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College tuition prices aren't skyrocketing. Hooray?

College tuition is higher than it's ever been.
College tuition is higher than it's ever been.
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  1. College tuition prices are still going up, but they're not skyrocketing. Instead, they're climbing slowly and steadily.
  2. Tuition increases this year are smaller than usual: 2.9 percent for in-state students at public four-year colleges and 3.7 percent at nonprofit four-year colleges.
  3. But most families' incomes are actually lower, adjusted for inflation, than they were 10 years ago.
  4. That means college is harder and harder to afford. A slowdown in tuition price growth is good news, but it's not enough.

College costs more than it ever has — but tuition growth has slowed down

Tuition prices are growing more slowly than they did in the past, according to a new report from the College Board. Annual tuition increases for in-state students at public four-year colleges are below 3 percent for only the second time since 1975. This chart from the Urban Institute shows how much better the picture is this year than it was in the past:

Urban Institute price increase chart

So this is good news — but only sort of. Tuition prices are still at all-time highs.

After adjusting for inflation, a year at a four-year public university costs three and a half times as much as it did in the 1980s. Private nonprofit colleges and community colleges cost about two and a half times as much, as this chart from the College Board shows:

Tuition prices relative to inflation over time

(College Board, Trends in College Pricing 2014)

It was much easier for the parents of today's college students to pay for their education in the '80s than it is for their children today.

And a slower rise in college tuition prices doesn't matter if people's incomes are stagnant. Between 2003 and 2013, published tuition prices went up on average between 2 and 3 percent each year at most types of colleges. At the same time, family income in real terms for all but the top 5 percent fell over the entire decade.

What will it take for college to actually be affordable?

When you take financial aid into account, private colleges actually aren't more expensive for students getting aid than they were a few years ago. But most college students go to public colleges and universities anyway. So public tuition prices are the ones to watch. Tuition really did skyrocket during the recession, as state budget cutbacks and college enrollment increases hit together at the worst possible time. A four-year public college charges 42 percent more now than it did in 2003.

But now state funding is stabilizing as the economy recovers. Twelve percent of public colleges didn't increase tuition at all this year, and another 43 percent increased it less than 3 percent.

That's good news for middle class families who plan to send their children to state schools. Still, the price of college tuition has increased faster than the overall rate of inflation for four decades. Unless state legislatures suddenly decide to pour much more money into higher education, those trends are probably going to continue. And that means incomes need to start growing again for college to really feel affordable — even if the tuition bills don't get much bigger from year to year.

Further reading: Everything you need to know about the cost of college.