Using primarily data from the Integrated Postsecondary Education Data System (IPEDS), this study analyzes trends in costs, prices, and revenues at postsecondary institutions from 1988–89 to 1995–96 (to 1997–98 for public institutions) and explores relationships among the variables. The analyses of relationships use existing statistical models, updated and extended over a longer period of time than in previous studies. All financial data were adjusted for inflation to constant 1999 dollars using the Consumer Price Index.² A different model was used for the public sector than for the private not-for-profit sector because research has consistently documented that there are fundamental differences in the financing structures, enrollment markets, and tuition decisionmaking processes between the sectors.

The study also examines relationships between tuition and financial aid variables. Because neither of the two existing models includes financial aid (except institutional aid) among the independent variables, new models were developed to analyze these relationships. In addition to using data from IPEDS, the analyses use data from the Institutional Prices and Student Financial Aid Survey (IPSFA), a new survey that captures information on both tuition and financial aid. At the time of this report, financial aid data from this survey were only available for one year, so an examination of changes over time to allow trends to be identified was not possible.

The universe of institutions examined in this study was drawn from the IPEDS universe, although some IPEDS institutions were excluded to increase comparability and to deal with missing data.³ For example, an attempt was made to include only institutions with primarily undergraduate enrollment, as undergraduate tuition charges were the focus of the study. The institutions in the final universe were grouped by sector; 4-year institutions were then divided into research/doctoral, comprehensive, and bachelor’s institutions. All analyses were performed separately on each group of institutions because the groups face different financial pressures and constraints.

The number of institutions and proportions of undergraduate enrollment included in the final groups of institutions are provided in figures 1 and 2. Although the groups of institutions comprise less than half of all public and private not-for-profit institutions in the IPEDS universe, they enroll more than three-quarters of undergraduates attending IPEDS institutions in the public and private not-for-profit sectors.

To provide a framework for this study’s analyses, NCES commissioned papers from seven national experts in higher education finance and student aid. A summary of an invitational meeting convened by NCES to discuss the commissioned papers, as well as the papers themselves, are included in the report.