisis of the States:  Lessons for the
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Halstead, Kent.  Higher Education Tuition.  Washington, D.C.: 
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Hauptman, Arthur M., with Jamie P.  Merisotis.  The College Tuition
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Henderson, Cathy.  Student Charges:  The Impact on Students,
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Hines, Edward R., with J.  Russell Higham, III.  State Higher
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Kirshstein, Rita J., Valentina K.  Tikoff, Charles Masten, and Edward
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Lenth, Charles S.  The Tuition Dilemma--State Policies and Practices
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RELATED GAO PRODUCTS
============================================================ Chapter 2

Financing College Facilities:  Factors Limit Connie Lee's Ability to
Help More Schools (GAO/HEHS-96-6, Dec.  8, 1995). 

College Savings:  Information on State Tuition Prepayment Programs
(GAO/HEHS-95-131, Aug.  3, 1995). 

University Research:  Effect of Indirect Cost Revisions and Options
for Future Changes (GAO/RCED-95-74, Mar.  6, 1995). 

University Research:  U.S.  Reimbursement of Tuition Costs for
University Employee Family Members (GAO/NSIAD-95-19, Feb.  15, 1995). 

College Savings Issues (GAO/HEHS-95-16R, Nov.  4, 1994). 

Department of Transportation:  University Research Activities Need
Greater Oversight (GAO/RCED-94-175, May 13, 1994). 

Federal Research:  Minor Changes Would Further Improve New NSF
Indirect Cost Guidance (GAO/RCED-93-140, June 3, 1993). 

Federal Research:  System for Reimbursing Universities' Indirect
Costs Should Be Reevaluated (GAO/RCED-92-203, Aug.  26, 1992). 


*** End of document. ***