April 13 - Fitch Ratings sees that the increase in cost of attendance at U.S. colleges and universities, which began during the mid-1990s and accelerated through the end of the past decade, has not yet had a meaningful impact on enrollment at most institutions. The lack of a negative enrollment trend, we believe, underscores fundamentally robust societal demand for post-secondary education and the nondiscretionary nature of a college degree. Both dynamics, in our view, need to be considered by investors in higher education bonds when analyzing the sustainability of tuition levels and annual rates of increase in student charges. According to public data collected by The College Board, average gross tuition has risen significantly since 1996. Gross tuition at public two-year and four-year institutions rose by 71%, and 361%, respectively; annualized, The College Board estimates the rate of increase at public four-year colleges and universities at 5.1% over the rate of inflation. For private, nonprofit four-year institutions, tuition rose by 152%. Despite these seemingly staggering increases in cost, The College Board data indicate that enrollment nationally in public and private institutions has increased sharply since 1996. The increase at public two-year institutions was 136%. Public four-year colleges and universities grew by 133%. And private four-year enrollment rose by 142%. The historically very low level of tuition charged by most public colleges and universities exacerbates the reported percentage change in tuition over time; clear pricing advantages continue to be enjoyed by most public institutions. For private institutions, a noticeable uptick in financial aid, particularly during the financial crisis of 2009, helped minimize the actual burden created by higher charges. Stable to upward trending enrollment through the intermediate term is likely to continue for most public and private institutions. We believe this trend will be fostered by colleges and universities enhancing marketing and recruiting efforts and increasing resources to financial aid. As reported by the Department of Labor Statistics, 68% of 2010 high school graduates were college bound, approximating the record of 70% set the prior year. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.