At public 4-year institutions, the median price of attendance increased from $10,230 in 1999–2000 to $11,187 in 2001–02 (figure C). The median value of total aid (across all firsttime freshmen, including nonrecipients) at public 4-year institutions increased from $2,946 in 1999–2000 to $3,554 in 2001–02. The median value of total grants increased, but not meaningfully. The median percentage changes in aid over the 3-year period were higher than median percentage change in price of attendance: a median of 20 percent increase for total grants and 14 percent increase for total aid, compared to a median of 10 percent increase for price of attendance (table 4). The median percentage increases for both price of attendance and aid were higher than inflation over the 3-year period, which was about 5 percent. Together, the changes in price of attendance and in financial aid impacted the median net prices of public 4-year institutions. Median net price (all aid) increased from $7,216 in 1999–2000 to $7,712 in 2001–02; median net price (grants) increased from $8,463 to $9,056 (table 4). The median percentage changes in both types of net price over the 3-year period were lower than the median percentage change in price of attendance. In other words, increases in financial aid made it possible for net prices to increase at a slower rate than the price of attendance (sticker price) at public 4-year institutions.
For a private four-year college:
The median price of attendance for private not-for-profit, 4-year institutions increased from $20,157 in 1999–2000 to $22,259 in 2001–02 (figure D). Across all first-time freshmen, including nonrecipients, the median total aid at private not-for-profit, 4-year institutions increased from $8,425 in 1999–2000 to $9,280 in 2001–02, while the median value of total grants increased from $5,862 to $6,747. The median percentage change in total grants over the 3-year period, an 11 percent increase, was higher than the median percentage change in price of attendance, a 10 percent increase; both of these percentage increases were higher than the rate of inflation, a 5 percent increase (table 9). The changes in price of attendance and in
financial aid were reflected in changes in the median net prices of private not-for-profit, 4-year institutions. Median net price (all aid) increased from $11,400 in 1999–2000 to $12,514 in 2001–02; median net price (grants) increased from $13,762 to $14,954.
The executive summary continues discussing 2-year institutions as well. Steve provides this summary:
It makes the rather obvious point that it is much more useful to think about the affordability of higher education in terms of what students actually pay, rather than what the headline prices are. For private, 4 year institutions, the headline price for a year of education is $22, 259, but the median price actually paid is $14,954 (for 2001-2). Interestingly (p.53), there is more discounting for institutions characterized as “moderately selective” than there is for those that are “very selective.” Overall, there is less inflation in “net prices” than there is in sticker prices, which suggests that universities are sticking it to those with the greatest willingness to pay and the least bargaining power (that is, likelihood of going somewhere else), and redistributing it to those with the least willingness to pay and the most bargaining power.
In other words, price discrimination. But if this is price discrimination that favors those with the least ability to pay (yes, that’s not necessarily the same as least willingness), this would be the kind of price discrimination that a ProGrowthLiberal might endorse.