honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, October 30, 2008

Tuition hikes, reduced aid likely in store for students

Advertiser Staff and News Services

College students and their parents should brace for sharp tuition hikes and declining financial aid as the widening economic downturn begins to hit campuses across the country, higher education officials and analysts said yesterday.

The warnings came in response to the College Board's annual survey of tuition and fees, which showed relatively modest increases in the cost for the 2008-09 academic year, with costs rising 1 percent to 3 percent above inflation. But the report also was based on data collected before June and does not reflect the economic issues now embroiling the nation.

The report found that for the current academic year, the average list price of tuition and fees at four-year public universities rose $394, or 6.4 percent, to $6,585 for in-state students.

At private colleges, prices rose $1,399, or 5.9 percent, to $25,143, according to the annual "Trends in College Pricing" report from the College Board.

The University of Hawai'i-Manoa began step increases in its tuition in 2006. Once completed in 2011, tuition will be more than double the cost of a year of undergraduate resident tuition compared to 2005.

Undergraduate tuition is expect to increase each year until 2011 when it will be $8,400 a year, compared with $3,504 in 2005.

With the economic downturn, the American Council on Education, a coalition of more than 1,600 college and university presidents, warned that conditions are increasingly ripe for some of the biggest tuition jumps in more than a decade.

Schools in at least two states — Michigan and Rhode Island — will take the unusual step of raising prices midyear.

"At a time of flattening wages, widespread job losses and shrinking home values, the last thing parents need is another big increase in the cost of college," said James Boyle, president of College Parents of America.

FEELING THE SQUEEZE

State governments, struggling to balance budgets at a time of plummeting tax revenue, are beginning to slash appropriations to post-secondary institutions. Private schools are also being squeezed as their endowments wither in the stock market and donors grow more cautious with their giving.

It's important to remember that many students don't pay the full list price. At private colleges, grants and tax breaks lower the average net price to about $14,900. At public universities the average actual cost is only about $2,900.

And while some private colleges now exceed $50,000 when room and board are figured in, they are the exception. Overall, more than half of four-year college students attend institutions where the list price for tuition and fees is less than $9,000.

"No student should rule out a private college and university without first checking with the institution about financial aid options," said David Warren, president of the National Association of Colleges and Universities.

He noted that over the last decade, independent colleges have increased financial aid at more than three times the rate they've increased tuition.

But they've done so largely by tapping rapidly growing endowments. Now, like family savings, college endowments have taken a beating on Wall Street, just as demand for financial aid rises.

Some colleges may try to hold down prices — Benedictine University in Lisle, Ill., has announced a freeze — but in most cases the pressure to charge more will be greater.

"If current economic patterns continue, it is possible that some tuition increases next year will be higher than the usual 5 to 6 percent at our institutions," Warren said.

FUNDING CUTS

At public institutions — which enroll about three-quarters of American college students — the economy already has prompted big increases. At least 21 states cut higher education spending this year, and some passed tuition increases well above the national average, according to the Center on Budget and Policy Priorities.

The University of Florida, for instance, is eliminating 430 faculty and staff positions, lowering enrollment by 1,000 students and increasing prices 15 percent for in-state undergraduates.

"I am concerned that we are entering a period — as we did following the recession of the late 1980s and early 1990s — when we will see a sharp spike in tuition prices at both public and private institutions," said ACE President Molly Corbett Broad in a statement. "Presidents and boards of trustees will be reluctant to increase tuition, but they will likely have little choice."

At least 17 states have already announced funding cuts to their university systems, Broad said, and she feared worsening state budgets and the market collapse have grown so serious the College Board's findings could quickly be rendered all but obsolete.

"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,' " Broad said.

Public two-year colleges once again were the biggest bargain. Average list prices there rose $108, or 4.7 percent, to $2,402. Factoring in financial aid, the College Board estimates the average net cost is only about $100.

The report found that overall aid available to students, including both grants and federal loans, increased for the year, particularly from public programs. Federal student loans jumped 6 percent, according to most recent available data.

But the number of private loans for higher education, which had been climbing, began to shrink even before the current credit crisis. The report did not address the effects of the recent credit crunch on student lending.

The Washington Post and Associated Press contributed to this report.