According to New NCES Study, Proprietary Higher Education Reduces Costs for Students by Over 10% Since 2007-08

by DLA Piper
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On December 3rd, the National Center for Education Statistics released the 2011-2012 National Postsecondary Student Aid Study.  This report focuses on the average price of attendance paid by students to attend institutions of higher education (price of attendance includes tuition, fees, books and materials, housing, food, transportation, and personal expenses), and also specifies the “net price” (price of attendance, less grants) and the out-of pocket expenses (price of attendance, less grants and other aid, such as loans or work study).

There are a few findings of note, as we try to show below, which is derived from Tables 1-3 in the study:

2011-12 – Full Time Undergraduate Students

 

Institution Type

  Public 2-year Public 4-year Private Nonprofit 4-year Private For-profit 2-year Private For-profit 4-year Private For-profit 2-year or more
Annual Price of Attendance $15,000 $23,200 $43,500 $29,700 $29,200 $29,200
Net Price $7,100 $14,300 $23,000 $18,600 $16,600 $17,100
Net “Out of Pocket” $6,000 $9,600 $15,000 $12,400 $9,000 $9,900

2007-08 – Full Time Undergraduate Students

 

Institution Type

  Public 2-year Public 4-year Private Nonprofit 4-year Private For-profit 2-year or more
Annual Price of Attendance $13,600 $20,400 $38,800 $32,900
Net Price $6,400 $13,200 $22,300 $20,300
Net “Out of Pocket” $5,600 $8,800 $14,200 $11,500

From the chart below, what we see is that while higher education overall has increased the cost of attendance over the last four years, for-profit institutions have actually reduced the cost of attendance:

 

Institution Type

  Public 2-year Public 4-year Private Nonprofit 4-year Private For-profit 2-year or more
2011-12 Annual Price of Attendance $  15,000.00 $  23,200.00  $  43,500.00  $  29,200.00
2007-08 Annual Price of Attendance $  13,600.00 $  20,400.00  $  38,800.00 $  32,900.00
Difference  $    1,400.00  $    2,800.00  $    4,700.00  $  (3,700.00)
Percentage Change

10.29%

13.73%

12.11%

-11.25%

         
2011-12 Net Price of Attendance  $    7,100.00  $  14,300.00  $  23,000.00 $  17,100.00
2007-08 Net Price of Attendance  $    6,400.00  $  13,200.00  $  22,300.00  $  20,300.00
Difference  $        700.00  $    1,100.00  $        700.00  $  (3,200.00)
Percentage Change

10.94%

8.33%

3.14%

-15.76%

Note, I have not considered students as a whole because part time students, which are disproportionally located at for-profit and 2-year public colleges, would have the effect of lowering the average and net price price.  So, by looking at full-time student, we get a fairly apples-to-apples comparison.

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The reduction in cost of attendance at for-profit schools, relative to the industry, is fairly dramatic.  Looking at net price – which is fairer to private non-profits which commit substantial sums to institutional scholarship – we see a significant reduction in the cost gap between for-profit schools and public colleges.  In fact, on average, a four-year public college will only cost $2,300 less (net price) than one at a for-profit 4-year college.

There are, no doubt, reasons for all of this.  Declining state expenditures on higher education have forced public institutions to raise tuition.  On the other hand, proprietary schools, and to a lesser extent, private non-profit institutions, have had reasons to reduce price or commit to large institutional scholarships to attract students in the face of declining student demand.  It is, however, a positive story that proprietary institutions have responded to consumer demand and reduced price.  I do wonder how much further price would be lowered if the 90/10 rule were repealed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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