College Costs Update
College costs still are on the rise. But thanks to a host of grant aid and tax credits, most students pay less than the published price of tuition.
And despite the tens of thousands of dollars parents have to pay and the increasing debt students are piling up, a college degree still pays off in a lifetime of increased earnings.
Annual tuition averages from $5,500 to $21,000
According to the College Board in New York, a not-for-profit membership association of colleges and universities, annual tuition and fees now average about $5,500 at four-year public universities for in-state students, and about $21,000 at four-year private colleges.
Specifically, for the 2005-2006 school year, annual tuition and fees averaged $5,491 at four-year public universities for in-state students. That's a 7.1% and $365 increase over the previous year. At four-year private colleges, annual tuition and fees averaged $21,235, a 5.9% increase.
Although tuition costs still are on the rise, the rate of increase has slowed from the previous two years at public universities, and is about the same as the year before at private colleges.
Because room and board costs increased a bit less than tuition and fees costs, the rate of increase in tuition and fees and room and board costs added together was 6.6% for four-year public universities, and 5.7% for private colleges.
A credit union loan officer can explain your options for funding higher education.
What students pay
When reporting these costs, the College Board emphasizes that these published tuition prices are not what most students actually pay. In fact, grant aid and education tax credits and deductions reduce the cost of college for many students and families.
Consequently, the average amount students actually paid for annual tuition and fees at public four-year universities--after receiving grant aid and taking advantage of tax breaks--was reduced from the published price of $5,491 to $2,200.
At private four-year colleges, the average amount students actually paid was reduced from the published price of $21,235 to $11,600.
Nonetheless, even with aid and tax breaks, college students receive more than half of their financial aid in the form of loans--and aid in the form of loans is growing at a faster pace than grant aid.
Adding up all the costs
When tuition and fees, room and board, books and supplies, personal expenses, and transportation are added together, average published expenses for one year of college total $15,566 for a four-year public university, and $31,916 for a four-year private college.
The cost of not earning a college degree can be much greater than the cost of attending college.
And when all the costs for attending college for four years are added up, the average cost of a four-year college education is estimated at $69,108 for a public university and $141,703 for a private college (assuming an average 7% annual increase in expenses).
A college degree still pays off
Despite the price tag, the College Board stresses that the cost of not earning a college degree can be much greater than the cost of attending college.
The income gap between high-school graduates and college graduates has increased significantly over time.
Census Bureau statistics show that the median annual income of the average full-time worker with a bachelor's degree is a considerable 62% higher than the annual income of a worker with only a high-school diploma. Those with Master's degrees earn about twice as much as those with a high-school diploma.
The average cost of a four-year public university education is estimated at $69,108, and $141,703 for a private college.
According to this Census Bureau data, the average full-time year-round worker with a four-year college degree earned $49,900 in 2003. That's compared with the $30,800 the worker with only a high-school diploma earned.
The lifetime earnings difference
Over their working lives, as calculated by the College Board, this income gap means that typical college graduates can expect to earn about 73% more than typical high-school graduates. Likewise, those with advanced degrees can expect to earn two to three times as much.
Furthermore, the average college graduate recoups the cost of college in a relatively short period of time. By the age of 33, the typical college graduate who enrolled at age 18 earned enough to compensate for tuition and fees at the average public four-year college, as well as earnings foregone while attending college.