9 Myths about Private Nonprofit Higher Education


Print

E-mail


9 Myths about Private Nonprofit Higher Education from NAICU on Vimeo.

 

Myth 1: Private colleges are not affordable

Myth 2: Federal student aid drives up college costs

Myth 3: Private colleges lack diversity and only enroll, wealthy, traditional students

Myth 4: Many college graduates leave school with more than $100,000 in debt

Myth 5: A college degree is no longer a good investment

Myth 6: Fewer students are choosing to attend private colleges

Myth 7: All private colleges have billion-dollar endowments

Myth 8: Private colleges are not innovative or flexible

Myth 9: Private colleges are not transparent or accountable

 

Myth 1: Private colleges* are not affordable
 

Reality: Because of generous institutional student aid policies, private colleges remain affordable to students from all backgrounds.

  • In 2013-14, average net tuition and fees at private four-year colleges is $12,460, less than half of the average published tuition and fees of $30,090. On average, full-time undergraduates at private four-year colleges receive an estimated $17,630 in grant aid from all sources and tax benefits.[1]
      
  • Average inflation-adjusted net tuition and fees (published tuition and fees minus grant aid from all sources and federal higher education tax benefits) at private colleges dropped 8.0 percent from 2008-09 to 2013-14.[2]
      
  • Seventy-eight percent of students who received a bachelor’s degree from a four-year private college were able to complete it in four years, compared to 60 percent of graduates at state institutions.[3]
    • Because students at private colleges graduate faster than their peers at public universities, they are more likely to avoid extra years of tuition and begin their careers earlier.




Myth 2: Federal student aid drives up college costs
 

Reality: The myth that federal student aid drives up college tuition has been refuted by empirical evidence and by the real-world actions of colleges and universities.

  • Leading higher education economists,[4] as well as federal studies conducted under the Clinton, Bush and Obama presidencies,[5] have found no causal relationship between increases in federal student aid and tuition.
      
  • Over the past four years, private colleges have slowed annual tuition increases to the lowest rates seen in at least four decades. In 2013-14, published tuition and fees at independent institutions grew an average of 3.6 percent — the second consecutive year that the rate has been below 4 percent.[6] Adjusted for inflation, published tuition increases at private colleges have decreased every decade since 1983.[7]
      
  • It costs colleges money to educate students. When a student comes to college with outside resources, whether it’s from parents or federal assistance, a college has to raise less money through tuition dollars to educate that student.


Myth 3: Private colleges lack diversity and only enroll wealthy, traditional students
  

Reality: Students at private colleges are as racially/ethnically and economically diverse as their peers at four-year public universities. Many older, working, and part-time students attend independent institutions.

  • The percentage of full-time, full-year, dependent, minority student undergraduates at four-year private colleges is equal to that at four-year public institutions (26 percent).
    • African American – Private colleges: 11 percent; Public colleges: 12 percent
    • Asian – Private colleges: 8 percent; Public colleges: 8 percent
    • American Indian/Alaskan Native – Private colleges: 1 percent; Public colleges: 1 percent
    • Native Hawaiian/Pacific Islander – Private colleges: 1 percent; Public colleges: 1 percent
    • Multi-racial – Private colleges: 5 percent; Public colleges 4 percent [8]


     
  • Our colleges enroll similar percentages of full-time, full-year, dependent undergraduate students from low-, middle-, and upper-income families as four-year public colleges.[9]
    • Less than $25k – Private colleges: 14 percent; Public colleges: 18 percent
    • $25k - $49k – Private colleges: 17 percent; Public colleges: 18 percent
    • $50k - $74k – Private colleges: 16 percent; Public colleges: 17 percent
    • $75k - $99k – Private colleges: 16 percent; Public colleges: 15 percent
    • $100k and higher – Private colleges: 39 percent; Public colleges: 33 percent


     
  • More than a quarter of students at four-year private colleges are 25 or older, 13 percent are part-time, 13 percent are married, and 3 percent are veterans – equivalent percentages to public four-year college enrollment.[10]


Myth 4: Many college graduates leave school with more than $100,000 in debt
 

Reality: The overwhelming majority of college borrowers have manageable loan levels.

  • In 2012, 40% of borrowers (undergraduate and graduate students across all sectors of higher education) owed less than $10,000; 70% owed less than $25,000; and 88% owed less than $50,000.[11] 
     
  • Only 4 percent of all borrowers (undergraduate and graduate students across all sectors of higher education) have student debt of $100,000 or more.[12]
       
  • Average debt per borrower among all bachelor degree recipients at private colleges in 2011-12 was $29,900 – compared to $25,000 at public universities.[13]


Myth 5: A college degree is no longer a good investment
  

Reality: Over the course of an individual's lifetime, a college degree is still the best investment a person can make for themselves and their community.

  • By 2020, almost 2/3 of American jobs (65 percent) will require some form of postsecondary education and training beyond high school. There will be 55 million job openings through 2020, sixty-five percent of them will require some college, an associate’s or bachelor’s degree (thirty-five percent of them will require at least a bachelor’s degree). Three of the fastest growing occupations (STEM, healthcare professionals, and community services) require postsecondary education and training.[14]
       
  • In 2012, the median annual earnings of workers with a bachelor's degree were $55,432 per year; an associate's degree, $40,820 per year; a high school diploma, $33,904 per year; and those without a high school diploma, $24,492 per year.[15]
       
  • The overall median starting salary for the undergraduate class of 2013 is $45,327. That’s a 2.4 percent increase over the class of 2012.[16]
       
  • The median lifetime earnings for workers with bachelor’s degrees is $2.4 million. For workers with just a high school diploma, it is $1.4 million.[17]
       
  • Between December 2007 and February 2012, people with a bachelor’s degree or more gained 2.2 million jobs, while people with a high school diploma or less lost 5.8 million jobs.[18]


Myth 6: Fewer students are choosing to attend private colleges
  

Reality: Enrollment at private colleges continues to grow, and the number of independent institutions has held steady for the past 30 years.

  • In 2011 and 2012 enrollment in private colleges and universities increased, while total postsecondary enrollment in the United States declined.[19] In the past decade, enrollment at private colleges has grown 25 percent,[20] and is expected to continue to rise.
       
  • • Between 1980 and 2012, the overall number of four-year private colleges in the United States has grown by 13 percent (179 institutions). This represents an average net growth of five to six four-year institutions per year over the last 32 years.[21]


Myth 7: All private colleges have billion-dollar endowments
 

Reality: Most private colleges do not have large endowments.

  • Across all independent institutions in FY2011-12, the median endowment was only $22.3 million, down from $24 million the year before.[22] 
      
  • During FY 2013, only 47 of the nation’s 1,600 private colleges and universities – 3 percent – have endowments of $1 billion or more.[23] 
     
  • More than half (59 percent) of independent colleges and universities had a 10-year average rate of return of less than 7.4 percent (the target rate to keep pace with spending and inflation).[24] 
     
  • In FY 2013, 65 percent of independent colleges and universities increased their endowment spending over the amount spent in the previous year. The average increase among those that raised their spending was by 14.9 percent.[25]
      
  • Typically, half of all endowment funds are earmarked by contributors for special purposes: scholarships, a new academic program, or faculty support. These gifts are legally restricted from being used for other purposes.
      
  • Endowments provide institutions with a financial bedrock. They are designed to serve not only today’s students, but tomorrow’s. Trustees are legally obligated to manage the endowment prudently, for both the institution’s present and future needs, including protecting the core amount.


Myth 8: Private colleges are not innovative or flexible
  

Reality: Private colleges are attuned and responsive to the changing needs of students, and to the financial, demographic, and technological transformations affecting higher education and the nation.

  • Private colleges are expanding flexible learning models, online courses, hybrid programs, three- year degree programs, and satellite campuses. They offer degree and certificate programs developed for adult learners, with many classes offered at night, on the weekends, partially or fully online, and during the summer. A large number of private colleges have transfer agreements with community colleges.
       
  • Private colleges are expanding outreach, academic support, and financial aid programs that help students from all backgrounds realize the opportunity to enroll in college and complete their degree. Hundreds of private colleges have shared their access and completion programs on the Building Blocks to 2020 website created by NAICU and the Council of Independent Colleges.[26]
       
  • • Independent institutions are introducing better business practices to control operating costs and enhance efficiency. Many are implementing new information technology for administrative functions; streamlining staff while safeguarding quality; and forming academic and administrative consortia to share costs and improve student services, while reducing duplication of certain functions and offerings.[27]
       
  • Independent higher education’s spirit of innovation, creativity, and adaptability has allowed it to thrive for hundreds of years through major changes in American society and the higher education marketplace.


Myth 9: Private colleges are not transparent or accountable
  

Reality: Through federal and state regulatory and reporting requirements, the accreditation process, and broad dissemination of consumer information, private colleges are held accountable to students, policymakers, and taxpayers.

  • In general, all aspects of a college are regulated. As nonprofit entities, private colleges come under specific IRS rules on governance and fiscal transparency, including widely available 990 forms that provide public disclosure of a range of institutional activities.[28] 
       
  • Accreditation by an agency approved by the U.S. Department of Education is a condition for participation in federal student aid programs. Accreditation requires intensive and highly- structured examinations of the financial health and academic quality of entire institutions and individual academic programs.  
       
  • • Since 2007, more than 800 private colleges and universities from 43 states have voluntarily signed up to participate in the NAICU-created, consumer-based University and College Accountability Network (U-CAN) initiative. Institutional profiles provide 47 information points across admissions, enrollment, graduation rates, price of attendance, financial aid, loan debt, and other areas—and give 26 links to specific pages of an institution’s website.[29]


 

* When used in this document, “private colleges” and “independent institutions” refer specifically to private nonprofit colleges and universities.

Download The PDF

Sources

[1] College Board, “Trends in College Pricing 2013,” October 2013, figure 11, page 21.

[2] College Board, “Trends in College Pricing 2013,” October 2013, figure 11, page 21.

[3] U.S. Department of Education, National Center for Education Statistics, “Beginning Postsecondary Students Longitudinal Study (BPS:04/09),” November 2011

[4] “Why student aid is NOT driving up college costs,” Washington Post, June 1, 2012

[5] Government Accountability Office, “Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase,” May 2011; U.S. Department of Education, National Center for Education Statistics, “Study of College Costs and Prices 1988-89 to 1997-98, Vol. 1,” December 2001; National Commission on the Cost of Higher Education, “Straight Talk about College Costs & Prices,” February 1998

[6] National Association of Independent Colleges and Universities, Annual Tuition Survey, October, 2013.

[7] College Board, “Trends in College Pricing 2013,” October 2013, figure 4, page 14.

[8] U.S. Department of Education, National Center for Education Statistics, NPSAS: 2012. Data represents full-time, full-year, non-transfer, dependent undergraduates by race/ethnicity census categories enrolled at four-year colleges and universities. Analysis by the National Association of Independent Colleges and Universities.

[9] U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12), August 20, 2013 release. Data represents parents’ income for undergraduate full-time, full-year, non-transfer, dependent students at four-year colleges and universities. Analysis by the National Association of Independent Colleges and Universities.

[10] U.S. Department of Education, National Center for Education Statistics, 2011-12 National Postsecondary Student Aid Study (NPSAS:12), August 20, 2013 release. Data represents all undergraduate students – part-time, full-time, dependent and independent. Analysis by the National Association of Independent Colleges and Universities.

[11] Postsecondary National Policy Institute, Meta Brown, Federal Reserve Bank of New York, “Student Debt Overview”, August 14, 2013.

[12] Postsecondary National Policy Institute, Meta Brown, Federal Reserve Bank of New York, “Student Debt Overview”, August 14, 2013.

[13] College Board, “Trends in Student Aid 2013,” October 2013, figures 10A and 10B, page 21.

[14] Georgetown University Center on Education and the Workforce, “Recovery: Job Growth and Education Requirements Through 2020” June 26, 2013.

[15] U.S. Bureau of labor Statistics, “Earnings and Unemployment Rates by Educational Attainment: Median weekly Earnings in 2012”, October 2013.

[16] National Association of Colleges and Employers, “NACE Salary Survey,” September 2013

[17] U.S. Bureau of Labor Statistics, “Employment Situation Summary,” February 2013

[18] Georgetown University Center on Education and the Workforce, “The College Advantage: Weathering the Economic Storm,” August 2012

[19] U.S. Department of Education, National Center for Education Statistics, “Enrollment in Postsecondary Institutions, Fall 2011; Financial Statistics, Fiscal Year 2011; and Graduation Rates, Selected Cohorts, 2003-2008: First Look (Provisional Data),” December 2012; “Enrollment in Postsecondary Institutions, Fall 2010; Financial Statistics, Fiscal Year 2010; and Graduation Rates, Selected Cohorts, 2002–07: First Look,” March 2012; “Enrollment in Postsecondary Institutions, Fall 2012; Financial Statistics, Fiscal Year 2012; and Graduation Rates, Selected Cohorts, 2004-2009: First Look (Provisional Data),” December 2013

[20] U.S. Department of Education, National Center for Education Statistics, “Digest of Education Statistics 2011,” June 2012

[21] U.S. Department of Education, National Center for Education Statistics, “Digest of Education Statistics 2011,” Table 5, August 2011; U.S. Department of Education, National Center for Education Statistics, “Postsecondary Institutions and Cost of Attendance in 2012-13; Degrees and Other Awards Conferred, 2011-12; and 12-Month Enrollment, 2011-12”, First Look, July 2013, Page 4, Table 1. Analysis by the National Association of Independent Colleges and Universities.

[22] U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data
System
, 2013, finance survey (represents fiscal year 2011-2012). Analysis by the National Association of Independent Colleges and Universities.

[23] National Association of College and University Business Officers and Commonfund Institute, “2013 NACUBO- Commonfund Study of Endowments,” January 2014

[24] National Association of College and University Business Officers and Commonfund Institute, “2013 NACUBO- Commonfund Study of Endowments,” January 2014

[25] National Association of College and University Business Officers and Commonfund Institute, “2013 NACUBO- Commonfund Study of Endowments,” January 2014

[26] Building Blocks to 2020 website

[27] National Association of Independent Colleges and Universities, “Cost Cutting and Efficiency Initiatives at Private Colleges and Universities,” April 2012

[28] University and College Accountability Network website