Why I’m Skeptical of Cost of Attendance Figures

In the midst of a fairly busy week for higher education (hello, Biden’s student loan forgiveness and income-driven repayment plans!), the National Center for Education Statistics began adding a new year of data into the Integrated Postsecondary Education Data System. I have long been interested in cost of attendance figures, as colleges often face intense pressure to keep these numbers low. A higher cost of attendance means a higher net price, which makes colleges look bad even if this number is driven by student living allowances that colleges do not receive. For my scholarly work on this, see this Journal of Higher Education article—and I also recommend this new Urban Institute piece on the topic.

After finishing up a bunch of interviews on student loan debt, I finally had a chance to dig into cost of attendance data from IPEDS for the 2020-21 and 2021-22 academic year. I focused on the reported cost of attendance for students living off-campus at 1,568 public and 1,303 private nonprofit institutions (academic year reporters) with data in both years. This time period is notable for two things: more modest increases in tuition and sharply higher living costs due to the pandemic and resulting changes to college attendance and society at large.

And the data bear this out on listed tuition prices. The average increase in tuition was just 1.67%, with similar increases across public and private nonprofit colleges. 116 colleges had lower listed tuition prices in fall 2021 than in fall 2020, while about two-thirds for public and one-third of private nonprofit colleges did not increase tuition for fall 2021. This resulted in a tuition increase well below the rate of inflation, which is generally good news for students but bad news for colleges.

The cost of attendance numbers, as shown below, look a little different. Nearly three times as many institutions (322) reported a lower cost of attendance than reported lower tuition, which is surprising given rising living costs. More colleges also reported increasing the cost of attendance relative to increasing tuition, with fewer colleges reporting no changes.

Changes in tuition and cost of attendance, fall 2020 to fall 2021.

 Public (n=1,568)Private (n=1,303)
Tuition  
  Decrease6452
  No change955439
  Increase549812
Cost of attendance  
  Decrease188134
  No change296172
  Increase1,084997

Some of the reductions in cost of attendance are sizable without a corresponding cut in tuition. For example, California State University-Monterey Bay reduced its listed cost of attendance from $31,312 to $26,430 while tuition increased from $7,143 to $7,218. [As Rich Hershman pointed out on Twitter, this is potentially due to California updating its cost of attendance survey instead of increasing it by inflation every year.]

Texas Wesleyan University increased tuition from $33,408 to $34,412, while the cost of attendance fell from $52,536 to $49,340. These decreases could be due to a more accurate estimate of living expenses, moving to open educational resources instead of textbooks, or reducing student fees. But the magnitude of these decreases during an inflationary period leads me to continue questioning the accuracy of cost of attendance values or the associated net prices.

As a quick note, this week marks the ten-year anniversary of my blog. Thanks for joining me through 368 posts! I don’t have the time to do as many posts as I used to, but it is sure nice to have an outlet for some occasional thoughts and data pieces.

Considering the Future of Academic Conferences

One of the defining features of life in higher education for full-time faculty, administrators, and graduate students has been the academic conference. Navigate your university’s travel and reimbursement process (if you’re lucky) to spend a few days attending presentations, sharing your work, and connecting with colleagues at a generic conference hotel or convention center with overpriced beverages and questionable carpet designs. The professional development (and food) can be outstanding—and then you scramble back to campus to catch up on everything that you missed.

This academic conference model, especially for faculty and students at lesser-resourced institutions, was already showing cracks prior to the pandemic. The largest professional associations, such as the American Educational Research Association, primarily held their conferences in expensive cities that were hard for many to afford. Smaller associations, such as the Association for Education Finance and Policy, took a different route and focused on midsize cities that were less expensive. Then politics started to also get involved, with California enacting a state-funded travel ban in 2015 to states with anti-LGBT policies.

The pandemic scrambled the finances of scholarly and professional associations in higher education, as many of them rely upon conference registrations as a key revenue source and had also signed contracts with hotels for several years in advance. Associations were hoping that the 2022-23 conference cycle would be something closer to the pre-pandemic norm, even if some also offer some hybrid and fully remote sessions.

In bad news for academic conferences, affordability and political issues have become even more challenging. With inflation at the highest level in my lifetime and travel and hospitality costs rising particularly quickly, the cost of traveling to a conference has risen sharply over the last year. The inflation squeeze that colleges are facing mean that any professional development budgets have much less purchasing power than last year, and of course many academics are paying out of pocket for any conferences.

Today’s Inside Higher Ed features a piece on how attendees to the American Sociological Association conference in Los Angeles are (rightly) worried about rising coronavirus cases. But there is also a strong undercurrent of people dropping out of the conference due to traveling to one of the most expensive cities in America.

Last month’s Supreme Court decision overturning Roe v. Wade and heightening political divides between red and blue states put academic conferences in an even tougher position. Many of the more affordable conference locations, such as Kansas City, Houston, and Columbus, are now in states in which abortions are now illegal with few or no exceptions. This has led to calls for conference boycotts and led some associations to reconsider scheduled meetings. Additionally, there is the very real possibility that more blue states put travel restrictions on going to red states, and that red states retaliate.

This means that associations have three potential options:

(1) Schedule in a small number of large, expensive cities in safe blue states and hope that people will come. The list of states that can be expected to stay under at least partial Democratic control over the next two election cycles is pretty small: basically, the Acela corridor, Illinois, Colorado, and the Pacific coast states. Maybe this leads to Buffalo, Providence, and Spokane being the new affordable conference hubs?

(2) Prioritize affordability by going to midsize cities with a history of hosting conferences, potentially alienating many academics who range from concerned to furious on abortion, LGBT, and other issues.

(3) Focus on hybrid and virtual conferences and hope that there is enough revenue to support this option. This can increase access to conferences (as a dad and department head, it’s hard to travel even setting money and politics aside). But it takes away some of the networking and socialization that can make conferences special.

Scholarly and professional associations are in a really difficult position regarding how to move forward. I don’t envy the decisions that they have to make.

Would Student Debt Forgiveness Drive Inflation?

During the last year or so, inflation has grabbed the attention of the American public. The price of just about everything is way up, with gas prices, food, and rent grabbing the nation’s attention. As I write this piece, the most recent inflation rate checks in at 8.3%, which is leading the Federal Reserve to increase interest rates and also likely increases the risk of a coming recession.

I have been talking for months about the squeeze that inflation puts on colleges, as tuition prices are rising much slower than the costs that colleges face. Although a recession probably would result in an increase in enrollment across higher education, that is not the reason why any of us want to see enrollment increase. Therefore, I am deeply concerned about inflation and its ramifications.

Much of the higher education policy discussion over the last two years has been dominated by the issue of student debt forgiveness as payment pauses continue. The latest news on this front is that the Biden administration is still pondering $10,000 in forgiveness (with a limit on income to qualify), and that high inflation rates are causing them to potentially rethink this issue.

I have plenty of thoughts and concerns about how student debt forgiveness would work, whether it should be limited to undergraduate debt only, whether it would lead to potential limits on federal student loans, and that we would be back in the exact same situation in just a few years without meaningful reforms. But I’m actually not too concerned about the effects of $10,000 in student debt forgiveness on inflation. Here’s why, with some caveats.

Let’s look at three groups of students that will be affected in different ways by $10,000 in forgiveness.

The first group is people with less than $10,000 in debt. As far as I know, nobody is getting handed a check for $10,000 and that benefits would be spread out. (I could see a world in which people who chose to pay off their loans since March 2020 get refunds, but I doubt that will happen.) Let’s say someone had $8,000 in debt remaining to pay off over five years, with monthly payments of $175. Those payments would be completely wiped out, and would increase the capacity to spend right now. But would people spend that money or save it?

Let’s keep in mind that borrowers have not had to make any payments for the last 27 months. Any borrowers who do not have to make payments have the same monthly take-home pay as they do now, but with the knowledge that they won’t have to resume payments at some point in the future. I think that could affect making some larger purchases like cars (a market with lots of inflation right now), but probably not a purchase like a home due to the larger sticker price.

Now consider borrowers with more than $10,000 in debt who are not using income-driven repayment. Consider someone with $20,000 in debt that they are paying over a standard ten-year plan, with payments of about $212 per month at 5% interest. If $10,000 gets forgiven, how does this work? One option is that students stay on the ten-year payment plan and drop their payments in half. Another option is to keep the same $212 payment, but pay off in about half the time. The first option could increase discretionary income now, while the second option does nothing now and increases it later. This pushes any inflation concerns years into the future.

Finally, let’s turn to borrowers with more than $10,000 in debt who are using income-driven repayment or pursuing Public Service Loan Forgiveness. For many of these borrowers, the effect will be less money forgiven years down the road. For example, instead of having $60,000 forgiven under PSLF, taking $10,000 off the balance now would result in the same monthly payments and maybe $40,000 forgiven in the future. This shouldn’t affect inflation at all.

My takeaway: the short-term effects on inflation are likely to be fairly modest. And if payments resume alongside forgiveness, there may even be a modest decrease in inflation compared to the current repayment pause. There could also be modest positive pressures on longer-term inflation, but that will hopefully be less of a concern if inflation is brought under control in the next few years.

A closing note: expect an administrative nightmare when trying to put an income limit on student debt forgiveness. The Department of Education cannot access IRS data on income, so this would require that people honestly provide their own income based on instructions provided. If the goal is to make sure that the most affluent individuals do not get debt forgiven, it is a better idea to use data from FAFSAs to make the determination (credit to the brilliant Sue Dynarski here). For example, debt forgiveness could be tied to an Expected Family Contribution threshold that excludes the wealthiest few percent of students’ families.

Will Republicans Try to End the Federal Student Loan Program?

Multiple news outlets are reporting that the Biden administration will announce a fifth extension of the federal student loan repayment pause that began in March 2020 shortly, with this extension going through the end of August 2022. This news doesn’t seem to make anyone truly happy, with borrower advocates and many progressives advocating for an extension through the end of 2022 and/or outright student debt forgiveness. On the right, conservatives are unhappy with continuing to kick the repayment can down the road when the economy is strong and a sizable share of borrowers could resume repayment (with or without income-driven repayment).

At this point, it seems more likely than not to me that the Biden administration will not resume student loan repayment during its time in office. There is almost no chance that the administration will restart payments in August as Democrats face a challenging midterm election and need every vote that they can get from their base and younger voters. Then 2023 starts the next presidential election cycle. If Biden and/or Harris want to run for office, resuming payments is a terrible way to position themselves in a Democratic primary.

Meanwhile, Republicans are stewing. Rep. Virginia Foxx, ranking member of the House Education and Labor Committee, had this to say (h/t Michael Stratford of Politico):

If Republicans take control of Congress in the November elections, I fully expect a serious effort to stop issuing federal student loans framed around statements like that from Rep. Foxx. 2023 is a great time for Republicans to make this play, as somewhere between ten and 250 Republicans in the House and Senate seem likely to run for president in 2024 and this is great messaging in a GOP primary. Additionally, a certain Biden veto makes this a vote with no real consequences, allowing people to vote yes without cutting off access to federal loans. There is a realistic chance that legislation would pass Congress while not becoming law.

Fast forward to 2025. If Republicans take control of the White House along with Congress, then they have to either put up or shut up about this issue. On health care, Republicans largely shut up because they could not agree on a replacement for the Affordable Care Act. The same may well happen about federal student loans, with a few moderate Republicans stopping passage to protect students and/or their own political careers in swing districts. Possible replacements include education savings accounts, income share agreements (a la Jeb Bush), or simply turning the issue over to colleges and states to figure out.

Do I think that Republicans will end federal student loans? Probably not, but I also didn’t expect payments to still be paused in April 2022 when I first suggested a pause on March 18, 2020. The more likely outcome is efforts to limit graduate and professional student borrowing to reduce the federal loan portfolio without affecting the most vulnerable undergraduates.

My 2022 Higher Education Finance Reading List

I am beyond excited to be back in the (virtual) classroom this spring, as I get to teach a course for the first time since spring 2020. I am teaching a remote synchronous PhD class in higher education finance as my first course at the University of Tennessee, Knoxville. Department heads here are expected to teach one course per year, and it was great to be asked to teach this course.

The last two times that I taught the course (spring 2020 and fall 2017), I shared my reading list for the class on this blog. I do not use a textbook for the course because the field is moving so quickly and there are more topics to cover than a textbook could ever include. Instead, I use articles, working papers, and other online resources to provide a current look at the state of higher education finance.

Here is the reading list I am assigning my students for the course. I link to the final versions of the articles whenever possible, but those without access to an academic library should note that earlier versions of many of these articles are available online via a quick Google search.

The higher education finance landscape and data sources

Lumina Foundation video series on federal financial aid: https://www.luminafoundation.org/history-of-federal-student-aid/

Chetty, R., Friedman, J. N., Saez, E., Turner, N., & Yagan, D. (2017). Mobility report cards: The role of colleges in intergenerational mobility. Working paper. (link)

Schanzenbach, D. W., Bauer, L., & Breitwieser, A. (2017). Eight economic facts on higher education. The Hamilton Project. (link)

Webber, D. A. (2021). A growing divide: The promise and pitfalls of higher education for the working class. The ANNALS of the American Academy of Political and Social Science, 695, 94-106. (link)

Recommended data sources:

College Scorecard: https://collegescorecard.ed.gov/ (underlying data at https://collegescorecard.ed.gov/data/)

Equality of Opportunity Project: http://www.equality-of-opportunity.org/college

IPEDS: https://nces.ed.gov/ipeds/use-the-data

NCES Data Lab: https://nces.ed.gov/datalab/index.aspx

Postsecondary Value Commission’s Equitable Value Explorer: https://www.postsecondaryvalue.org/equitable-value-explorer/

ProPublica’s Nonprofit Explorer: https://projects.propublica.org/nonprofits/

Urban Institute’s Data Explorer: https://educationdata.urban.org/data-explorer/colleges/

Institutional budgeting

Barr, M.J., & McClellan, G.S. (2010). Understanding budgets. In Budgets and financial management in higher education (pp. 55-85). Jossey-Bass. (link)

Jaquette, O., Kramer II, D. A., & Curs, B. R. (2018). Growing the pie? The effect of responsibility center management on tuition revenue. The Journal of Higher Education, 89(5), 637-676. (link)

Rutherford, A., & Rabovsky, T. (2018). Does the motivation for market-based reform matter? The case of responsibility-centered management. Public Administration Review, 78(4), 626-639. (link)

University of Tennessee System’s FY2022 budget: https://finance.tennessee.edu/budget/documents/

University of Tennessee System’s FY2020 annual financial report: https://treasurer.tennessee.edu/reports/

The financial viability of higher education

Ducoff, N. (2019, December 9). Students pay the price if a college fails. So why are we protecting failing institutions? The Hechinger Report. (link)

EY-Parthenon (2018). Transitions in higher education: Safeguarding the interests of students. (link)

Kelchen, R. (2020). Examining the feasibility of empirically predicting college closures. Brookings Institution. (link)

Massachusetts Board of Higher Education (2019). Final report & recommendations. Transitions in higher education: Safeguarding the interest of students (THESIS). (link)

Sullivan, G. W., & Stergios, J. (2019). A risky proposal for private colleges: Ten reasons why the Board of Higher Education must rethink its plan. Pioneer Institute. (link)

Tarrant, M., Bray, N., & Katsinas, S. (2018). The invisible colleges revisited: An empirical review. The Journal of Higher Education, 89(3), 341-367. (link)

Higher education expenditures

Archibald, R. B., & Feldman, D. H. (2018). Drivers of the rising price of a college education. Midwestern Higher Education Compact. (link)

Cheslock, J. J., & Knight, D. B. (2015). Diverging revenues, cascading expenditures, and ensuing subsidies: The unbalanced and growing financial strain of intercollegiate athletics on universities and their students. The Journal of Higher Education, 86(3), 417-447. (link)

Commonfund Institute (2021). 2021 higher education price index. (link)

Griffith, A. L., & Rask, K. N. (2016). The effect of institutional expenditures on employment outcomes and earnings. Economic Inquiry, 54(4), 1931-1945. (link)

Hemelt, S. W., Stange, K. M., Furquim, F., Simon, A., & Sawyer, J. E. (2021). Why is math cheaper than English? Understanding cost differences in higher education. Journal of Labor Economics, 39(2), 397-435. (link)

State sources of revenue

Chakrabarti, R., Gorton, N., & Lovenheim, M. F. (2020). State investment in higher education: Effects on human capital formation, student debt, and long-term financial outcomes of students. National Bureau of Economic Research Working Paper 27885. (link)

Gándara, D. (2020). How the sausage is made: An examination of a state funding model design process. The Journal of Higher Education, 91(2), 192-221. (link)

Laderman, S., & Heckert, K. (2021). State higher education finance: FY 2020. State Higher Education Executive Officers Association. (link)

Lingo, M., Kelchen, R., Baker, D., Rosinger, K. O., Ortagus, J. C., & Wu, J. (2021). The landscape of state funding formulas for public colleges and universities. InformEd States. (link)

Odle, T., Lee, J. C., & Gentile, S. P. (2021). Do promise programs reduce student loans? Evidence from Tennessee Promise. The Journal of Higher Education, 92(6), 847-876. (link)

Ortagus, J. C., Kelchen, R., Rosinger, K. O., & Voorhees, N. (2020). Performance-based funding in American higher education: A systematic synthesis of the intended and unintended consequences. Educational Evaluation and Policy Analysis, 42(4), 520-550. (link)

Tennessee’s outcomes-based funding formula: https://www.tn.gov/thec/bureaus/policy–planning–and-research/fiscal-policy/redirect-fiscal-policy/outcomes-based-funding-formula-resources/redirect-outcomes-based-funding-formula-resources/2015-20-outcomes-based-funding-formula.html

Federal sources of revenue

Bergman, P., Denning, J. T., & Manoli, D. (2019). Is information enough? The effect of information about education tax benefits on student outcomes. Journal of Policy Analysis and Management, 38(3), 706-731. (link)

Cellini, S. R. (2010). Financial aid and for-profit colleges: Does aid encourage entry? Journal of Policy Analysis and Management, 29(3), 526-552. (link)

Gibbons, M. T. (2021, January 13). Universities report 5.7% growth in R&D spending in FY 2019, reaching $84 billion. National Science Foundation. (link)

Kelchen, R. (2019). An empirical examination of the Bennett Hypothesis in law school prices. Economics of Education Review, 73, Article 101915. (link)

Mok, S., & Shakin, J. (2018). Distribution of federal support for students pursuing higher education in 2016. Congressional Budget Office. (link)

College pricing, tuition revenue, and endowments

Baker, D. J. (2020). “Name and shame”: An effective strategy for college tuition accountability? Educational Evaluation and Policy Analysis, 42(3), 1-24. (link)

Baum, S., & Lee, V. (2018). Understanding endowments. Urban Institute. (link)

Cheslock, J. J., & Riggs, S. O. (2021). Psychology, market pressures, and pricing decisions in higher education: The case of the US private sector. Higher Education, 81, 757-774. (link)

Kramer II, D. A., Ortagus, J. C., & Lacy, T. A. (2018). Tuition-setting authority and broad-based merit aid: The effect of policy intersection on pricing strategies. Research in Higher Education, 59(4), 489-518. (link)

Ma, J., & Pender, M. (2021). Trends in college pricing and student aid 2021. The College Board. (link)

Webber, D. A. (2017). State divestment and tuition at public institutions. Economics of Education Review, 60, 1-4. (link)

Financial aid policies, practices, and impacts

Anderson, D. M., Broton, K. M., Goldrick-Rab, S., & Kelchen, R. (2020). Experimental evidence on the impacts of need-based financial aid: Longitudinal assessment of the Wisconsin Scholars Grant. Journal of Policy Analysis and Management, 39(3), 720-739. (link)

Bird, K., & Castleman, B. L. (2016). Here today, gone tomorrow? Investigating rates and patterns of financial aid renewal among college freshmen. Research in Higher Education, 57(4), 395-422. (link)

Guzman-Alvarez, A., & Page, L. C. (2021). Disproportionate burden: Estimating the cost of FAFSA verification for public colleges and universities. Educational Evaluation and Policy Analysis, 43(3), 545-551. (link)

Kelchen, R., Goldrick-Rab, S., & Hosch, B. (2017). The costs of college attendance: Examining variation and consistency in institutional living cost allowances. The Journal of Higher Education, 88(6), 947-971. (link)

Nguyen, T. D., Kramer, J. W., & Evans, B. J. (2019). The effects of grant aid on student persistence and degree attainment: A systematic review and meta-analysis of the causal evidence. Review of Educational Research, 89(6), 831-874. (link)

Student debt and financing college

Baker, D. J. (2019). When average is not enough: A case study examining the variation in the influences on undergraduate debt burden. AERA Open, 5(2), 1-26. (link)

Black, S. E., Denning, J. T., Dettling, L. J., Goodman, S., & Turner, L. (2020). Taking it to the limit: Effects of increased student loan availability on attainment, earnings, and financial well-being. National Bureau of Economic Research Working Paper 27658. (link)

Boatman, A., Evans, B. J., & Soliz, A. (2017). Understanding loan aversion in education: Evidence from high school seniors, community college students, and adults. AERA Open, 3(1), 1-16. (link)

Ritter, D., & Webber, D. (2019). Modern income-share agreements in postsecondary education: Features, theory, applications. Federal Reserve Bank of Philadelphia Discussion Paper 19-06. (link)

Scott-Clayton, J. (2018). What accounts for gaps in student loan default, and what happens after. Brookings Institution Evidence Speaks Report #57. (link)

Free college

Carruthers, C., Fox, W. F., & Jepsen, C. (2020). Promise kept? Free community college, attainment, and earnings in Tennessee. Working paper. (link)

*Collier, D. A., & Parnther, C. (2021). Conversing with Kalamazoo Promise scholars: An inquiry into the beliefs, motivations, and experiences of tuition-free college students. Journal of College Student Retention: Research, Theory & Practice, 22(4), 572-596. (link)

*Gándara, D., & Li, A. Y. (2020). Promise for whom? “Free-college” programs and enrollments by race and gender classifications at public, 2-year colleges. Educational Evaluation and Policy Analysis, 42(4), 603-627. (link)

Murphy, R., Scott-Clayton, J., & Wyness, G. (2017). Lessons from the end of free college in England. Washington, DC: The Brookings Institution. (link)

Perna, L. W., Leigh, E. W., & Carroll, S. (2018). “Free college:” A new and improved state approach to increasing educational attainment? American Behavioral Scientist, 61(14), 1740-1756. (link)

Map of college promise/free college programs: https://ahead-penn.org/creating-knowledge/college-promise

Returns to education

Darity, Jr., W. A., & Underwood, M. (2021). Reconsidering the relationship between higher education, earnings, and productivity. Postsecondary Value Commission. (link)

Deterding, N. M., & Pedulla, D. S. (2016). Educational authority in the “open door” marketplace: Labor market consequences of for-profit, nonprofit, and fictional educational credentials. Sociology of Education, 89(3), 155-170. (link)

Doyle, W. R., & Skinner, B. T. (2017). Does postsecondary education result in civic benefits? The Journal of Higher Education, 88(6), 863-893. (link)

Ma, J., Pender, M., & Welch, M. (2019). Education pays 2019: The benefits of higher education for individuals and society. The College Board. (link)

Webber, D. A. (2016). Are college costs worth it? How ability, major, and debt affect the returns to schooling. Economics of Education Review, 53, 296-310. (link)

How Colleges’ Carnegie Classifications Have Changed Over Time

NOTE: This post was updated on February 2, 2022 to reflect substantial changes between the initial and final Carnegie data releases.

Every three years, Indiana University’s Center on Postsecondary Research has updated Carnegie classifications–a key measure of prestige for some colleges that helps define peer groups. Much of the higher education community looks closely at these lists, and doesn’t hesitate to share their opinions about whether they are correctly classified.

The 2021 version includes many different types of classifications based on different institutional characteristics. But the basic classification (based on size, degrees awarded, and research intensity) always garners the most attention from the higher education community. I took a look at the 2018 update three years ago, and this post provides an updated analysis of the 2021 classifications.

The item that always gets the most attention in the Carnegie classifications is Research 1 (research universities: very high activity) status, as this is based on research metrics and is a key indicator of prestige. The R1 line has continued to grow, moving from 96 universities in 2005 to 146 in 2021. Notably, nine additional universities were added to the R1 list between the initial data release in December 2021 and the final release in January 2022. This includes three universities that were initially moved down to R2 and successfully managed to get moved back through either correcting data errors or appealing their classification.

YearR1R2R3Total
2021146134189469
2018131132161423
2015115107112334
20101089889295
20059610281279

At the two-year level, there are competing trends of institutional consolidations in the for-profit sector and more community colleges offering bachelor’s degree programs. The number of baccalaureate/associate colleges declined substantially in 2021 (going from 269 in 2018 to 202 in 2021), but this is mainly driven by reclassifications between the initial and final data releases (going from 250 to 202).

2021: 202

2018: 269

2015: 248

2010: 182

2005: 144

IPEDS counts these institutions as four-year universities, but the Carnegie classification (basic codes 14 and 23) is a better way to flag them as two-year colleges.

Going forward, Carnegie classifications will continue to be updated every three years in order to keep up with a rapidly-changing higher education environment. It remains to be seen who will host the classifications following a falling-out with Albion College, and I’m very much intrigued by the high number of reclassifications this time around. It’s never dull in higher ed data land!


Rising Inflation and the Impending Tuition Squeeze

For the first time in the lifetimes of many Americans, inflation has become a legitimate concern. In the last year, the Consumer Price Index increased at a 6.2 percent clip—a rate not seen this century.

Trends in inflation over the last two decades (BLS graphic)

The higher education industry is far from immune from the effects of an inflationary cycle that was largely unexpected even a few months ago. Colleges have been struggling to address supply chain issues and a shortage of staff members willing to work in person at pre-pandemic wage rates. Colleges have responded by reducing services, increasing wages in some cases, and even trying to get faculty members to work in dining halls. In my position as a faculty member and department head, I am still waiting for my permanent laptop computer setup to arrive and have seen the challenges in trying to hire employees within existing salary bands.

But what really caught my attention was Virginia Tech’s move to increase meal plan charges by about $200 between the fall and spring semesters. Midyear adjustments in student charges are highly unusual and typically only happen if a state withholds previously promised funding during a recession. But the university is required by state law to have auxiliary enterprises operate with balanced budgets, so the sudden increase in costs had to be passed on to students.

At this point, it seems like inflationary pressures are here to stay for at least the next several months. This will put continued pressure on colleges to increase their salaries to keep up with a hot economy and rising consumer prices. While faculty tend to have less power in the labor market due to lots of qualified people looking to teach in many disciplines, many staff members are in a great position to command raises of between five and ten percent as colleges look to retain talent.

This is also the time of year during which many colleges start to develop their proposed rates for tuition, fees, and room and board for the next (2022-23) academic year. With the costs of running a college likely to rise by at least five percent this year, the logical step for colleges would be to raise student charges by the same amount. This would be a rate largely unseen since the Great Recession—when student debt was less of a public policy concern and there was less vocal skepticism of higher education. But if colleges try to keep tuition increases more modest, they are losing money. And that is a challenge after the pandemic severely affected the finances of many institutions.

So expect a fair amount of sticker shock this spring when tuition, housing, and dining charges for next year get posted. There are likely to be three types of exceptions to this trend:

  • Public colleges in states that limit tuition increases by state law or governing board policy. They’re stuck with what they can get.
  • Extremely wealthy colleges that can afford to limit increases if that will help them increase diversity and/or move up in the rankings.
  • Cash-strapped colleges that are desperately seeking to recruit and retain students. They will decide that holding the line on student charges is the best of a lousy set of options.

Options for Replacing Standardized Test Scores for Researchers and Rankers

It’s the second Monday in September, so it’s time for the annual college rankings season to conclude with U.S. News & World Report’s entry. The top institutions in the rankings change little from year to year, but colleges pay lots of attention to statistically insignificant movements. Plenty has been written on those points, and plenty of digital ink has also been spilled on U.S. News’s decision to keep standardized test scores in their rankings this year.

In this blog post, I want to look a few years farther down the line. Colleges were already starting to adopt test-optional policies prior to March 2020, but the pandemic accelerated that trend. Now a sizable share of four-year colleges had taken a hiatus from requiring ACT or SAT scores, and many may not go back. This means that people who have used test scores in their work—whether as academic researchers or college rankings methodologists—will have to think about how to proceed going forward.

The best metrics to replace test scores depend in part on the goals of the work. Most academic researchers use test scores as a control variable in regression models as a proxy for selectivity or as a way to understand the incoming academic performance of students. High school GPA is an appealing measure, but is not available in the Integrated Postsecondary Education Data System and also varies considerably across high schools. Admit rates and yield rates are available in IPEDS and capture some aspects of selectivity and student preferences to attend particular colleges. Admit rates can be gamed by trying to get as many students as possible with no interest in the college to apply and be rejected, and yield rates vary considerably based on the number of colleges students apply to.

Other potential metrics are likely not nuanced enough to capture smaller variations across colleges. Barron’s Profiles of American Colleges has a helpful admission competitiveness rating (and as a plus, that thick book held up my laptop for hundreds of hours of Zoom calls during the pandemic). But there are not that many categories and they change relatively little over time. Carnegie classifications focus more on the research side of things (a key goal for some colleges), but again are not as nuanced and are only updated every few years.

If the goal is to get at institutional prestige, then U.S. News’s reputational survey could be a useful resource. The challenge there is that colleges have a history of either not caring about filling out the survey or trying to strategically game the results by ranking themselves far higher than their competitors. But if a researcher wants to get at prestige and is willing to compile a dataset of peer assessment scores over time, it’s not a bad idea to consider.

Finally, controlling for socioeconomic and racial/ethnic diversity are also options given the correlations between test scores and these factors. I was more skeptical of these correlations until moving to New Jersey and seeing all of the standardized test tutors and independent college counselors that existed in one of the wealthiest parts of the country.

As the longtime data editor for the Washington Monthly rankings, it’s time for me to start thinking about changes to the 2022 rankings. The 2021 rankings continued to use test scores as a control for predicting student outcomes and I already used admit rates and demographic data from IPEDS as controls. Any suggestions that people have for publicly-available data to replace test scores in the regressions would be greatly appreciated.

Examining Trends in Tuition Freezes and Declines

Greetings from beautiful eastern Tennessee! Since my last post, I have accepted a position as professor and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville. It is an incredible professional opportunity for me, and the Knoxville area is a wonderful place to raise a family. I start on August 1, so the last month has been a combination of moving, taking some time off, and getting data in order to keep making progress on research.

Speaking of getting new data in order, the U.S. Department of Education’s newest iteration of Integrated Postsecondary Education Data System (IPEDS) data came out with a fresh year of data on tuition and fee charges, enrollment, and completions. In this post, I am using the new data on tuition and fees in the 2020-21 academic year to look at how colleges changed their listed prices during the pandemic.

I limited my analysis to 3,356 colleges and universities that met three criteria. First, they had IPEDS data on in-district or in-state tuition and fees in both the 2019-20 and 2020-21 academic years. Second, they reported data for the typical program of study (academic year reporters) instead of separately for large programs (program reporters). This excluded most certificate-dominant institutions. Third, I kept colleges with Carnegie classifications in 2018 and excluded tribal colleges due to their unique governance structures. I then classified public institutions into two-year and four-year colleges based on Carnegie classifications to properly classify associate-dominant institutions as two-year colleges.

Now on to the analysis. There was a lot of coverage of colleges cutting tuition and/or fees for 2020-21 on account of the pandemic, but now analysts can see how prevalent this actually was. The majority of public and for-profit colleges either froze or decreased tuition in 2020-21, but two-thirds of private nonprofit colleges increased their list prices. This does not mean that private colleges actually increased tuition revenue due to the possibility of increased financial aid, and this answer will not be known in publicly available data until early 2023. Public colleges and universities were somewhat more likely to reduce fees than tuition, while for-profit colleges were less likely to do so.

The rightmost column of the first table below combines tuition and fees and provides a more comprehensive picture of student charges. Although a majority of public universities froze tuition and fees, combined tuition and fees still increased at 56% of institutions. This suggests that colleges that froze tuition increased fees and colleges that froze fees increased tuition. Colleges found a way to get the money that they needed. Fifty-three percent of community colleges increased tuition and fees, while 71% of private nonprofit colleges did so compared to just 42% of for-profit colleges.

Changes in tuition and fees, 2019-20 to 2020-21.

TuitionFeesTuition and fees
Four-year public   
Increase35.6%35.8%56.1%
No change61.2%55.5%30.7%
Decrease3.2%8.6%13.1%
Two-year public   
Increase41.0%45.1%53.4%
No change55.3%40.0%39.9%
Decrease3.8%14.9%6.6%
Private nonprofit   
Increase66.9%38.6%71.2%
No change28.2%54.0%21.3%
Decrease4.9%7.4%7.5%
For-profit   
Increase34.7%25.3%42.3%
No change49.6%66.8%41.5%
Decrease15.7%7.8%16.2%
Source: Robert Kelchen’s analysis of IPEDS data.

The next obvious question is whether the 2020-21 trends differed from past years. I pulled IPEDS data going back to 2015 to look at trends in tuition and fees over the past five years. The share of tuition freezes increased in every sector of higher education, with the increase being most pronounced among public universities (9.5% in 2019-20 to 30.7% in 2020-21). Other sectors had smaller increases, although around one-third of community colleges and for-profit institutions had no changes in tuition and fees in prior years. The only sector with a large increase in tuition and fee cuts was public universities, with a jump from 5.1% to 13.1% between 2019-20 and 2020-21.

Changes in tuition and fees over time.

4-year public2-year publicPrivate nonprofitFor-profit
2020-21    
No change30.7%39.9%21.3%41.5%
Decrease13.1%6.6%7.5%16.2%
2019-20    
No change9.5%31.7%13.7%34.0%
Decrease5.1%6.9%4.7%12.0%
2018-19    
No change10.5%27.2%14.6%38.0%
Decrease6.0%6.5%5.2%22.4%
2017-18    
No change7.4%27.2%12.4%34.8%
Decrease3.2%5.9%3.6%25.0%
2016-17    
No change13.8%24.5%12.4%28.7%
Decrease4.4%8.0%3.8%16.0%
2015-16    
No change8.7%29.3%10.8%33.5%
Decrease5.2%7.3%4.3%18.2%
Source: Robert Kelchen’s analysis of IPEDS data.

As the pandemic enters a new stage, the higher education community continues to get more information on the broader effects on the 2020-21 academic year. It will take a few years to get a complete picture of what happened in the sector, but each data release provides additional insights for researchers and policymakers.

An Updated Look at Financial Responsibility Scores and College Closures

The topic of college closures has gotten even more attention since the beginning of the coronavirus pandemic last spring. Even though the number of private nonprofit colleges closing remained around recent norms in 2020 (approximately ten degree-granting institutions), many colleges have absorbed sizable losses during the pandemic and will continue to do so in coming years. In a recent working paper that I wrote with Dubravka Ritter of the Federal Reserve Bank of Philadelphia and Doug Webber of Temple University, we estimate that colleges and universities may lose approximately $100 billion in revenue over the next five years. This means that colleges are still going to face financial challenges going forward.

One of the federal government’s main tools to identify colleges at risk of closure is financial responsibility scores. Private nonprofit and for-profit colleges are scored on a scale of -1.0 to 3.0 based on three measures: a primary reserve ratio, a net income ratio, and an equity ratio. Colleges that score at 1.5 or above pass, while colleges that score between 1.0 and 1.4 are in an oversight zone and colleges that score at 0.9 or below fail. Colleges that fail must submit a letter of credit in order to keep receiving federal financial aid, and colleges that are in the oversight zone or fail are subject to additional financial monitoring.

The financial responsibility scores for fiscal years ending in 2018-19 were recently released by Federal Student Aid, and this represents the final pre-pandemic look at colleges’ finances. The distribution of listed scores by sector is below. The vast majority of colleges in both sectors passed, but a larger number of for-profit colleges failed than in the private nonprofit sector.

OutcomeFor-profitNonprofit
Pass1,5171,479
Zone5151
Fail12349
Total1,6911,579

Four years ago, I looked at the financial responsibility scores of private nonprofit colleges that closed in 2016. Of the 12 colleges with available data, four colleges passed, two were in the oversight zone, three failed, and the final three institutions were placed on heightened cash monitoring for financial responsibility score issues without assigning a score.

I repeated this exercise for twelve private nonprofit colleges that closed or merged in 2020 or 2021 and had available data. As shown below, not a single college that closed received a failing financial responsibility score. Three were in the oversight zone, three were instead placed on heightened cash monitoring for financial responsibility concerns, and the other six all passed. Holy Family College in Wisconsin, which closed in 2020, had a perfect score.

NameFinancial responsibility score
Judson College2.1 (pass)
Becker CollegePlaced on HCM1
Concordia College (NY)Placed on HCM1
Marlboro College1.8 (pass)
Wesley College (DE)Placed on HCM1
Pine Manor College1.0 (zone)
Holy Family College (WI)3.0 (pass)
Urbana University2.9 (pass)
MacMurray College2.6 (pass)
Robert Morris University (IL)1.3 (zone)
Concordia University (OR)1.1 (zone)
Watkins College of Art2.2 (pass)

Next year’s release of financial responsibility scores will begin to show the effects of the pandemic at colleges which had their fiscal years end after the pandemic began. The 2020-21 IPEDS data collection cycle also includes for the first time values for each component of the financial responsibility score so analysts have more information about colleges’ financial positions.