Why This Matters

To fully understand postsecondary accessibility and affordability, policymakers must be aware of trends in prices (i.e., tuition, fees, and other expenses, as well as student aid) and institutional finances. Data on how higher education institutions’ revenues and expenditures have changed and how patterns vary across types of institutions provides a foundation for improving student opportunities. In this report, we illustrate some key changes in institutional finances from fall 2004 to fall 2019, illustrating how different sectors and types of institutions changed during, and in the wake of, the Great Recession.

Key Takeaways

Our assessment of postsecondary institutional finances yields the following insights:

• Because of increased reliance on institutional grant aid (i.e., tuition discounting), the ratio of net to gross tuition and fee revenue has declined at all types of institutions. The decline has been sharpest at private nonprofit institutions, particularly at private bachelor’s colleges, where, during the 2019–20 school year, institutions collected, on average, only 54 percent of the tuition and fee revenue they would have had all students paid the published prices.
• State and local appropriations per full-time equivalent student grew more slowly at public four-year institutions than at public two-year institutions in the decade following 2009, narrowing the gap in public funding levels between the two sectors. This is at least in part because enrollment declined at public two-year (and for-profit) institutions between 2010 and 2019 but has been stable or continued to rise slowly at public and private nonprofit four-year institutions. Enrollment growth has been concentrated at public doctoral universities.
• A large share of the changes in average revenues, expenditures, and enrollment that might appear in other analyses is attributable to institutions shifting from one Carnegie classification to another. We use a consistent classification over time to eliminate these misleading changes.
• Expenditures for compensation, as a share of all current expenditures, have risen at all types of public institutions, where benefits have grown steadily as a share of compensation expenditures.

How We Did It

Building on the conceptual approach of the Delta Cost Project, this report uses the Urban Institute’s adjustment of data from the Integrated Postsecondary Education Data System (IPEDS) to examine institutional finance patterns from fall 2004 through fall 2019 (fiscal year 2005 through fiscal year 2020) at public four-year, public two-year, private nonprofit, and, where possible, for-profit institutions. The report also explores the differences among bachelor’s, master’s, and doctoral institutions within the public and private nonprofit four-year sectors. Although IPEDS finance data are now available through fiscal year 2022, we focus on fall 2004 through fall 2019 to avoid the introduction of temporary responses to the COVID-19 pandemic and to call attention to prepandemic trends in institutional finance that may continue as these temporary measures dissipate.