Most of the information on tuition refers to published, or “sticker,” tuition. While that number is certainly informative since it is essentially the baseline cost, net tuition is a better measure of the actual cost to students and families. Net tuition is simply published tuition minus grant aid. Since grant aid (unlike loans) does not need to be repaid, net tuition provides a better understanding of how much students and their families are actually paying in tuition.
Although calculating net tuition is fairly straightforward, IPEDS only started collecting information on grant aid in 1999-2000. In addition, the newest data is several years old (2010-2011). Thus, the time period for which we can calculate net tuition is relatively short. Nevertheless, it is interesting to compare the growth of published tuition with the growth of net tuition. The figure below reports the enrollment weighted average for each.
The most striking feature of published tuition is how consistent its growth has been. Indeed, with just a few bumps along the way, it is close to being a straight line.
We don’t have as many years of data for net tuition, but even so, it is clear that net tuition does not have the same predictable pattern of almost linear growth that we see with published tuition. The massive increase in federal financial aid in recent years (Pell grants just about doubled from 2008-2009 to 2010-2011) was able to jolt the net tuition curve downward, even though published tuition continued to climb. But rising published tuition did blunt the impact of the increase in federal grant aid: between 2008-2009 and 2010-2011, the average federal grant increased by $615 but net tuition only fell by $341.
Since I mentioned last week that looking at the entire distribution can be more enlightening than just the averages, the chart below shows the distribution of net tuition for each year.
Recall that the middle line in each box gives the median, and the box edges give the 25th and 75th percentiles (note that this is the distribution of net tuition among colleges rather than students). I also cut off some extreme outliers and added the enrollment weighted average for each year as a red dot.
A few things are worth noting:
First, the range of net tuition has increased over time. This is most clearly evident by the increased height of the boxes. To a lesser extent, this is also apparent in the growing distance between the whiskers and the spreading out of the outliers at the top.
Second, while relatively rare, there are some colleges with negative net tuition (where grant awards are greater than published tuition). In such cases, students can use the leftover grant aid to cover other expenses, such as textbooks or room and board.
Third, note the position of the red dot (enrollment weighted average net tuition) versus the line in the box (median net tuition among colleges). While subtle, the movement of the dot from above to below the median value over time confirms anecdotal stories of students shifting their enrollment to lower-cost institutions in response to the recession (this shift will affect the position of the red dot, but not of the median line).