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Rising Cost of College Tuition - 10/6/14

As everyone knows, college costs have been rising for decades, including at the nation’s public colleges, which are attended by roughly 80 percent of undergraduates according to Professor Susan Dynarski at the University of Michigan.  Tuition at public colleges has expended more rapidly than inflation for decades.  From 1988 to 2013, average tuition at 4-year public colleges doubled even after adjusting for inflation. 

But Professor Dynarski offers a surprising fact – public colleges remain just as resource constrained as they were many decades ago.  One might think that the nation’s public colleges would be flush with cash since they have boosted charges so much.  That is apparently not true.  Public colleges are collecting about the same revenue per student today as they were 25 years ago.  In 1988, educational revenue per full time equivalent student at public colleges was $11,300 in inflated-adjusted terms; in 2013 it was $11,500. 

That represents just a 1.8 percent increase in real terms in 25 years.  How is this possible?  Public colleges depend on two primary sources of revenues – tuition from students and appropriations from their state legislatures.  In 1988, state legislatures gave their public colleges an average of $8,600 per student.  Today, states supply only about $6,000.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.