The State of the Higher Education System: Understanding Trends in Student Outcomes and Affordability
Student Outcomes
Enrollment Trends
Recent federal data shows about 15.4 million students enrolled in undergraduate education and 3.2 million students enrolled in graduate education. Female students account for 58% of the total undergraduate enrollment and male students 42%. The overall undergraduate population was 52% white, 22% Hispanic, 13% Black, 7% Asian, 4% two or more races and 1% American Indian/Alaska Native.
Between 2012 and 2022, the overall undergraduate enrollment population decreased by 2.4 million students, a 13.5% drop. Over this decade, enrollment decreased every year, but declines significantly accelerated during the COVID-19 pandemic. In fact, nearly half of the total enrollment drop over the past decade occurred between fall 2019 and 2021. However, enrollment in graduate programs increased by over 10%, a gain of 300,000 students.
The immediate college enrollment rate for high school graduates was 62% in 2022. During the 2010s, the year-by-year rate ranged from 66% to a peak of 70% in 2016. In 2022, 66% female high school graduates enrolled in college, compared with 57% of male graduates.
Overall, nearly 77% of undergraduates attend public two- or four-year institutions. An additional 17% of students attend private four-year institutions, and the remaining 5% of students are mostly enrolled in for-profit two- and four-year institutions.
About 70% of undergraduate students attend four-year institutions, and nearly three-fourths of these students attend public four-year institutions. Over the past decade, enrollment in four-year institutions has slightly increased, rising 2% from 2012 to 2022.
Most students at four-year institutions (73%) attend on a full-time basis. Among the students attending on a full-time basis at public four-year institutions, 91% were younger than 25. Of those attending part-time, 62% were under 25.
According to NCES, “The racial/ethnic makeup of enrollment at public four-year institutions was most representative of the racial/ethnic makeup of enrollment of the undergraduate population overall.” Among recent high school graduates, 51% of female students immediately enroll at four-year institutions compared with 38% of male students.
About 30% of undergraduates attend two-year institutions. Over the past decade, enrollment in two-year institutions has decreased 35%, a loss of nearly 2.5 million students.
In contrast to four-year enrollees, most students at two-year institutions (65%) attend on a part-time basis. Among the students attending on a part-time basis at public two-year institutions, 64% were younger than 25. Among full-time enrollees at two-year public institutions, 79% were under 25. The immediate enrollment rate among high school completers at two-year institutions decreased 29% from 2012 to 2022.
Compared with the overall racial and ethnic makeup of the undergraduate population, public two-year institutions enroll a relatively higher percentage of Hispanic students.
Attainment and Completion Trends
Education attainment rates have increased steadily over time. Today, nearly 38% of adults have a bachelor’s degree or higher. Half of those ages 25 to 29 have at least an associate’s degree, an increase of over 7 percentage points over the past decade. Among this cohort, 40% have a bachelor’s degree or higher, and 11% have at least a master’s degree.
In 2021-2022, American institutions awarded 5.1 million degrees, including over 4 million degrees and certificates at the undergraduate level. Across all institutions, the national completion rate within six years is 62.2%, which has not changed since 2015.
Despite modest gains in attainment, nearly 42 million Americans have “some college, no credential.” This population represents 18.1% of the total U.S. population aged 18 to 64.
In the most recently reported year, four-year institutions awarded 2 million bachelor’s degrees, a 12% increase over the past decade. Among bachelor’s degrees awarded, some of the most popular fields of study include: science, technology, engineering and mathematics, or STEM fields (22%); business (19%); health professions (13%); social sciences and history (7%); and psychology (6%). Over the past decade, degrees related to health professions increased 62% and engineering increased 51%. Among the top six fields of study, only social sciences and history saw a decline in degrees awarded (-15%).
The graduation rate for first-time, full-time students at four-year public institutions is 49.1% within four years, 60.1% within five years and 63.5% within six years. Graduation rates at public four-year institutions generally improve as admission selectivity increases. The six-year graduation rate for open access four-year institutions was about 27%, but it was more than 91% for schools with acceptance rates below 25%.
Graduation rates at public institutions also vary by race: Asian students have the highest six-year graduation rates (76.5%), followed by white students (66.5%), Hispanic students (58.1%) and Black students (46.2%).
Overall graduation rates have increased steadily over the last 30 years at four-year institutions. The overall six-year graduation rate at public institutions has increased from 55.4% in the mid-1990s to 63.5% today. While completion gaps between races persists, students of all races are graduating at higher rates today than in the mid-1990s. In particular, Hispanic students are graduating at rates nearly 13.6 percentage points higher in the most recent cohort compared with cohorts in the mid-1990s.
In the most recently reported year, two-year institutions awarded about 1 million certificates and 1 million associate’s degrees. The number of certificates awarded has increased 5% over a decade, while the number of associate’s degrees declined by 1%.
Among associate’s degrees awarded, some of the most popular fields of study include: general studies, liberal arts, humanities (38%); health professions (18%); business (11%); and STEM (8%). Over the past decade among the six most popular fields of study, only general studies and the humanities saw an increase (14%) while the remaining five fields saw decreases, including health professions (17%) and business (21%).
A federal report found that the six-year completion rate for public two-year institutions was 43.4% and an additional 11.2% of students were at least still enrolled in higher education. The graduation rate for full-time, first-time students seeking a certificate or associate’s degree at a two-year public institution within 150% of normal time (i.e. three years for a two-year associate’s degree) was 30.2% for the most recent cohort. This graduation rate metric has increased year over year from 19.5% in 2010.
Graduation rates at two-year public institutions also vary by race: Asian students have the highest normal time graduation rates (42%), followed by white students (35.1%), Hispanic students (25.9) and Black students (19%). However, given that more students enroll in community colleges on a part-time basis, this federal data is not considered comprehensive since it only captures full-time students.
Many students also enter community colleges with the intent to transfer, which makes tracking student outcomes for two-year institutions more difficult. A recent study found that 33% of community college students transfer to a four-year institution but that only 48% ultimately earned a bachelor’s degree within six years of original enrollment. As such, only 16% of community college enrollees ultimately earn a bachelor’s degree.
Economic Benefits of a College Degree
For most graduates, a higher education continues to offer clear and substantial benefits. Those who complete increasingly higher levels of education typically receive higher wages and experience lower levels of unemployment. The wage premium for a higher education remains substantial: The average college graduate with a bachelor’s degree earned about $78,000 in 2019, compared with $45,000 for the average worker with only a high school diploma. However, this wage premium has declined somewhat over time. In addition, wage gaps persist by race and gender at all levels of education attainment.
While higher education is generally a good investment, the economic benefits of a degree vary by institutions and programs. In recent years, the proliferation of federal data through efforts such as the College Scorecard and the emergence of longitudinal data systems in some states has produced a trove of new findings that shed light on the return on investment for a degree. These data confirm the longstanding evidence for the broad benefits of higher education but show that not all students who receive degrees benefit from their investment.
Data from a Third Way study found that 87% of the 24,151 programs offered at public colleges and universities provide a positive return on investment for students. Yet more than 3,100 programs (13%) do not offer any return on investment, and another 2,600 programs (14%) take at least 10 years and as long as 20 years for students to recoup costs.
While degree type matters significantly for earnings, evidence has found that a range of programs offer return on investment over time. A study from the Georgetown Center of Education and the Workforce found that community colleges and many certificate programs have the highest returns in the first 10 years after enrollment, but that most bachelor’s degrees offer higher returns over time. Another study by David Deming found that STEM degrees initially offer a substantial wage premium, but graduates in other programs such as the social sciences catch up over time.
Recent analysis by the HEA Group found that two-thirds of all programs show that most of their students earn at least $40,000 within four years of graduating. However, at least 13% of programs show most graduates earning less than $30,000.
College Affordability
College Pricing
In 2023-24, the average published tuition and fees at public four-year universities for in-state tuition was $11,260, according to the College Board’s Trends in College Pricing report. Published prices peaked in 2014-15 after nearly doubling over the previous two decades but have since declined nearly 12% from the peak.
Students at public four-year institutions paid an average of $2,730 net tuition and fees (the tuition charged to students after financial aid and discounts are applied) in 2023-24. Net tuition and fees peaked at $4,230 in 2012-13 and have since declined. Today’s net tuition costs are lower than they were in the mid-2000s.
The average net price for tuition and fees have recently declined to levels not seen since the mid-2000s.
Lower net tuition prices are the result of increases in state, federal and institutional grant aid for students over the past 20 years. Institutional grant aid accounted for nearly 49% of the total $9,360 in grant aid per first-time full-time student in the public four-year sector. Overall, 80% of students attending four-year public institutions received some form of grant aid. In 2019-20, 31% of full-time in-state students at public four-year colleges received enough grant aid to cover their tuition and fees, including 64% of those from families with incomes of less than $40,000.
After factoring in grant aid and including non-tuition expenses, estimated average net cost of attendance at public four-year institutions was $20,310 in 2023-24. Of the total average net cost of attendance, 13% is attributed to net tuition and fees. This total is similar to net costs in 2008-09. Net costs peaked at $23,290 in 2016-17 and have since declined.
In 2023-24, the average published tuition and fees at public two-year institutions for in-district tuition was $3,990. Published prices peaked in 2020-21 after increasing nearly 75% over the previous two decades.
The average net tuition and fees that students pay at public two-year institutions is -$330 in 2023-24. This reflects that the average student receives sufficient grant aid to cover tuition and fees and has additional funds to put towards broader cost of attendance expenses. Net tuition and fees were $760 in 2006-07, the highest mark in the most recent range calculated by the College Board. Net tuition dropped as low as -$690 in 2010-11 and -$680 in 2021-22.
In 2020-21, 76% of students enrolled at a two-year institution received federal, state or institutional grant aid; The Pell Grant awarded 54% of the total aid.
After factoring in grant aid and including non-tuition expenses, estimated average net cost of attendance at public two-year institutions was $15,540 in 2023-24. All of the total average net cost of attendance is attributed to expenses beyond tuition and fees. The 2023-24 net total costs are the lowest in the 18 years tracked by the College Board. Net costs peaked at $17,340 in 2016-17.
Revenues and Spending
In 2019, the U.S. spent $37,400 per student on postsecondary education, more than double the average of OECD countries and second only to Luxembourg. By comparison, the U.S. spent $15,500 per student on elementary and secondary education.
The U.S. spends 2.5% of its GDP on postsecondary education, the second-highest rate in the world behind Chile at 2.7%. Only three OECD countries spend more than 2% of GDP on postsecondary education. U.S. spending on postsecondary education was 18% higher in 2019 than in 2010.
In 2020-21, public institutions had total revenues of $539 billion, 40% of which came from federal, state and local sources. Federal revenues increased 24% from the prior year due to federal stimulus spending. Total revenue from government sources increased 22% over the prior decade, from $17,350 in 2010-11 to $21,230.
Four-year institutions receive 28% of their revenues from state sources, 18% from federal and 10% from local. Two-year institutions receive 31% of their revenues from state sources, 27% from federal, and 20% from local sources.
During this same year, public institutions spent $450 billion. Total core expenses per full-time student (which include instruction, research, academic support and student services) were $39,330 at public four-year institutions and $21,110 at public two-year institutions. Core expenses make up 74% of total expenses at public four-year institutions and 97% of total expenses at public two-year institutions.
Tuition has increasingly made up a larger share of public institutional revenues compared with public spending, according to a SHEEO report. In 1980, net tuition accounted for nearly a 21% share. Today, net tuition accounts for over 40%. Notably, the student share of revenue has declined 4.6 percentage points since 2020.
Public spending accounts for 50% of the share of revenue at public four-year institutions and nearly 75% of the revenue at two-year institutions. The larger share of public spending at two-year institutions is attributable to two factors. First, two-year institutions take in nearly 34% less revenue per student than four-year institutions. Second, public spending on two-year institutions per student is slightly greater than for four-year institutions ($10,448 per student in 2023 compared with $10,238).
According to a SHEEO report, State and local spending on higher education totaled $128.1 billion in fiscal year 2023, with states accounting for $116.4 billion in spending, a 7.7% increase over the prior year. On an aggregate basis, state funding for higher education has increased year-over-year since state budgets began recovering from the Great Recession in FY 2013. Overall state spending per student has surpassed funding levels compared to levels preceding the Great Recession but remains nearly 4% below the previous all-time per student funding high set in FY 2000 of $11,492. However, half of states are still spending less per student than they did before 2008.
Annual revenues at public institutions are at all-time highs and state spending per student is nearing all-time highs set in FY1999-2001.
In FY 2023, 8.7% of state expenditures went towards higher education, trailing only Medicaid and K-12 spending as the largest single area of spending. The average share of state budgets for higher education spending from 1995 to 2023 was 10.3%. The peak share was 11.4% in FY 2000.
State funding for higher education has increased over time. Since 1980, annual state appropriations have increased nearly 66% and state spending per student has increased 11%. Since FY 2001, state appropriations are up over 14%, although current per student funding is slightly below FY 2001 levels due to increased student enrollment. Compared with 200, public institutions now enroll over 1 million more students, an increase of around 13.5%.
However, state funding has not been consistent as periodic economic downturns have strained state budgets, which has led to periods of lower public support for higher education. The most precipitous decline took place during the Great Recession from FY 2009 to FY 2013: Per student spending in 2013 was 29% below pre-recession highs and nearly 19% lower than state funding in 1980.
While state spending on higher education has been resilient and continued to increase over time, rising college costs have outpaced state appropriations. Since 1980, net tuition revenue per student has increased by nearly 180%.
In FY 2022, the federal government provided in nearly $84 billion in direct support for higher education, including $29.7 billion in financial aid and institutional support; $28.1 billion for the Pell Grant; and $54.1 billion in research funding. This support does not include temporary funding through the Higher Education Emergency Relief Fund (HEERF), federal expenditures related to student loan repayment assistance or forgiveness, higher education tax credits or veterans benefits.
The Pell Grant has long been the federal government’s primary source of support for defraying the cost of college. On a per student basis, the Pell Grant has largely received stable funding over decades. The maximum Pell Grant award is $7,395 for 2024-25, which is 10% higher than in 2003-04. Based on the most recent data, the average Pell Award in 2022-23 was $4,510, and over 6 million students received some Pell award.
However, the purchasing power of Pell has declined over time due to rising college costs. The maximum Pell Grant covers 66% of average published in-state tuition and fees and 31% of average tuition, fees, housing and food at public four-year colleges and universities. Nearly 20 years ago, the maximum Pell covered 87% of published in-state tuition and 38% of tuition, fees, housing and food costs. Yet nearly 57.5% of students who receive a Pell Grant at in-state public universities pay no tuition and fees because of additional sources of state and institutional aid.
Going back to the mid-1970s, the maximum Pell Grant was enough to cover three-quarters of the full costs of attending a public four-year institution, although Pell amounts were capped at 50% of expenses until 1980 and 60% of expenses until 1993, when the limits were removed.
Student Debt
National Student Debt
Americans collectively owe $1.753 trillion in student loans. Total student debt briefly peaked at $1.775 trillion in early 2023 and has declined slightly over the past year, likely due to federal loan forgiveness programs. Student debt has increased by nearly 57%, or over $630 billion, over the past decade. Student debt has more than tripled since 2006, when Americans owed $481 billion.
Among the more than 46.2 million federal borrowers, more than half (54%) owe less than $20,000 and account for 12% of total federal debt. Nearly one-third of borrowers owe less than $10,000. However, borrowers with balances greater than $80,000 hold 47% of total federal debt despite comprising only 10% of all borrowers.
Students borrowed $83.5 billion in 2022-23, including $44.1 billion for undergraduate education and $39.4 billion for graduate education. Total annual borrowing through federal loans peaked in 2012-13 at $129.7 billion and has since declined. Since this peak, annual undergraduate borrowing has significantly declined by 48%, or $41.5 billion.
Annual undergraduate borrowing has significantly declined by 48%, or $41.5 billion, since its peak in 2012-13.
Annual borrowing on graduate education remained steady for much of the 2010s, but has more recently declined and is now 11% below 2012-13 levels. The share of annual loans to graduate education rose from 36% in 2007-2008 to 47% in 2022-23. A report from the U.S. Department of Education noted that annual borrowing on graduation may soon surpass undergraduate borrowing.
The Congressional Budget Office (CBO) reported that graduate debt made up nearly 47% of all federal student debt in 2017. As annual borrowing for undergraduate education has fallen faster than graduate borrowing in recent years, it is possible today that debt for graduate education accounts for as much of the national student debt as undergraduate borrowing.
The CBO estimates that students will take out $1.1 trillion in federal loans over the next decade, with slightly more than half going toward graduate education.
Borrower Balances
While most graduate students borrow to finance their education, only 25% of undergraduate students borrow through federal student loan programs, down from 38% in 2011-12 and near similar levels in 2002-03.
Nearly 50% of students who graduated from public four-year institutions borrowed with an average cumulative debt per borrower of $27,400. Among recipients of associate’s degrees and certificates at public institutions, only one-third of students borrowed to finance their education. In 2022-23, undergraduates receiving federal loans borrowed an average of $6,520, which is $1,580 less than a decade prior.
According to federal data, graduate school completers with debt in 2016 borrowed $66,502. Including undergraduate debt, the average borrower balance among graduate completers was $88,832.
Federal data shows the average bachelor degree recipient owes $45,300 four years after graduation. This balance could include additional borrowing for graduate education or growth from accumulated interest. However, Black borrowers owed $58,400, and borrowers who had received a Pell Grant owed $47,100. Black borrowers were the only group whose average amount borrowed was greater after four years. While Asian borrowers had higher than average balances ($49,100), they owed far less than their peers compared with their original balance four years earlier.
Borrower Default
One-third of federal borrowers have debt but no degree. These borrowers are more likely to have borrowed less than $10,000 and are more likely to default on their student loans.
In the second quarter of 2023, 6.5 million borrowers, or 15% of all borrowers, were in default status on their federal student loans. These borrowers hold 9% of total federal student debt and have an average balance of $21,500. Default rates are higher for borrowers with low balances. Two-thirds of those who defaulted owed $10,000 or less.
A national survey from The Pew Charitable Trusts found that about one-third of federal student loan borrowers surveyed reported experiencing default over the past two decades. Among many findings, the survey found that Black and Hispanic borrowers, as well as older borrowers, were more likely to default.