State Aid Kept Public Tuition From Outpacing Inflation

Although average college tuition and fees has increased since last year, prices at public colleges and universities are rising at a slower pace than inflation.

That finding—which means the inflation-adjusted cost of college has actually decreased over time, even amid prevailing public perceptions that the cost of college has become so high that it’s not worth it—is the key takeaway of the College Board’s 2024 “Trends in College Pricing and Student Aid” annual report, released Monday.

“Several public college and university systems continued tuition freezes in 2024–25,” Jennifer Ma, executive research scientist at College Board and coauthor of the report, said in a news release. “After adjusting for inflation, the average published tuition and fees in all three major sectors are lower in 2024–25 than in 2019–20, before the COVID-19 pandemic.”

General inflation for 2024 stands at 3.1 percent, but for in-district students attending public two-year colleges during the 2024–25 academic year, average published tuition and fees increased by 2.5 percent; for in-state students at public four-year institutions, it increased by 2.7 percent. And while the 3.9 percent increase in published tuition and fees at private nonprofit four-year institutions outpaced inflation this year, the average $43,350 annual cost is still lower than its inflation-adjusted peak in 2019.

How students are paying for college also continues to shift, according to the report, which noted that this was the 13th consecutive year of decline in total annual borrowing nationwide. Compared to the inflation-adjusted peak of $159.2 billion in 2010, students and parents borrowed $99 billion in federal and nonfederal loans during the 2023–24 academic year.

Instead, students are increasingly tapping grants, which they don’t have to repay and which can significantly reduce their net price—the price they actually pay compared to an institution’s sticker price.

And when adjusted for inflation, those net prices have dropped over the past decade.

“That’s partly because state budgets and, to some extent, endowments have been in pretty good shape and they’ve been able to subsidize the cost of education pretty well,” said Nate Johnson, principal consultant for Postsecondary Analytics LLC. “There’s also declining or flat enrollment, so there’s not the kind of enrollment pressure that we had for a long time where states needed to accommodate [the cost] of more students.”

Between fall 2019 and fall 2022, total U.S. college enrollment declined by 5 percent—from 19.5 million to 18.5 million, according to the report.

Despite those factors, “the idea that—at least in inflation-adjusted terms—tuition and fees are down hasn’t really become part of the public discussion,” Johnson added.

Indeed, despite public perceptions, the actual cost of tuition and fees is cheaper than it has been in the past.

For example, the average inflation-adjusted net tuition and fees paid by first-time, full-time, in-state students enrolled in public four-year institutions dropped from $4,340 during the 2012–13 academic year to $2,480 in 2024–25. The net cost of tuition and fees paid by first-time, full-time students enrolled in private nonprofit four-year institutions also declined from $19,330 (in 2024 dollars) during the 2006–07 academic year to $16,510 this year.

During the 2021–22 academic year—the most recent included in the report concerning aid—81 percent of public two-year students, 82 percent of public four-year undergraduates and 87 percent of first-time, full-time undergraduate students at private, nonprofit four-year institutions received federal, state or institutional grant aid, according to the report.

The relatively low increase in tuition and fees over the past five years has been driven partly by boosts in federal and state higher education funding that came after the Great Recession in 2008, and more recently, during and after the pandemic.

After hitting a nadir in the late 2000s and early 2010s, state and local funding per student increased each year from 2012 to 2022. During the 2022–23 academic year, state and local funding per student was $11,040—the same as it was in 2021–22 when adjusted for inflation.

The federal government has also put more money toward higher education costs in recent years.

Between 2016–17 and 2021–22, federal appropriations and government grants and contracts per student increased by 38 percent at public doctoral institutions and more than doubled at other types of public institutions, after adjusting for inflation.

One of the most well-known sources of federal aid is the Pell Grant, which saw declining expenditures and fewer recipients between 2010 and 2023. However, recent congressional approval to boost the maximum amount of individual Pell Grant awards by $500 led to a 6 percent increase in recipients and an 11 percent increase in total Pell Grant expenditures over this past year, according to the report.

Institutional grant aid has also been on the rise, growing by about 30 percent between 2013–14 and 2023–24, the most recent year included in the report. At the state level, average state grant aid per undergraduate student increased from $870 in 2012–13 to $1,180 in 2022–23, though it varied from less than $200 in some states to more than $2,000 in others.

But robust state budgets aren’t expected to last forever.

“The forecast for next year isn’t as rosy. The federal COVID stimulus money is pretty close to all being spent and the surpluses states have had are fading,” Johnson said. “Depending on the politics of each state, there will be some pressure on higher education budgets that might result in tuition going up.”

Recommended state budgets for 2025 have called for a more than 6 percent drop in general fund expenditures compared to 2024, according to a report from the National Association of State Budget Officers.

Raising tuition is one way to help fill higher education budget gaps. But the market may not support increasing tuition prices, given that the higher education industry is competing for a shrinking pool of students who are increasingly skeptical of a degree’s return on investment, said Robert Kelchen, a professor of education and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee at Knoxville.

“There’s such a public perception that college is too expensive, [so] states want to restrict tuition increases, and unless there’s a big influx of students, most colleges won’t have the ability to increase tuition,” he said.

And although raising tuition prices may have been a strategy for balancing institutional budgets in the past, Kelchen said, “Now a lot of colleges are looking at how to cut costs, realizing they may not see the growth in revenue they may have expected in the past.”