College is getting Cheaper

For decades, it college fees were increasing faster than inflation, and nothing could be done about it.

To my surprise, this has been reversed:

The actual price of tuition at many of America’s colleges continued a steady, decade-long decline as the sector enters an era of shrinking high-school enrollments and greater competition, according to analysis released Monday by the College Board.

While sticker prices have continued to balloon to as large as $100,000 at some private, nonprofit universities, the average net price — the remaining cost of tuition after institutional and grant aid is deducted — for undergraduate students entering their freshman year at these institutions clocked in at $16,510 for the 2024-25 academic year, down from $19,330 in 2006-07 (adjusted for inflation to 2024 dollars). Net prices at public institutions followed similar trend lines: $2,480 was the average amount charged in 2024-25 at in-state, four-year institutions, down from $4,340 in 2012-13 (inflation adjusted); and, according to the College Board, freshmen attending two-year colleges continue to receive on average enough grant aid to cover tuition and fees, a trend that dates back to 2009-10.

The article is behind a paywall, so this is all I have.

40 colleges have closed recently, and CNBC reports:

At least 20 colleges closed in 2024, and more are set to shut down after the current academic year, according to the latest tally by Implan, an economic software and analysis company.

Coming out of the pandemic, a small group of universities, including many in the Ivy League, experienced a record-breaking increase in applications, reports show.

So the elite colleges can be as selective as they want, but the others have to lower prices to meet declining demand.

Update: Tyler Cowan writes:

There are a lot of numbers, but here is the comparison I find most impressive: Adjusting for grants, rather than taking sticker prices at face value, the inflation-adjusted tuition cost for an in-state freshman at a four-year public university is $2,480 for this school year. That is a 40% decline from a decade ago…

As might be expected, the trajectory for student debt is down as well. About half of last year’s graduates had no student debt. In 2013, only 40% did. That famous saying from economics — if something cannot go on forever, it will stop — is basically true. Due to changes in the formula, aid for Pell Grants is up, which helps to limit both student debt and the expenses of college.