Community College Tuition and Financial Aid: Current Trends

ERIC Clearinghouse for Community Colleges
By Michelle D. Plecha
EDO-JC-03-010
December, 2003

For over 100 years community colleges have offered postsecondary education at a low cost. Today, they educate almost half the student enrolled in higher education. Community colleges’ open access admission policies, coupled with their low-cost tuition, have accounted for much of the gains in the total student population served. The American Association of Community Colleges (AACC) (2000) reported that in 1997-98 public community college tuition averaged less than half the tuition paid at public four-year colleges and about one-tenth of the tuition at private four-year colleges. However, budget crises in many states are now forcing some community colleges to consider turning away students, challenging the long-standing tradition and mission of open access (Sheldon, 2003). In fiscal year 2002-03, fourteen states’ appropriations for higher education operating expenses decreased over the previous fiscal year, and the outlook for the current academic year is even bleaker with 36 states anticipating budget deficits (Hebel, Schmidt, & Slingo, 2002). Although in the current fiscal climate all public higher education sectors are facing cuts in their state appropriations, two-year colleges are likely to be the most affected sector of higher education because they are more dependent on revenue from the state and have fewer funding options than four-year institutions (Education Commission of the States, 2000). In light of the current fiscal situation, this Digest explores trends in tuition, fees, and financial aid, and concludes by examining how these trends challenge the traditional open access mission of community colleges.

Tuition and Fees

Although community colleges rely on federal, state, and local funding, as well as tuition and donations, for revenue, almost half the operating budget of community colleges comes from state and federal support (Sheldon, 2003). According to an AACC (2000) report on college financing, revenue from state funding is the key budget variable for community colleges; generally, where state support is high, tuition is low. Discussed below are trends in community college tuition over the last 25 years.

According to a recent report from the College Board (2001) public community college revenue from tuition and fees jumped from 16 percent in 1980 to 21 percent in 1996, resulting in an increase in average annual tuition from $355 in 1979-80 to $1,239 in 1995-96. The American Association of Community Colleges (2003) estimates for the 2003-04 academic year an average annual tuition of $1,560 for a full-time student (12 semester hours per term), an increase of almost $80 (11.5 percent) per semester compared to the previous year. More than 25 community college systems raised their tuition between 10 and 20 percent for the 2003-04 academic year (Arnone, 2003), and some states’ tuition jumped 30 percent and even close to 40 percent for the 2003-04 academic year (AACC, 2003). Bovbjerg (2000) reports that, based on research conducted by the College Board from 1995-96 to 1999-00, public two-year college tuition has risen 25 percent, a rate twice that of the Consumer Price Index (CPI). Not all states have experienced the same tuition increases. For example, increases for the 2003-04 year were as small as 3 percent in Georgia and Louisiana and as large as 42 percent in Virginia. States with tuition increases in excess of 20 percent are California, Virginia, New Mexico, Louisiana, Kentucky and Oregon (AACC, 2003).

U.S. Department of Education data show that tuition and fees have risen at a faster rate than the increase in total revenues, indicating shifts in costs toward individual students (Merisotis and Wolanin, 2000). Hikes in tuition can affect a number of student behaviors, including enrollment rates, graduation rates and borrowing behavior. As the cost of college goes up, students will either find a way to pay for their education or choose not to attend. Many students will cover the increasing cost of tuition with financial aid.

Financial Aid

When tuition rises, students must find additional means of financing their education. Options for students include increasing their work hours, getting more money from their parents, applying for more financial aid, and taking out more loans (Heller, 1996). According to NCES, fifty-five percent of the16.5 million undergraduates enrolled during 1999-00 received some type of financial aid and almost 40 percent of full-time students at two-year colleges received aid (Snyder, 2003). Although students receive a variety of different types of aid from federal, state, local, and institutional sources, over the past 20 years research indicates that students are borrowing more and receiving fewer grants and fellowships that do not need to be paid back (Strauss, 2001). According to a study conducted by the U.S. Department of Education in 1997 community college students borrowed more than $1.5 million in fiscal year 1996 through federal loan programs, a growth of 135% since 1990 (Merisotis & Wolanin, 2000).

Tuition Increase and Access to Higher Education

A number of researchers have noted that when tuition increases, students, especially those with fewer resources, are less likely to attend college. Heller (1996) examined the relationship between rising tuition and higher education enrollment, and in every study he reviewed, he found an inverse relationship between tuition and enrollment rates; a tuition increase of $100 dollars results in a .5 to 1 percent drop in enrollment. Further, during the last economic downturn in California, a study conducted by the San Diego Community College district showed that rising tuition was in part responsible for an 8 percent decline in student enrollment within the district (San Diego Community College District, 1993). Similar enrollment decreases have been noted in Florida and Texas (Brann, 1995; Texas State Legislature, 1992).

The swelling cost of college has important implications for access to higher education. Community colleges have historically provided access to a number of students who would not have otherwise been able to attend college (Sheldon, 2003). More than any other segment of higher education, community colleges offer open admissions, low cost tuition, and geographical access to students that are place bound, working full-time, underprepared academically, single parents, or lower income. Many students’ hopes for a four-year degree begin at a community college. As Sheldon (2003) states, “Clearly, open access in community colleges has resulted in postsecondary opportunities for a significant number of undergraduates with diverse backgrounds and needs.” Community colleges, sometimes called democracy’s colleges, are considered an educational and economic equalizer in our country. Certainly the current trends in tuition and financial aid will make access to a college education more difficult and this will have important implications for individuals as well as for society as a whole.

Conclusion

In times of financial crisis, community college will likely continue to increase tuition and fees to cover their operating costs. Research shows that where state budgets are plentiful tuition is low and vice versa (AACC, 2000). Given the national decrease in state support for higher education, community college tuition is expected to increase an average of 11.5 percent for the 2003-04 academic year (AACC, 2003). What does the increasing cost of attending a community college mean for students? We know that when tuition increases, students tend to rely more on financial aid to cover the cost (AACC, 2000). However, some students who do not or cannot rely on financial aid simply do not attend college (Heller, 1996). In fact, research shows that community college enrollment often declines when tuition increases (Heller, 1996). Therefore, the rising cost of education can be considered an indirect threat to the community college’s traditional mission of open access. Since access to four-year degrees for students from non-traditional backgrounds often starts at the two-year institution, these students may not get another chance at a college education. Community colleges have a tough challenge ahead of them as they struggle maintain financial solvency and to maintain their open access mission.

References

American Association for Community Colleges-AACC (2000). Student costs and college finance. Retrieved September 12, 2003 from http://www.aacc.nche.edu/Content/NavigationMenu/AboutCommunityColleges/Trends_and_Statistics/CostAndFinancialInfo/Cost_And_Financial_Info.htm.

American Association for Community Colleges-AACC (2003). Summary analysis: 2003 community college tuition survey. Retrieved August 15, 2003 from http://www.aacc.nche.edu/Template.cfm?Section=NewsandEvents&template=/ContentManagement/ContentDisplay.cfm&ContentID=11101&InterestCategoryID=272.

Arnone, M. (2003, August 15). Students face another year of big tuition increases in many states. [Electronic Version]. The Chronicle of Higher Education. Retrieved August 21, 2003 from http://chronicle.com/prm/weekly/v49/i49/49a02401.htm.

Brann, H. (1995). Analysis of the enrollment loss among first-time-in-college students attending Miami-Dade community college (Research Report No. 95-07R). Miami-Dade, FL: Miami-Dade Community College, Office of Instructional Research. (ERIC Document Reproduction Service No. ED390509).

Bovbjerg, B., D. (2000). College tuition and fees: Changes in the 1995-96 to 1999-2000 period compared with median household income. Unpublished manuscript. (ERIC Document Reproduction No. ED446679).

College Board (2001). 2001-2002 college costs: Keeping rising prices in perspective. Retreived August 21, 2003 from http://www.collegeboard.com/article/1,,6-29-0-4494,00.html?orig=sch.

Education Commission of the States, Center for Community College Policy. (2000). State funding for community colleges: A 50 state survey. Washington, DC: Office of Educational Research and Improvement (OERI). (ERIC Document Reproduction Service No. ED449863).

Hebel, S., Schmidt, P., & Selingo, J. (2002, January 11). States face year of famine after decade of plenty. 36 legislatures must deal with deficits, and higher education may be a lower priority. [Electronic Version]. The Chronicle of Higher Education. Retrieved September 2, 2003 from http://chronicle.com/prm/weekly/v48/i18/18a02001.htm.

Heller, D., E. (1996). Tuition, financial aid, and access to public higher education: A review of the literature. Unpublished manuscript. (ERIC Document Reproduction No. ED406906).

Merisotis, J. & Wolanin, T. (2000). Community college financing: Strategies and challenges. New expeditions: Charting the second century of community colleges. Issues paper No. 5. (ERIC Document Reproduction No. ED439737).

San Diego Community College District, Research and Planning Office (1993). Increasing). Increasing enrollment fees: Equity? Or the allocation of opportunity? San Diego, CA: Author. (ERIC Document Reproduction Service No. ED362223).

Snyder, T. (2003). Digest of education statistics 2002. (NCES Report No. 2003-060). Washington, DC: National Center for Education Statistics.

Texas State Legislature, House Committee on Higher Education. (1992). A report of the committee on higher education to the house of representatives 73^rd legislature. Austin, TX. (ERIC Document Reproduction Service No. ED357716).

Sheldon, C. Q. (2003). ERIC review: The impact of financial crises on access and support services in community colleges. Community College Review, 31(2), 1-17.

Strauss, L. (2001). Trends in community college financing: Challenges of the past, present, and future. ERIC Digest No. EDO-JC-01-10. (ERIC Document Reproduction Service No. ED467983).

This project has been funded at least in part with Federal funds from the U.S. Department of Education under contract number ED-99-CO-0010. The content of this publication does not necessarily reflect the views or policies of the U.S. Department of Education nor does mention of trade names, commercial products, or organizations imply endorsement by the U.S. Government. ERIC Digests are in the public domain and may be freely reproduced.