Higher Education:

Tuition Increases and Colleges' Efforts to Contain Costs

HEHS-98-227: Published: Sep 30, 1998. Publicly Released: Sep 30, 1998.

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Carlotta C. Joyner
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Pursuant to a congressional request, GAO provided information on issues regarding college tuition increases and what schools have done to keep down their costs, focusing on: (1) the extent to which tuition increases varied by type and size of school; (2) the extent to which there is a statistical relationship between increases in tuition and other factors such as cost increases at the schools; (3) the extent to which tuition increases at 4-year schools have affected tuition at community colleges; and (4) examples of strategies that schools have employed to reduce their own costs.

GAO noted that: (1) on a percentage basis, tuition has risen faster at both 4- and 2-year public colleges and universities than at 4-year private schools--30 percent versus 17 percent in the past 5 years; (2) however, 4-year private schools, which had much higher tuitions to begin with, had dollar increases that were greater--$1,763 at 4-year private schools versus $670 at 4-year public schools and $228 at community colleges; (3) the relative size of a school, whether public or private, appeared to have no relationship to the rate of increase; (4) large schools tend to have higher tuitions than small schools, and therefore, although the increase was greater in dollar terms at large schools, the percentage increases were about the same; (5) GAO's analysis showed that the size of tuition increases was statistically related to a variety of other financial variables such as revenues from grants, contracts, and gifts, and, for public schools, state appropriations for higher education and changes in the school's costs of providing education, including noninstructional costs; (6) tuition increases at community colleges have closely paralleled increases at 4-year public schools in recent years; (7) however, there is little evidence that tuition increases at community colleges have been caused by increases at 4-year schools, according to officials and researchers GAO contacted and the literature GAO reviewed; (8) instead, the increases at both 4-year public schools and community colleges are similar either because they are set legislatively or administratively on a statewide basis or because the tuition-setting entities consider the same kinds of factors such as the Consumer Price Index or state funding levels when deciding on tuition increases for both kinds of schools; (9) states, consortiums of schools, and individual colleges and universities have all taken steps to cut schools' operating costs in recent years; (10) in GAO's review of published reports and discussions with education officials, a variety of cost-cutting strategies surfaced, such as eliminating degree programs or academic departments, increasing class sizes, streamlining administrative operations, and privatizing operations like bookstores and food service operations; and (11) while these actions serve to reduce schools' own costs, they may not necessarily result in lower tuition for students because schools' costs may be only one of several factors considered when tuition-setting decisions are made.

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