Average undergraduate tuition and fees are rising faster than inflation in Texas.
The cause? There are several:
- University spending, particularly in non-instructional areas, has increased.
- Staffing and salary spending in administrative and other non-instructional sectors have grown.
- State appropriations have declined.
But some new trends, such as competency-based courses and massive open online courses (MOOCs), could help control the expense of higher education.
Tuition Keeps Increasing
Despite the positive returns that come with a college degree, the required investment has increased dramatically, with average undergraduate public tuition and fees rising faster than inflation. In Texas, average in-state public university tuition and fees rose by 90 percent between 2003 and 2012.
In the same period, healthcare prices rose by 40 percent; median income rose by 32 percent; inflation rose by 25 percent; and housing prices rose by 21 percent.
Sources: Texas Higher Education Coordinating Board, U.S. Census Bureau, Bureau of Labor Statistics, Texas Comptroller of Public Accounts.26
Texas' in-state tuition and fees have risen faster than those of other populous states, increasing by 344 percent from 1990 to 2010.
In 2003, the Texas Legislature deregulated tuition, allowing universities to set tuition rates themselves. Prior to 2003 they had been set by the Legislature.
Despite this high growth, at $8,522, Texas tuition and fees for the 2013-14 school year were about 4 percent below the U.S. average of $8,893.
Source: Delta Cost Project, Texas Comptroller of Public Accounts.28
See tuition and fees at Texas public universities and community colleges.
Public versus Private University Tuition Costs
Private colleges and universities, unsurprisingly, tend to be more expensive than public institutions — between three and four times more expensive — both nationwide and in Texas.
Source: The College Board.29
- It should be noted that the published tuition and fees stated above reflect the prices charged by universities before taking financial aid into consideration.
- Net price reflects what students actually pay after accounting for financial aid such as scholarships, grants and federal tax credits and deductions.
- Estimated net tuition and fees for private nonprofit four-year institutions was $12,460 in 2013-14, compared to $30,090 in published tuition and fees.30
A growth-rate comparison for public versus private colleges yields differing trends on the national and Texas levels.
According to data from the College Board, U.S. public university tuition and fees growth has outpaced such growth at private colleges during the past decade.
U.S. public four-year university tuition and fees grew from $6,322 to $8,893 from 2004-05 to 2013-14, while private nonprofit tuition and fees grew from $24,722 to $30,094.
Sources: The College Board.31
Texas private university tuition and fees, in contrast, have grown more quickly than public university tuition and fees in the last few years.
Texas public four-year university tuition and fees grew from $6,259 to $8,522 from 2004-05 to 2013-14, while private non-profit tuition and fees rose from $20,440 to $29,750.
Sources: The College Board.32
Net Price Calculators
With tuition rising faster than other expenses, it's becoming all the more important for students to have the tools they need to estimate college costs. Net price calculators are online tools that can help students and their parents get a full picture of what a degree will cost, based on factors such as family income, household size and dependency status, to estimate tuition and fees, room and board and net price after grants and scholarships.
See sample net price calculator output below:
Note: Sample output created by custom query to Texas Higher Education Coordinating Board's statewide net price calculator. Output results will vary depending on personal information entered into calculator.
Visit the Texas Higher Education Coordinating Board's statewide net price calculator to estimate your college costs.
Since fall 2011, all colleges that enroll first-time, full-time undergraduates and offer federal financial aid have been required to provide net price calculators on their websites. In addition, the Texas Higher Education Coordinating Board offers a statewide net price calculator that draws on financial data submitted by Texas colleges.
Such calculators are not always easy to find, though; a recent study found that many universities post them on parts of their websites unrelated to costs and financial aid.33 Even when posted in context with other financial materials, the links often are not positioned prominently on the page.
Our review of public Texas university websites found that universities do place the net price calculators within the financial aid sections of their websites, but they are often near the bottom of a list or grouping of other links.
See our recommendation on net price calculators.
Source: Texas Comptroller of Public Accounts.34
See full listing of Texas public universities' net price calculators.
What Tuition and Fees Pay For
In addition to how much they are paying, students should know what their tuition and fees are going toward.
Public universities and colleges in Texas have broad authority to set designated tuition levels and to budget and spend tuition revenues as they see fit. Fees must be used for their stated purposes.
Many universities, such as Texas A&M University, make explanations for various fees available on their websites.
Information on what tuition actually buys, however, is often more difficult to find. Some universities, such as UT-Austin, are starting to present categorical cost breakdowns for students, but this is uncommon.
Why Has Tuition Increased?
In Texas, some often-cited data suggest that administrative costs have not risen significantly in recent years.
American Institutes for Research data show that from 1990 to 2010, Texas public universities' administrative costs as a share of educational and related expenses remained fairly steady, hovering between 28 and 32 percent, with the 2010 share at 30 percent.35
Sources: Texas Higher Education Coordinating Board, Texas Comptroller of Public Accounts.36
Note: Decrease in spending on capital outlay from current fund sources may be partially due to data collection system change in 2003.
See operating expense category definitions.
Common definitions for administrative costs, however, typically exclude functions such as student services, which are clearly not instruction or research activities — and include some activities, such as student aid administration and student records, which many would regard as administrative. At any rate, it is clear that the fastest-growing categories of spending are non-instructional.
Spending in such categories rose more quickly than instruction, research and public service spending from 1994 to 2013.
Under state law, Texas public universities and colleges have broad authority to budget and spend tuition revenues as they see fit. For example, Chapter 51 of the Texas Education Code gives boards of regents at institutions of higher education the authority to control funds from various revenue streams and to budget those funds.
According to the Texas Higher Education Coordinating Board (THECB), Texas public universities' operational spending per full-time student equivalent (FTSE) rose by an inflation-adjusted 20.8 percent from fiscal 1994 through 2013.
- The largest growth occurred in student services (137 percent) and academic support (99.4 percent).
- The student services category includes admissions and registrar offices but can also include activities such as cultural events and intramural athletics.
- Academic support includes items such as galleries, deans' salaries and technical support.
- Student services and academic support represent relatively small shares of total operating use spending per FTSE.
- Even so, these shares grew from fiscal 1994 to 2013. Student services rose from 3 percent to 6 percent, while academic support went from 6 percent to 10 percent.
Sources: Texas Higher Education Coordinating Board, Texas Comptroller of Public Accounts.37
Though student services and academic support are the fastest-growing spending categories, currently there are no standardized measures in place to compare the benefits of these activities to their costs.
See our recommendation on student services and academic support activities.
Universities could compare students' academic performance before and after implementation of certain student services, for example.
Staffing for various employee categories provides another way to examine how higher education resources are allocated.
American Institutes for Research data indicate that from 1990 to 2010, administrative staffing per full-time student equivalent (FTSE) at Texas public universities increased more quickly than instruction and research positions:
Sources: Delta Cost Project, Texas Comptroller of Public Accounts.38
See staffing category definitions.
Examination of university employee salary spending also reflects faster growth in categories that include some administrative-type positions, such as student services and academic support. The following inflation-adjusted changes occurred in wage and salary expenditures per full-time student equivalent (FTSE) at public Texas four-year institutions from 1990 to 2010:
Changes in Salary Spending per Student, Public Texas Four-Year Institutions,
1990-2010 (Adjusted for Inflation)
|Salary Spending Category
|Instruction || 29 percent |
|Research ||65 percent |
|Public Service ||53 percent |
|Academic Support ||93 percent |
|Student Services ||142 percent |
|Institutional Support ||55 percent |
Sources: Delta Cost Project, Texas Comptroller of Public Accounts.39
Note: Calculations for salary spending categories created from matched dataset for 1990 to 2010. Instruction salaries and wages include compensation paid for instructional positions, including faculty, part- time and full- time employees and student employees of the colleges, schools, departments and other instructional divisions of the institution, and for departmental research and public service that are not separately budgeted. Public service salaries and wages include compensation for employees who provide non-instructional services beneficial to individuals and groups external to the institution, such as conferences, institutes, general advisory services and reference bureaus.
- Salary spending for student services and academic support rose the fastest, at 142 percent and 93 percent, respectively.
- Salary spending for instructional positions, such as full-time and part-time faculty, saw the least growth, at 29 percent, suggesting that faculty salaries are not a primary driver of tuition costs.
- Though the increases in compensation spending are partly due to staffing increases, salary growth likely accounts for at least some of the uptick.
Salaries for academic deans, for example, have outpaced inflation in the past several years, according to national data from the College and University Professional Association for Human Resources.
- Growth in median salaries for 28 of 41 deans' positions surveyed (68 percent) outpaced inflation from 2007 to 2013.40
- The fastest-growing median salaries during these years were for deans of government and public affairs and deans of computer and information sciences, both of which grew by 27 percent in inflation-adjusted dollars.41
State Support Declines
The rise in tuition costs during the past few decades coincided with declines in state appropriations. State support has not kept pace with enrollment growth and inflation.
Sources: Delta Cost Project, Texas Comptroller of Public Accounts.42
While state appropriations fell, the cost burden to students and families increased via higher tuition and fees. In Texas, the share of public university revenue from tuition rose from 10 percent to 22 percent on a per-student basis from 1990 to 2010.43
Despite the decline in state appropriations, total revenues including all funding sources increased during those years. Federal sources other than Pell grants, however, are generally used for research purposes rather than student instruction.
It should be noted that student tuition and fees do not cover the full cost of instruction in any state. Students pay only a share of that cost — a share that varies considerably from state to state — with the remainder largely covered through state appropriations.
Constitutional Endowment Funds
In addition to direct state appropriations, institutions of higher education in Texas are also eligible to receive funding from other sources such as constitutional endowment funds. Constitutional funds benefit particular groups of institutions depending on the specific fund purpose or constitutional authority.
Read More >>
- The Available University Fund (AUF) consists of the "surface income and investment proceeds" from the Permanent University Fund, a permanent state endowment comprising more than 2 million acres of land.
- Two-thirds of the AUF is appropriated to the University of Texas System and the other one-third to the Texas A&M University System.
- Each system board of regents makes decisions about how AUF funds are allocated among campuses.
- In August 2014, the University of Texas System Board of Regents voted to exercise its ability to increase AUF distributions in an effort to keep student tuition at UT-System campuses flat.
- The Board plans to increase AUF distributions to system campuses while consolidating some services in the System, thereby freeing up other revenue to help cover tuition costs.
- The Higher Education Fund (HEF) is supported by general revenue appropriations and benefits higher education institutions that are not eligible to receive AUF funding. Institutions are required to use HEF funds for capital purposes, either for debt service on HEF bonds or as cash.
- The National Research University Fund (NRUF) is a dedicated HEF fund targeting emerging research institutions.
- Institutions must meet two mandatory criteria and at least four out of six optional criteria in order to be eligible for NRUF funding.
- The two mandatory criteria are that the university be designated as an emerging research university within the Higher Education Coordinating Board's Accountability System, and that the university reported $45 million or more in restricted research spending for each of the previous two fiscal years.44