3 surprising things every college student should know about tuition freezes and tuition caps

With the fall semester now set to begin in only 2 months at most colleges and universities, many students have made, or are nearing, a final decision about college.

As usual, those decisions will be heavily influenced by questions about costs – is this college affordable, which one is offering the best financial aid package, how much money will I have to borrow, what will my total educational expenses be, and is attending college the best long-term financial decision for me?

A key element in those questions is the tuition rate that colleges charge. While that might be seen as involving straightforward comparisons between various institutions’ tuition and fees, savvy students know those comparisons are far more complicated.

Here are 3 basic factors every student should keep in mind as he or she evaluates the tuition charges of the colleges highest on their list.

Published tuition is not what most students pay

Most colleges and universities have now officially approved their new operating budgets and tuition rates for the 2024-25 academic year. It’s clear that the vast majority of institutions are increasing their listed tuition and fee charges. The hikes tend to be clustered in the 3% to 4% range, but many schools are also boosting financial aid to help offset all or most of the increases.

Against this backdrop, several major public universities have publicized that they will be holding the line on tuition for next year. Among the Big Ten universities, for example, although most institutions will raise next year’s tuition for in-state students, 2 institutions – Purdue University and the University of Illinois – are keeping their rates flat.

Purdue University will freeze its tuition for the 13th straight year. That freeze means base undergraduate tuition at Purdue will remain at $9,992 per year for Indiana residents through 2025-26. The University of Illinois system will also hold its tuition rate level for resident undergraduates for next year. That marks the 7th year out of the last 10 that the system has kept undergraduate tuition unchanged for in-state students.

Other noteworthy tuition freezes for the upcoming year include those announced by Clemson University, the University of South Carolina, Florida State University, the University of North Carolina, and Oklahoma State University.

While published tuition, sometimes called the “sticker price,” makes the big news headlines, the fact is that most students don’t pay the sticker price. Instead, they pay a discounted rate, which is known as “net tuition.” It refers to the price students pay for college tuition after government grants and institutional financial aid are factored into the equation.

So, for example, when you see a news story proclaiming that tuition at elite colleges will soon hit $100,000 per year, it’s important to understand that will be true for only a very small number of students. Most will pay far less.

In 2023-2024, according to The College Board’s Trends in College Pricing and Student Aid 2023, the average sticker tuition and fee price was:

• $3,990 for in-district 2-year (community college) college students;
• $11,260 for undergraduate resident students;
• $29,150 for undergraduate out-of-state students;
• $41,540 for undergraduates at private, nonprofit 4-year schools.

However, when it comes to net tuition, after scholarships and other grants were factored in, the picture looked very different. After adjusting for inflation:

• The average net tuition and fee price paid by first-time full-time in-state students enrolled in public 4-year institutions peaked in 2012-13 at $4,230 (in 2023 dollars) and declined to an estimated $2,730 in 2023-24.
• The average net tuition and fee price paid by first-time full-time students enrolled in private nonprofit 4-year institutions declined from $18,820 (in 2023 dollars) in 2006-07 to an estimated $15,910 in 2023-24. (Figure CP-10)
• Full-time in-state students at public 2-year colleges received enough grant aid to cover their tuition and fees, just as they have since 2009-10.

A tuition freeze does not necessarily mean the amount you pay won’t increase

Not only do some colleges voluntarily decide to freeze tuition, others are forced to do so by legislatively mandated tuition freezes or caps on the amount tuition can be increased.

According to a 2018 survey, 14 states had implemented a cap or freeze on in-state undergraduate tuition for at least 1 higher education sector in the state. 3 had put tuition freezes in place, while 11 states had capped tuition increases to a given annual percentage, often pegged to cost-of-living increases.

Tuition caps are very popular with the public. A 2023 Century Foundation/Lake Research Partners survey of 1,000 registered voters found that 75% supported capping tuition at colleges and universities that receive government funding. Caps were favored by 81% of Democrats, 70% of Republicans, and 69% of independents.

A word to the wise. Although it’s natural to assume that freezing or capping tuition will hold down college costs, the evidence suggests the effects of government-mandated caps are far more complicated.

Regulations can limit “sticker price” tuition increases, but colleges can and do compensate for those limits through other means.

For example, they can lower the amount of institutional financial aid they extend to students; and in the process, recoup some of the tuition revenue they would have lost because of a cap. The result is that students’ net tuition costs actually increase. The tuition freeze masked the bottom line that students have to meet.

In addition, tuition caps usually reduce an institution’s net revenue, and that decrease is likely to result in budget cutbacks, fewer student services, and academic program reductions. Those consequences are usually overlooked in the initial favorable embrace that mandated tuition caps and freezes receive.

The fine print can mean a big difference in costs

Whether one considers sticker price or net tuition, not all students pay the same rate at the same school.

In fact, the cost of classes can differ a great deal, depending on the curriculum in which a student is enrolled. At many colleges, there are additional fees associated with the program that one chooses as a major.

Health professions, engineering and business majors often cost thousands of dollars more than liberal arts, education or communications majors because of these program add-ons. In addition, individual courses, particularly those that include a lab, special equipment, or a practicum, often cost substantially more than standard lecture or seminar classes.

Course and program fees hide the actual price of college, and they are usually not covered by tuition freezes or caps. As a result, they often increase at a much faster rate than standard tuition and other required fees.

Final thoughts

Competition for enrollment is intense again this year, and that competition is only likely to grow in the future. Institutions that can boast about keeping their tuition charges down will try to gain a marketing edge by persuading applicants that they are their best, most affordable choice.

Price-consciousness will remain a highly salient factor in students’ enrollment decisions, and students and their families need to be smart consumers when it comes to assessing real college costs.

They need to look beyond the soundbites and news banners and remember that published tuition information tells only part of the story about the true costs of college.