College Costs Increasing at a Slower Rate - But Pell Grants Are Getting Smaller

Recent reports on college cost trends offer a mixed bag of good and bad news for college students and their families.

The good news comes from the College Board's annual "Trends in College Pricing" report, which was released in late October. The study found that the cost of higher education is still rising in the U.S., but at the slowest rate in over five years.

According to the study, the average cost for tuition and fees at a public college or university now stands at $5,836, marking a 6.3 per cent increase from 2005. Once inflation is factored in, the net increase is only 2.5 per cent.

Tuition and fees at private colleges and universities now average $22,218 per year, 5.9 per cent higher than last year. Grants and scholarships reduce the average amount that students actually pay to $13,200 per year.

Two-year public colleges posted an even lower rate of growth, with average tuition and fees increasing by just 4.1 per cent, to $2,272. The College Board says that the net price of attending a community college actually decreased slightly for students receiving financial aid.

The College Board had less upbeat news on the state of federal financial aid. According to the College Board, total spending on Pell Grants decreased from $13.6 billion in 2005 to $12.7 billion in 2006. The average value of individual grants dropped, too, going from $2,474 last year to $2,354 this year. The College Board says that most of the decline is due to a change in the formula used to determine how much aid a student is eligible for based on assumptions about how much students and their families pay in state and local taxes.

Another trend noted in the College Board's annual report is that the number of students financing part of their education with private bank loans continues to increase. 10 years ago, private loans accounted for less than 5 per cent of all student borrowing. Today, they make up 20 per cent of all student debt.

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