Spending, Subsidies, and Tuition:
Why Are Prices Going Up?
What Are Tuitions Going to Pay For?
A Delta Data Update
2000–2010
Spending, Subsidies, and Tuition:
Why Are Prices Going Up?
What Are Tuitions Going to Pay For?
A Delta Data Update, 2000–2010
Steven Hurlburt and Rita J. Kirshstein
1000 Thomas Jefferson Street, NW
Washington, DC 20007-3835
202.403.5000 | 800.356.2735
This is one in a series of data briefs developed by the Delta Cost Project at AIR using data from the
IPEDS Analytics: Delta Cost Project Database 1987–2010, which was released on August 14, 2012, by
the U.S. Department of Education, National Center for Education Statistics. The intent of these briefs
is to update key tables and figures from Trends in College Spending: Where does the money come from?
Where does it go? What does it buy?1
This data brief focuses on the relationship between spending, subsidies, and tuition between 2000 and
2010, with particular attention paid to changes between 2009 and 2010. By examining the changes in
education and related (E&R) spending as they relate to changes in tuitions and institutional subsidies,
this brief seeks to address whether tuitions increase to cover additional institutional spending or to
make up for declines in other revenues. Key metrics discussed include the following:
and tuition share of costs, the relative portion of E&R costs paid by students through tuition
•Subsidy
revenues versus those that are subsidized by the institution
spending changes compared to changes in tuitions to determine whether rising tuitions are primarily
•E&R
explained by increased spending or cost shifting
All the Delta measures are reported in 2010 constant dollars and adjusted for changes in enrollments
by dividing dollar amounts per full-time equivalent (FTE) student enrollment. A table presenting FTE
enrollment changes is included in the supplemental table section of this update.
Primary Findings on Spending, Subsidies, and Tuition,
2000–2010
In public and nonprofit private colleges and universities, revenues from student tuition and fees do
not cover the full cost of educating students (i.e., E&R costs); the difference comes from a general
institutional subsidy. In public institutions, the subsidy share of cost is largely underwritten by state
and local appropriations; in private nonprofit institutions, it is underwritten by tax-exempt institutional
resources, either earnings on endowments or private gifts. Figures 1 and 2 show the average dollar
amount and percentage of E&R costs covered by net tuition revenues and institutional subsidies.
Figure 1 shows the following:
subsidies per student at public institutions declined in 2010, dropping to their lowest level in
•Institutional
the past decade for most public institution types. Across public four-year institutions, average subsidies
per student declined by 7 to 9 percent ($518 to $659 per FTE student). Community colleges suffered
the largest one-year declines, as average subsidies dropped by nearly $1,000 (about 14 percent) per
student, in the face of continuing steep enrollment increases. Looking across the 2000 to 2010 period,
subsidy levels reached a 10-year low at public research, master’s, and community colleges; among public
bachelor’s institutions, subsidies in 2010 averaged close to 2005 levels.
See http://deltacostproject.org/resources/pdf/Trends2011_Final_090711.pdf.
1
Spending, Subsidies, and Tuition: Why are prices going up? What are tuitions going to pay for?
|1
the 2000 to 2010 period, average subsidies per student declined by close to $2,000 in public
•Over
research universities and community colleges, while subsidies in public master’s and bachelor’s
institutions declined by approximately $1,700 and $1,400, respectively.
subsidies in the private research sector saw a one-year decline between 2009 and 2010,
•Although
over the entire decade the subsidy share of costs increased by almost 30 percent—the lone exception
to the pattern of subsidy reductions elsewhere in higher education.
Figure 1
Institutional subsidies continued to drop in 2010, in BOTH public and private institutions.
Average education and related spending per FTE student, by net tuition and subsidies, AY 2000–2010 (in 2010 dollars)
$40,000
$30,000
$20,000
$7,999 $7,340
$9,287 $7,596
$0
$7,513 $6,995
$7,610 $6,206 $6,535 $5,880
$8,369 $6,986
$5,469 $7,116 $8,106 $8,611
$4,114 $5,365 $5,961 $6,360
$3,611
$4,759 $5,471
$5,746
$2,324
$2,831 $3,130 $3,269
’00
’00
’00
’05
’09
Bachelor’s
’10
’00
’05
’09
Community
colleges
$10,000
’05
’09
Research
’10
’05
’09
Master’s
’10
$8,161 $6,868 $7,227
$6,233
Public institutions
Average subsidy
$40,000
Net tuition
$15,380 $14,350
$13,109
$30,000
$11,168
$20,000
$2,661
$2,028
$2,003
$1,632
$7,464
$7,327
$7,546
$6,869
$10,000
$0
$17,509 $19,277 $20,560 $20,718
$12,312 $13,843 $14,940 $15,192
$11,502 $12,916 $14,086 $14,257
’00
’00
’00
’05
’09
Research
’10
’05
’09
Master’s
’10
Private institutions
Source. IPEDS Analytics: Delta Cost Project Database 1987–2010, 11-year matched set.
2
|
Delta Cost Project
’05
’09
Bachelor’s
’10
’10
Figure 2 shows the following:
revenues covered more of educational costs in 2010 than at any point in the last decade. The
•Tuition
proportion of costs covered by tuition increased in both public and private institutions between 2009
and 2010. The increase ranged between 3 and 4 percentage points in public colleges and universities
and between 2 and 3 percentage points in private colleges and universities.
research and master’s institutions, students covered over one half of the total E&R costs,
•Inandpublic
in public bachelor’s colleges, tuition share of E&R was close to one half.
tuition share of costs is always higher in private institutions because of the lack of state and local
•The
appropriations. The tuition share of E&R costs ranged from 73 percent in private bachelor’s colleges to
76 percent in private research institutions to 92 percent in private master’s institutions.
in the subsidy share of E&R spending were particularly dramatic in public colleges and
•Changes
universities between 2000 and 2010. The subsidy decline ranged from 13 percent in community
colleges to 18 percent in public research universities.
also declined in private institutions over this 10-year period but not to the extent of public
•Subsidies
institutions. Declines ranged from 4 percent in private research universities to 8 percent in private
bachelor’s institutions.
Spending, Subsidies, and Tuition: Why are prices going up? What are tuitions going to pay for?
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Figure 2
Tuition revenues continued to shoulder a larger share of costs.
Net tuition and subsidy shares of education and related costs, AY 2000–2010 (in 2010 dollars)
100%
61.6%
49.6%
47.7%
43.8%
64.2%
52.8%
51.5%
47.1%
67.8%
57.2%
55.4%
52.5%
76.8%
69.4%
68.0%
63.8%
38.4%
50.4%
52.3%
56.2%
35.8%
47.2%
48.5%
52.9%
32.2%
42.8%
44.6%
47.5%
23.2%
30.6%
32.0%
36.2%
’00
’05
’09
Research
’10
’00
’05
’09
Master’s
’10
’00
’05
’09
Bachelor’s
’10
’00
’05
’09
Community
colleges
’10
31.9%
27.5%
80%
60%
40%
20%
0%
Public institutions
100%
27.9% 26.3% 26.1% 24.4%
15.4%
10.9%
10.4%
8.2%
35.3%
30.3%
Tuition share
of E&R costs
80%
60%
40%
20%
0%
72.1%
73.7%
73.9%
’00
’05
’09
Research
75.6%
84.8%
89.1%
89.6%
’10
’00
’05
’09
Master’s
91.8%
64.8%
68.1%
’10
’00
’05
’09
Bachelor’s
Private institutions
Source. IPEDS Analytics: Delta Cost Project Database 1987–2010, 11-year matched set.
4
|
Subsidy share
of E&R costs
Delta Cost Project
69.7%
72.5%
’10
Figure 3 compares shifts in net tuition, state and local appropriations, and E&R spending between 2009
and 2010. This analysis provides insights into whether tuition increases are compensating for declines in
state appropriations and/or increases in E&R spending.
in net tuition in 2010 resulted from cost shifting, not from increased spending. Among public
•Increases
institutions, increases in net tuition revenue per student between 2009 and 2010 were considerably
less than the declines in state and local appropriations in this same time period. Tuition increases per
student made up over 60 percent of the cuts in state and local appropriations in public research and
master’s colleges, about 30 percent in public bachelor’s colleges, and only 14 percent in community
colleges. In addition, all public institutions cut E&R spending per student between 2009 and 2010.
These cuts were also less than the declines in state and local appropriations.
the period between 2008 and 2009, private institutions reduced E&R spending between 2009
•Unlike
and 2010. Tuition increases in private research and bachelor’s institutions were smaller than spending
cuts, but in private master’s institutions, tuition increases were larger than the decline in E&R spending.
With the exception of the private master’s institutions, students were paying more in both public and
private colleges and universities in 2010, but these dollars did not translate into new spending.
Figure 3
Tuitions increased primarily to replace institutional subsidies—not to enable new spending.
Changes in net tuition, state and local appropriations, and education and related spending per FTE student, AY 2000—2010
(in 2010 dollars)
$505
‐$818
‐$154
$399
‐$618
‐$256
$275
‐$927
‐$243
$139
‐$1,014
‐$855
$157
‐$873
$253
‐$118
$171
‐$506
$0
$200 $400 $600 ‐$1,200 -$1,000 -$800 ‐$600 ‐$400 ‐$200 $0
Net tuition
State and local appropriations
-$1,000 -$800 ‐$600 ‐$400 ‐$200 $0
Education and related spending
Source. IPEDS Analytics: Delta Cost Project Database 1987–2010, 11-year matched set.
Spending, Subsidies, and Tuition: Why are prices going up? What are tuitions going to pay for?
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Supplemental Tables
Figure S1
FTE enrollment, AY 2000-2010
2000
2005
2009
2010
Public research
2,996,782
3,346,624
3,561,280
3,669,834
22.5%
3.0%
Public master’s
1,722,723
1,950,242
2,092,926
2,163,384
25.6%
3.4%
237,245
274,466
290,398
307,902
29.8%
6.0%
2,843,154
3,496,802
3,801,306
4,251,990
49.6%
11.9%
Private research
837,277
924,412
977,558
1,003,533
19.9%
2.7%
Private master’s
790,952
942,520
1,027,568
1,056,664
33.6%
2.8%
Private bachelor’s
595,317
664,245
695,177
716,384
20.3%
3.1%
Public bachelor’s
Public community colleges
Source. IPEDS Analytics: Delta Cost Project Database 1987–2010, 11-year matched set.
6
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Delta Cost Project
10-year change
1-year change
Spending, Subsidies, and Tuition: Why are prices going up? What are tuitions going to pay for?
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About the Delta Cost Project
The Delta Cost Project at American Institutes for Research provides
data and tools to help higher education administrators and
policymakers improve college affordability by controlling institutional
costs and increasing productivity. The work is animated by the belief
that college costs can be contained without sacrificing access or
educational quality through better use of data to inform strategic
decision making. For more information about the Delta Cost Project,
visit www.deltacostproject.org.
About American Institutes for Research
Established in 1946, with headquarters in Washington, D.C., and
offices across the country, American Institutes for Research (AIR) is
an independent, nonpartisan, not-for-profit organization that conducts
behavioral and social science research, and delivers technical assistance
both domestically and internationally in the areas of health, education,
and workforce productivity. As one of the largest behavioral and social
science research organizations in the world, AIR is committed to
empowering communities and institutions with innovative solutions
to the most critical education, health, workforce, and international
development challenges.
AIR currently stands as a national leader in teaching and learning
improvement, providing the research, assessment, evaluation, and
technical assistance to ensure that all students—particularly those
facing historical disadvantages—have access to a high-quality,
effective education. For more information about American Institutes
for Research, visit www.air.org.
1000 Thomas Jefferson Street, NW
Washington, DC 20007-3835
202.403.5000 | 800.356.2735
Copyright © 2012 American Institutes for Research. All rights reserved. 2813c_09/12