College Textbook Prices Have Grown at Twice the Rate of Inflation, Trailing Annual Tuition Increases

College textbook prices have risen at double the rate of inflation for the  last two decades but have followed the trend of tuition increases at  postsecondary institutions. Meanwhile, tuition and  fees have increased at an average of 7 percent per academic year during  the same period, while overall price increases averaged 3 percent per  academic year. Overall price  inflation was 72 percent during the same time period. While increases in textbook prices have not followed far behind hikes in  college tuition and fees, the cost of textbooks and supplies as a percentage  of tuition and fees varies for degree-seeking students attending different  types of institutions. According to data from Education’s Integrated  Postsecondary Education Data System, first-time, full-time students  attending 4-year private, nonprofit colleges were estimated to spend $850  for books and supplies in their first year, or 8 percent of the cost of tuition  and fees during academic year 2003-2004, as shown in figure 3. Publisher Investments in New Products Have Contributed to Increases in Textbook Prices

While publishers, retailers, and wholesalers all play a role in textbook  pricing, the primary factor contributing to increases in the price of  textbooks has been the increased investment publishers have made in new  products to enhance instruction and learning according to industry  executives we interviewed. Wholesalers, Retailers, and Others Express Concern That Some Publisher Practices May Unnecessarily Increase Costs to Students

Wholesalers, retailers, and some public interest groups acknowledge that  publishers are making substantial investments to develop textbooks and  supplementary materials, but they have expressed concern about the  impact some publisher practices may have on student costs. The Price of U.S. Textbooks Sold in Other Countries Varies according to Local Market Conditions

College textbook prices in the United States may exceed prices in other  countries because textbook publishers assign prices that reflect the  market conditions found in each country. Publishers Have Taken Recent Steps to Limit the Reentry of Their Textbooks into the U.S. Market

Retailers and publishers have expressed concern about the reimportation  of lower-priced textbooks from international locations. Agency Comments

We provided copies of a draft of this report to the Department of Labor  and the Department of Education for review and comment. NACS generally agreed with our findings, stating that the report accurately  portrayed the textbook industry. AAP agreed with some findings in the report but expressed concern with  respect to the data sources we used in our analyses and the tone and  objectivity of the report. We use  IPEDS data because they are the most complete data available on  estimated student spending. On the basis of these reviews and tests, we found the data  sufficiently reliable for our purposes. To determine what factors have contributed to the change in college  textbook prices, we interviewed executives from five of the largest  textbook publishers, representing more than 80 percent of new textbook  sales; the three national used textbook wholesalers; three companies that  operate over 1,300 college textbook retail stores, or 29 percent of stores  nationwide; the National Association of College Stores; the Association of  American Publishers; and various other industry experts.
Why GAO Did This Study

The federal government strives to make postsecondary education accessible and affordable, primarily by providing financial aid to students and their families. Given that nearly half of undergraduates receive federal financial aid, Congress is interested in the overall cost of attendance, including the cost of textbooks. We were asked to determine (1) what has been the change in textbook prices, (2) what factors have contributed to changes in textbook prices, and (3) what factors explain why a given U.S. textbook may retail outside the United States for a different price. We received technical comments from the Department of Labor. The Department of Education had no comments. The National Association of College Stores generally agreed with the report's findings. The Association of American Publishers agreed with some findings but expressed concern about the data sources we used and the characterizations made by retailers and wholesalers regarding the impact of publisher practices on students. We carefully reviewed the data sources available on college textbook pricing and found the data we used to be the most complete and reliable data available for our purposes. Additionally, we sought perspectives from publishers, retailers, and used book wholesalers to ensure our characterization of the textbook industry was balanced and complete.

What GAO Found

In the last two decades, college textbook prices have increased at twice the rate of inflation but have followed close behind tuition increases. Increasing at an average of 6 percent per year, textbook prices nearly tripled from December 1986 to December 2004, while tuition and fees increased by 240 percent and overall inflation was 72 percent. The cost of textbooks as well as supplies as a percentage of tuition and fees varies for first-time, full-time, degree-seeking students by the type of institution attended--72 percent at 2-year public institutions, 26 percent at 4-year public institutions, and 8 percent for 4-year private institutions. While many factors affect textbook pricing, the increasing costs associated with developing products designed to accompany textbooks, such as CD-ROMs and other instructional supplements, best explain price increases in recent years. Publishers say they have increased investments in developing supplements in response to demand from instructors. Wholesalers, retailers, and others expressed concern that the proliferation of supplements and more frequent revisions might unnecessarily increase costs to students. U.S. college textbook prices may exceed prices in other countries because prices reflect market conditions found in each country, such as the willingness and ability of students to purchase the textbook. While geographical barriers have historically limited the reentry of textbooks intended for international distribution back into the United States, known as reimportation, recent advances in electronic commerce have broken down this barrier. In response to concerns that the international availability of less expensive textbooks might negatively affect textbook sales, publishers have taken steps to limit large-scale textbook reimportation.