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. 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? 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. As Schools’ Expenditures Have Increased, Tuition Has Provided a Larger Share of Schools’ Revenues

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. Chapter 3 further discusses schools’ expenditures, and chapter 4 discusses the correlation between states’ average costs and state tuition levels. Grant Aid to Students Has Not Kept Pace, Causing Greater Reliance on Loans

Grant aid available to students and their families has not kept pace with tuition increases. 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. 3.2). 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. Tuition at 4-Year Public Colleges Varies Widely Among States

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. High Tuition Often Accompanies High State Taxes

There is a strong correlation between high composite tax rates and high tuition levels. Tuition tends to be lower in states that provide high levels of per-student financial support to their public colleges. In-state tuition increased even less.
Why GAO Did This Study

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.

What GAO Found

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.