Cost of Higher Education In U.S. Increases As Inflation Rises

October 30, 2008 5:36 a.m. EST

New York, NY (AHN) - The average four-year tuition and fees at colleges and universities have increased at faster pace than the Consumer Price Index, a report released Thursday showed.

As financial aid increases for students, the number of private loans for higher education began to shrink even before the current credit crisis, the report said.

"Despite every effort by our institutions to increase aid to students and families, I am afraid this year's report may prove only to be a snapshot of a time in history that we might soon be referring to as 'the good old days,'" American Council on Education (ACE) President Molly Corbett Broad said in a statement commenting on the College Board report.

The negative impact of financial turmoil that started with the subprime mortgage contagion last summer was noticed on the higher education.

The College Board also reported that students are taking more loans for public schools compared to private ones, leading federal education loan volume to rise by 6 percent in inflation-adjusted dollars on the year-on-year basis.

With the inflation rate at 5.6 percent higher on annual basis in 2008, the average tuition and fees declined this year by 0.8 percent at public two-year colleges.

The average tuition and fees rose by 0.7 percent for in-state students at public four-year institutions and by 0.3 percent at private four-year colleges and universities, the report said.

Students in the past have increasingly depended on private loans to help pay for college. But the latest report showed that the volume of the private loan dropped by 1 percent or $173 million in the last 12 months to $19.1 billion in 2007 dollars.

"Adequate and accessible financial aid is now more crucial than ever with so many students and families facing a wide range of economic pressures," Sandy Baum, senior policy analyst at the College Board and professor of economics at Skidmore College, said in a statement on Wednesday.

According to the data, average tuition and fees at private four-year colleges and universities in 2008-09 are higher by 5.9 percent or $1,398 to $25,143, compared to 2007-08 period.

The average tuition and fees for in-state students at public four-year colleges and universities in 2008-09 increased by 6.4 percent to $6,585 from 2007-08 period; for out-of-state students it was 5.2 percent or $866 higher to $17,452 in the same period.