Table of Contents

The price of college tuition rose sharply in the most recent academic year, driven in large measure by steep cost increases at public institutions, according to a new report from the College Board.

For the fifth straight year, tuition and fees at public colleges and universities rose at a higher rate than private, nonprofit institutions, an increase attributable in part to state funding for public schools that has not kept up with the growing number of student enrollments.

Nationally, in-state tuition and fees at four-year public colleges and universities increased 8.3 percent from the 2010-2011 academic year to 2011-2012, compared to a 4.5 percent increase at nonprofit, private four-year schools over the same period. In the most recent academic year, average in-state tuition at public schools was $8,244, compared to $28,500 at private schools.

Total costs, including room and board, as well as tuition and fees, increased 6 percent for in-state public schools to $17,131 per year. Total costs at nonprofit private schools increased 4.4 percent, to $38,589.

Tuition and fees at out-of-state, public four-year schools increased 5.7 percent this year to an average of $20,770, while overall costs jumped 5.2 percent, to $29,657.

California tops the list

The College Board report also highlighted wide swings in tuition rates among the states, and found that while more students are taking advantage of federal programs to help finance a college education, the price hikes are becoming increasingly difficult to shoulder amid a sluggish economy.

"While the importance of a college degree has never been greater, its rapidly rising price is an overwhelming obstacle to many students and families," College Board President Gaston Caperton said in a statement. "Making matters worse is the variability of price from state to state."

California, for instance, which accounts for 10 percent the nation's students enrolled in full-time, public four-year schools, posted a whopping 21 percent increase in average in-state tuition and fees. According to the College Board, if California were excluded from the aggregate data, the nationwide increase in tuition and fees would have been 7 percent rather than 8.3. Close behind in proportional increases were Arizona and Washington, whose schools hiked their average tuition and fees by 17 percent and 16 percent, respectively.

At the low end of the rate increase were Connecticut and South Carolina, posting a roughly 2.5 percent annual rise.

Coping with rising tuition

The news isn't all bad for students heading into college, however. While the tuition rises are sharp, students increasingly have been tapping into tax credits and grant aid to help cover the costs.

According to the College Board, students are estimated to have received tax credits and deductions for the 2009-2010 and 2010-2011 academic years of $14.8 billion through the American Opportunity Tax Credit, implemented in 2009. That marks a dramatic uptick of more than 80 percent in inflation-adjusted dollars from the $7 billion that students received in subsidies in the 2007-2008 academic year.

Over the same period, federal student loans and grant aid extended to the average student increased by about 30 percent in inflation-adjusted dollars, with grant aid continuing an annual increase while student loan borrowing dipped slightly in the most recent year.

The College Board's advocacy arm, which conducted the study, emphasized the squeeze that many students and their families are feeling from the tuition increases.

"In an era of persistently high unemployment, family incomes that fail to keep up with inflation, and savings that have been eroded by declining stock market values, colleges are relying on tuition for an increasing share of their revenues," said Skidmore College Professor of Economics Emerita Sandy Baum, co-author of the College Board Advocacy and Policy Center's Trends in Higher Education series. "At a time when students and families are ill-equipped to manage additional expenses, student financial aid is more important than ever."

Those same concerns drove the U.S. Department of Education last month to issue new rules that aim to help students with the repayment of their federal loans, including caps on monthly payment obligations and earlier eligibility for debt forgiveness.