In a recent Wall Street Journal interview, President Mitch Daniels of Purdue University said, “For decades college tuition has outpaced inflation, forcing students to increase their borrowing.” While this sort of hyperbole is rampant in the media, it’s disconcerting, to say the least, coming from a college president. Daniels claims “tuition has outpaced inflation” for decades. What tuition? Is it tuition at public or private colleges? Is it published tuition or net tuition? And what about the fact that most students pay different tuition rates based on family income?
A blanket statement that tuition increases exceed overall price changes has consequences. Growing regulatory pressure on higher education can be traced to the general view promulgated by the media that colleges pass out-of-control costs along to students in the form of rapidly increasing tuition. The resulting escalation in tuition, it is alleged, hits low-income students particularly hard, since they are least able to afford it.
There is, however, much more than meets the eye regarding tuition pricing. If one focuses attention on private higher education, for example, careful analysis of tuition should, at the very least, be adjusted to account for institutional grants, known as discounts. Since those discounts now represent more than 45 percent, on average, of the published tuition rate for private colleges, this adjustment is necessary to reflect a more accurate measure of the actual tuition being paid by students. <Read more.>