Colleges Subsidize Postsecondary Ed

Do colleges really subsidize the costs of postsecondary education?

Most students don’t pay the “retail price” for college. They pay a discounted rate, thanks to financial aid packages, which at many schools have kept pace with tuition increases. Still, the bigger question about college pricing looms. During financial aid presentations, a parent will inevitably share concern about tuition increases and ask how the price of college is determined. The instructional cost per student is divided between the component the average student pays and the part that is subsidized. While it is hard to separate strictly instructional costs from other components of campus spending, a new Web-based data system compares spending, revenues, productivity, and enrollment in higher education institutions. The new database aims to increase transparency within higher education and guide the conversation on how colleges and universities should adapt to recent reductions in revenue sources brought on by the weak economy. Using data from the U.S. Department of Education’s Integrated Postsecondary Education Data System, the database breaks information into six key metrics – revenue, expenditures, average educational cost per student, performance, spending comparisons and enrollment – allowing the public to better understand where college funding comes from and where it is spent.  Families can now access spending detail and comparisons for 2,300 public and private higher education institutions at the Delta Cost Project on Postsecondary Costs, Productivity and Accountability online database (www.tcs-online.org/Home.aspx) that tracks spending and revenue sources at 2,300 public and private higher education institutions.

Interested in more facts and research-based interpretation of college pricing and financial aid trends? The College Board publications Trends in College Pricing, Trends in Student Aid, and Education Pays provide insight about how colleges and universities and their students are grappling with recent economic pressures. To access the complete reports and for additional detailed information, visit the College Board’s Trends website (www.collegeboard.com/trends).