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

Myth 1: Private colleges are not affordable

FACT: Because of generous institutional student aid policies, private colleges* remain affordable to students from all backgrounds.In 2012-13, average net tuition and fees at private four-year colleges is $13,380, less than half of the average published tuition and fees of $29,056. On average, full-time undergraduates at private four-year colleges receive an estimated $15,680 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 3.5 percent from 2007-08 to 2012-13.[2]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.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]

Myth 2: Federal student aid drives up college costs

FACT: 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 2012-13, published tuition and fees at independent institutions grew an average of 3.9 percent — the first time on record the rate has been below 4 percent.[6] Adjusted for inflation, published tuition increases at private colleges have decreased every decade since 1982.[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 enroll only white, wealthy, traditional students

FACT: 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.Approximately one-third of all undergraduates at four-year private colleges are minority students. Our colleges enroll the same percentage of African American (12 percent), Hispanic/Latino (12 percent), Asian (6 percent), and multi-racial (2 percent) students as four-year public institutions.[8]Our colleges enroll similar percentages of students from low-, middle-, and upper-income families as four-year public colleges.[9]Less than $25k – Private colleges: 22 percent; Public colleges: 26 percent$25k - $49k – Private colleges: 19 percent; Public colleges: 20 percent$50k - $74k – Private colleges: 16 percent; Public colleges: 17 percent$75k - $99k – Private colleges: 15 percent; Public colleges: 14 percent$100k and higher – Private colleges: 29 percent; Public colleges: 24 percentMore than a quarter of students at private colleges are 25 or older, and almost one-quarter attend part-time.[10]Myth

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

FACT: The overwhelming majority of college borrowers have manageable loan levels.Only 3.1 percent of all borrowers (undergraduate and graduate students across all sectors of higher education) have student debt of $100,000 or more. Only 5.4 percent have debt of more than $75,000, and only 11.3 percent have debt of more than $50,000.[11]Average debt per borrower among students who earned bachelor’s degrees from private colleges in 2011 was $29,900 – compared to $23,800 for borrowers at public universities.[12]

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

FACT: Over the course of an individual's lifetime, a college degree is still the best investment a person can make.By 2018, six in 10 American jobs (63 percent) will require some form of postsecondary education. The nation's employers will need 22 million new workers with postsecondary degrees. Of the ten fastest growing major occupational groups, seven require some type of postsecondary degree.[13]In 2010, workers with a bachelor's degree or higher earned an average of more than $78,000 per year; workers with an associate's degree earned approximately $49,000 per year; and those without a high school diploma averaged approximately $29,000 per year.[14]The overall median starting salary for the undergraduate class of 2012 is $44,455. That’s a 3.4 percent increase over the class of 2011.[15]The median lifetime earnings for workers with bachelor’s degrees is $2.3 million. For workers with just a high school diploma, it is only $1.3 million.[16]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.[17]The unemployment rate for people with at least a bachelor’s degree is just 3.7 percent (January 2013). This compares to the national unemployment rate of 7.9 percent, and an unemployment rate of 8.1 percent for people with just a high school degree.[18]Unemployment and underemployment rates for recent college graduates are significantly lower than for people without four-year degrees. In 2012, 7 percent of new graduates with a bachelor’s degree or better were unemployed and another 14 percent underemployed. By comparison, the unemployment rate for new high school graduates is 24 percent, while 42 percent are underemployed in jobs beneath their skill levels.[19]

Myth 6: Fewer students are choosing to attend private colleges

FACT: Enrollment at private colleges continues to grow, and the number of independent institutions has held steady for the past 30 years.Enrollment at private colleges and universities increased 1.8 percent in 2011, while total postsecondary enrollment in the United States declined slightly for the first time in 15 years, by 0.14 percent.[20] In the past decade, enrollment at private colleges has grown 25 percent,[21] and is expected to continue to rise.Since 1980, there’s been very little change in the overall number of private colleges in the United States, including during the recent economic downturn. On average, three to four private colleges close annually, while another two to three open, representing very little overall change on a base of 1,600 independent institutions.[22]

Myth 7: All private colleges have billion-dollar endowments

FACT: Most private colleges do not have large endowments.Only 44 of the nation’s 1,600 private colleges and universities – 3 percent – have endowments of $1 billion or more – down from 47 the previous year.[23] Across all independent institutions, the median endowment is only $22 million.[24]Endowment performance since the start of the economic downturn has been unstable. Endowments, on average, lost money in the 2012 fiscal year, dropping 0.3 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 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

FACT: 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

FACT: 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.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.In general, all aspects of a college are regulated. An A-to-Z list compiled by The Catholic University of America of laws that apply to colleges covers more than eight single-spaced pages.[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 have signed up to participate in the NAICU-created U-CAN college information website. 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.
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[1] College Board, "Trends in College Pricing 2012,” October 2012
[2] College Board, "Trends in College Pricing 2012,” October 2012
[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] "Private College Tuition Increases Slow to Lowest Rate in at Least Four Decades,” National Association of Independent Colleges and Universities, October 4, 2012
[7] College Board, "Trends in College Pricing 2012,” October 2012
[8] U.S. Department of Education, National Center for Education Statistics, NPSAS: 2008. Analysis by the National Association of Independent Colleges and Universities.
[9] U.S. Department of Education, National Center for Education Statistics, NPSAS: 2008. Analysis by the National Association of Independent Colleges and Universities.
[10] U.S. Department of Education, National Center for Education Statistics, NPSAS: 2008. Analysis by the National Association of Independent Colleges and Universities.
[11] Federal Reserve Bank of New York, "Grading Student Loans,” March 2012
[12] College Board, "Trends in Student Aid 2012,” October 2012
[13] Georgetown University Center on Education and the Workforce, "Help Wanted: Projections of Jobs and Education Requirements Through 2018,” June 2010
[14] U.S. Census Bureau, "Statistical Abstract of the United States: 2012”
[15] National Association of Colleges and Employers, "Salary Survey,” January 2013
[16] Georgetown University Center on Education and the Workforce, "The College Payoff: Education, Occupations, Lifetime Earnings,” August 2011
[17] Georgetown University Center on Education and the Workforce, "The College Advantage: Weathering the Economic Storm,” August 2012
[18] U.S. Bureau of Labor Statistics, "Employment Situation Summary,” February 2013
[19] Georgetown University Center on Education and the Workforce, "The College Advantage: Weathering the Economic Storm,” August 2012
[20] 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
[21] U.S. Department of Education, National Center for Education Statistics, "Digest of Education Statistics 2011,” June 2012
[22] Analysis by the National Association of Independent Colleges and Universities.
[23] National Association of College and University Business Officers and Commonfund Institute, "2012 NACUBO-Commonfund Study of Endowments,” January 2013
[24] U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System, 2011. Analysis by the National Association of Independent Colleges and Universities.
[25] National Association of College and University Business Officers and Commonfund Institute, "2012 NACUBO-Commonfund Study of Endowments,” January 2013
[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] Catholic University of America, Office of General Counsel, "Summary of Federal Laws: A - Z,” September 2012
[29] University and College Accountability Network website