Unsure of where to begin when talking to your clients about 529 plans? The fact that the tuition and fees at public and private universities have increased to more than double the rate of inflation this year, with prices increasing faster at public institutions is a good place to start. According to the College Board’s Trends in College Pricing 2007 report, tuition and other costs, excluding room and board, increased on average to $6,185 at public four-year colleges this year, up 6.6% from last year, while tuition at private colleges hit $23,712–an increase of 6.3%. At public two-year institutions, average tuition and fees rose 4.2% to $2,361. Last year, tuition and fees at public institutions rose 5.7%, private schools increased by 6.3%, and at public two-year institutions 3.8%. These increases in the cost of higher education continue to drive up the amount that students and families borrow, with the fastest growth in private loans, the reports found.
Also, the report found that the changes in tuition at public institutions are directly affected by the changes in financing they receive from state governments and other public sources. When state and local support for public colleges declined over the last seven years, tuition and fees rose more quickly, and as state support has grown of late, the pace of increases fell, it said. “We hope that state governments–which really set tuition prices at most public colleges and universities–will do their part to reinvest in higher education,” said David Ward, president of the American Council on Education, in a statement.
The College Board’s study was based on responses from 2,976 institutions to questionnaires sent out last October, as well as government agencies and organizations.