Rising costs and stagnating completion rates: Who is bucking the trend?
By Emma Dorn, Andre Dua, and Jonathan Law
Higher education is coming under intense criticism, with concerns about its value: prices are rising, and completion rates are stagnating. Which higher-education institutions are bucking the trend?
This is one of a series of data-driven interactive charts aimed at exploring recent US higher-education data and trends. The aim is not to explain but to highlight trends from the data and raise questions for further investigation. We have used publicly available data from the Integrated Postsecondary Education Data System (IPEDS) and the US Department of Education’s College Scorecard. Unless noted, we have looked at all active public and private nonprofit two- and four-year institutions from 2007 to 2017.
The sticker price for four-year colleges has increased substantially over the past decade, putting the affordability of higher education front and center. Yet the reality is that while sticker price has gone up 20 percent since 2007 (adjusting for inflation), the actual cost to attend for the two-thirds of students receiving grant aid or scholarships has risen 4 percent, or 0.4 percent a year. However, affordability is only one part of the equation. Students who successfully complete their degree open the door to more employment opportunities and increased earning potential. On this count, while college completion rates remain stagnant across the sector, a few institutions have managed to move the needle. To provide value to students, universities need to work on both sides of this equation, managing the net cost to attend while providing the education and support services students need to ensure completion.
Below we examine the relationship between cost to attend and completion at four-year public and private nonprofit colleges.
Section 1 – Four-year colleges
Even as four-year colleges’ sticker prices soar, the actual amount an average student pays hasn’t changed much in the past decade.
Sticker prices, including living costs for students living on campus,* rose 41 percent over the past decade to hit $32,500 in 2017. Adjusted for inflation, this figure represents a 20 percent increase (or 1.8 percent a year) since 2007.
*Sticker price is the published cost of attendance for full-time, first-time degree- or certificate-seeking undergraduate students living on campus, according to IPEDS. It includes tuition and fees, books and supplies, on-campus room and board, and other on-campus expenses. Approximately 80 percent of four-year students at public and private nonprofit schools live on campus (breakdown only available for students receiving aid). For public universities, we use in-state numbers; 17 percent of students at public universities are from out of state and pay higher tuition.
Costs, 4-year universities, 2007–17
$ thousand, inflation-adjusted to 2017
2007200820092010201120122013201420152016201720253035Sticker price (incl. living costs)$32,500 (+20%)
However, for the 68 percent of students receiving federal, state, local, or institutional grant aid or scholarships, the average net cost to attend* was $18,400, almost half of the sticker price. Adjusted for inflation, net cost increased just 4 percent (or 0.4 percent a year) since 2007.
*Cost to attend is the average net price for full-time, first-time degree- or certificate-seeking undergraduates paying the in-state or in-district tuition rate who were awarded grant or scholarship aid from federal, state, or local governments or from the institution. Average net price is generated by subtracting the average amount of aid from federal, state, or local governments or institutional grants and scholarships from the total cost of attendance. Total cost of attendance is the sum of published tuition and required fees, books, and supplies, as well as the weighted average room and board and other expenses.
Assuming that students who are not receiving aid are paying sticker prices, the weighted average cost to attend four-year college* has risen 10 percent over the decade (or 1 percent a year), to $22,400 in 2017.
*Weighted average cost to attend is calculated by applying the average four-year split between on-campus and off-campus for students receiving federal aid to create a measure covering all living arrangements. The calculation uses in-state or in-district numbers for public universities, thus excluding the 18 percent of students who are out-of-state students at public universities.
Net cost to attend* is growing at slightly different rates for different types of institutions, but the overall trend is consistent. It has risen 9 percent for private nonprofit universities, versus 5 percent for public universities. It has grown faster at bachelor of arts and sciences and master’s universities (9 to 10 percent) than at research-intensive universities (6 to 7 percent).
*We use the net price for all our detailed analysis, as this number is verifiable by IPEDS. This is the net cost to attend for students receiving any form of aid; for public institutions, it includes only in-state and in-district students. All numbers are inflation adjusted. We classify schools using the Carnegie classification for bachelor of arts and sciences, master’s, and research-intensive universities, in which “research-intensive” refers to R1 and R2 in IPEDS.
Section 2 – Four-year colleges
Despite changes in higher-education models and rising cost to attend, completion rates have been stagnant.
Any discussion of cost comes with a discussion of value. There is no perfect measure of value for higher education, though many analysts are doing great work.* However, the critical floor is ensuring that students complete their degrees and graduate. Six-year completion rates (the percentages of students who graduate a four-year program within six years) for public and private nonprofit universities have hovered around 56 to 58 percent for the past ten years.
Completion rate, 2007–17
% of 4-year students graduating within 6 years
200720082009201020112012201320142015201620175055606570Completion rate58% (+3%)
Completion rates* at private nonprofit institutions are slightly higher than those at public institutions, but neither have shown significant movement over the decade.
*Completion rates are for full-time, first-time degree or certificate-seeking students, excluding transfers; 150 percent time.
There are also clear racial disparities. Asian and white students graduate in higher numbers than their Hispanic and Native American peers. Even as Hispanic graduation rates are closing the gap, they still lag rates among Asian and white students. Meanwhile, completion rates* for Black and Native American students continue to fall, suggesting more needs to be done to support underrepresented minorities, especially as higher-education becomes more important with the future of work.
*Completion rates are for full-time, first-time degree or certificate-seeking students, excluding transfers; 150 percent time.
Section 3 – Four-year colleges
At the intersection of cost and completion, a small subset of universities are improving completion while keeping cost stable or decreasing.
There is a high degree of variability in performance across the four-year college landscape in 2017. Each circle here represents a university, sized to represent the number of students and plotted to show the completion rate and net cost to attend* in 2017.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
Net cost to attend versus completion rate
Net cost to attend, 4-year college average, 2017
02040608010001020304050
Completion rate
% of 4-year students graduating within 6 years
Although the value of higher education can't be measured solely by a degree, examining cost to attend and completion rates side by side offers a rough approximation of value. And the context of completion rates helps shift the conversation to outcomes. Students who have a degree in hand have greater earning potential, which helps balance the high cost of college—and helps students pay off the debt associated with it.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
Unsurprisingly, there is some correlation between the net cost to attend an institution and the likelihood its students graduate within six years. Often more expensive degrees are indicative of more selective schools with a higher proportion of college-ready students with strong academic performance, as well as higher levels of student support.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
However, there is a significant distribution of institutions around the trend line. Many institutions have a completion rate that is far higher or far lower than their net cost to attend may suggest. For example, expensive, highly selective schools that subsidize costs with large endowments tend to have higher completion rates while keeping their net cost to attend less than $20,000 per year.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
The type of institution also makes a difference. ln general, public universities deliver similar completion rates at lower cost to attend for in-state students than most private nonprofit institutions.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
Approximately 90 percent of students at public institutions attend schools that sit below the trend line, meaning they offer an above-average completion rate, given their net cost to attend* for in-state students. It is worth noting that out-of-state costs would be significantly higher.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
In contrast, only 30 percent of students at private nonprofit schools sit below the trend line. These schools’ additional cost to attend is no guarantee of higher completion rates.
Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
Meanwhile, the U.S. News & World Report’s top 100 institutions include both public and private nonprofit institutions across a wide spectrum of prices.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
Section 4 – Four-year colleges
How are schools influencing the cost-to-value equation?
Although average net cost to attend* and completion rates have barely shifted, some individual institutions have significantly increased completion rates while keeping cost to attend steady. This chart shows the change in completion rates over the past decade on the x-axis and the change in cost over the same period on the y-axis.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
Change in net cost to attend, %
2007-17 (%)
Completion decrease
Completion increase
Cost increase
Cost decrease
-40-2002040-120-80-4004080120160
Change in completion rate, %
2007-2017 (%)
A subset of universities have managed to increase completion rates by five percentage points or more …
… while keeping cost to attend stable or decreasing (keeping cost increases, adjusted for inflation, less than 5 percent over the decade).* This select group of 234 institutions accounted for about 15 percent of students in 2017.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
This includes universities from across sectors: public
… and private nonprofit.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes only in-state and in-district students. The chart includes only institutions with more than 1,000 undergraduates.
Furthermore, if we rewind back one decade and consider how net cost to attend* and completion rates compared at these 234 universities back in 2007, we see that they started out at all points across the map. The message is clear: improvement is possible from any starting point.
*Net cost to attend is measured for students receiving any form of aid; for public institutions, it includes in-state and in-district students only. The chart includes only institutions with more than 1,000 undergraduates.
The value of a college degree may always be difficult to measure, but completion helps shift the conversation.
Across the sector, the cost of college has increased and completion rates have stagnated, but some institutions have improved the value equation: they have managed to hold the line on cost while improving outcomes.
Data sources:
U.S. Department of Education; National Center for Education Statistics; Integrated Postsecondary Education Data System (IPEDS)
About the author(s)
Emma Dorn is the education practice manager in McKinsey’s Silicon Valley office, Andre Dua is a senior partner in the Miami office, and Jonathan Law is a senior partner in the New York office.
The authors wish to extend a special thanks to Arthur Bianchi and Mike Munroe for their contributions to this series of charts and analyses. Special thanks also to the data design consultancy Signal Noise for creating the article experience.
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