Report 2007-116 Summary - August 2008

Affordability of College Textbooks

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Textbook Prices Have Risen Significantly in the Last Four Years, but Some Strategies May Help to Control These Costs for Students

HIGHLIGHTS

Our review of the affordability of college textbooks in the University of California (UC), California State University (CSU), and California Community Colleges (community colleges) systems revealed the following:

RESULTS IN BRIEF

Textbook prices have increased at a rate significantly outpacing that of the median household income, and the financial burden imposed on students because of these rising prices, combined with escalating student fees, increase the likelihood that some students will forgo or delay pursuing a postsecondary education. Student fees increased considerably at the University of California (UC) and California State University (CSU) during academic years 2004-05 through 2007-08, but textbook prices rose at an even greater rate over the same period. Moreover, at the California Community Colleges (community colleges), the cost of textbooks was nearly 60 percent of a full time student's total education cost in academic year 2007-08.

The increase in the publishers' invoice prices, or the prices that publishers charge retailers, is driving the rise in campus bookstores' retail prices, which leads to increasing textbook costs for students. Another factor inflating the cost of textbooks are the markups that campus bookstores add to the prices of the textbooks they buy from publishers. At the nine campus bookstores we reviewed, markups ranged from 25 percent to 43 percent of the publishers' invoice prices. Campus bookstores generally use the profits resulting from these markups to cover the stores' operating costs and, in some cases, to support campus activities and organizations. However, bookstores using their profits to pay for campus functions has not quelled the frustration some students have expressed about textbook pricing policies.

Students can somewhat offset the rising cost of textbooks by taking advantage of the used textbook market. In reviewing the costs of textbooks associated with six majors at nine campuses during a two year academic period, we found that although students, on average, could spend as much as $1,815 on required textbooks, they could save $308 by purchasing used textbooks and receive $523 by selling their textbooks back to the campus bookstore.

About half of the students we surveyed across all three postsecondary educational systems expressed extreme concern about covering the cost of attending college. As a result, students are reacting to increasing textbook prices in differing ways and have developed strategies to reduce the burden these costs may impose. For instance, many students we surveyed stated they often purchase their textbooks from third parties advertising textbooks with online retailers, such as Amazon.com (Amazon). We tested the viability of this cost saving strategy during our visit to nine campus bookstores, comparing retail prices for new and used versions of selected textbooks to the prices offered by third parties on Amazon. We found that a student can potentially realize cost savings of up to 32 percent by purchasing new books through a third party rather than through the campus bookstore.

Additionally, several key players in the textbook industry believe that the used textbook market drives up the cost of new textbooks and may play a role in how frequently publishers issue new editions. According to the Association of American Publishers, a key factor in the price of textbooks is the impact of the used textbook market on new book prices. Further, one large publisher of college textbooks stated it is aware that if it does not revise a book, demand for the book will diminish and eventually disappear. The responses we received from other publishers indicated that availability of new content and demand from faculty also affect publishers' decisions to issue new editions. However, bookstore managers, one major wholesaler of used textbooks, and some faculty we spoke to believe the used textbook market plays a role in the textbook revision cycle. Moreover, many of the deans, department chairs, and faculty we interviewed stated that revisions to textbooks are often minimal and not always warranted. In assessing selected textbooks at nine campus bookstores, we noted that publishers released a new edition every 3.9 years on average. Further, publishers' development of supplementary materials, like compact discs and student workbooks, may contribute to increases in textbook prices, and the custom edition and digital textbooks that publishers offer may reduce the role of the used textbook market.

Nearly all the faculty members we interviewed about the state laws encouraging them to participate in efforts to reduce textbook costs were unaware of them, and many did not understand how their textbook selection decisions and priorities could affect student costs. This lack of awareness may partially explain why faculty submit most of their textbook adoption requests after the initial deadline, even though bookstore managers claim that timely textbook adoptions enable them to pay students more for their used textbooks during buyback1 and to procure more used textbooks for sale in the next term.

Further, some faculty members we interviewed require students to buy textbooks that come bundled with supplementary materials, even though bookstores may have a limited ability to purchase textbook bundles from students during buyback. Many students expressed frustration with textbook bundles stating that they often never have a need to use the supplementary materials. Because publishers increase textbook prices to cover the costs of developing and producing supplementary materials, the requirement set by some faculty members that students purchase textbooks bundled with supplementary materials that go unused may unnecessarily increase student costs.

Although each campus bookstore we visited has implemented some strategies to reduce students' textbook costs, the strategies are inconsistent across the three postsecondary educational systems. For instance, although all the bookstores we reviewed operate buyback programs, only four of the nine bookstores guarantee at the time the student initially purchases the textbook that they will buy it back at the end of the term for 50 percent of the original purchase price. Further, some bookstores have developed incentives that encourage faculty to submit their textbook adoptions on time and thus increase the likelihood that the bookstores can procure more used textbooks and pay students more during buyback. Additionally, only some of the campuses we reviewed have developed initiatives to reduce textbook costs for students. For example, only one of the nine campuses we reviewed has implemented a textbook loan program, which may reflect the significant initial and ongoing funding needed to start and sustain such a program. If campus bookstores across all three systems developed a consistent set of strategies to lessen the cost of textbooks for students, more students would be able to realize cost savings at the campus bookstores.

Reports issued by organizations like the State Public Interest Research Groups and the U.S. Government Accountability Office may have increased awareness among postsecondary educational institutions that the affordability of college textbooks is a serious issue. The community colleges and CSU, with some participation from UC, have explored possible ways to curb the rising costs of textbooks. For instance, the system office of the community colleges recently convened two textbook summits to identify strategies that campuses could implement to reduce textbook costs. In early May 2008, as a result of the summit meetings, participants compiled a list of 11 recommendations for the community colleges board of governors to consider and which they ultimately approved. One recommendation encourages the promotion of open educational resources. The William and Flora Hewlett Foundation, a strong advocate of open educational resources, defines them as teaching, learning, and research resources that reside in the public domain or have been released under intellectual property licenses that permit their free use or repurposing by others. Open educational resources include full courses; course materials; modules; textbooks; streaming videos; tests; software; and any other books, materials, or techniques used to support access to knowledge.

Further, at the beginning of 2007, executive vice chancellors within the CSU chancellor's office charged a task force of students, faculty, campus bookstore managers, and administrators with providing advice that could lead to CSU's implementation of effective measures to reduce the cost of textbooks for students. The task force ultimately recommended, among other things, that CSU develop the Digital Marketplace, which would be a one stop, Web based service for selecting, contributing, sharing, approving, procuring, and distributing both no cost and cost based academic technology products and services. Eventually, the Digital Marketplace could reduce textbook costs.

RECOMMENDATIONS

To increase awareness and transparency about the reasons why campus bookstores add markups to publishers' invoice prices for textbooks, the UC, CSU, and the community colleges should consider requiring their campuses to reevaluate bookstores' pricing policies to ensure that markups are not higher than necessary to support bookstore operations. If bookstore profits are deemed necessary to fund other campus activities, the campuses should seek input from students to determine whether such purposes are warranted and supported by the student body. Additionally, campuses should direct bookstores to publicly disclose on an annual basis any amounts they use for purposes that do not relate to bookstore operations, such as contributions they make to campus organizations and activities.

UC, CSU, and the community colleges should issue guidance on the process of selecting textbooks and to delineate the factors affecting textbook costs so that the systems can make certain that faculty understand how their own textbook choices influence textbook costs for students. This guidance should direct campuses to do the following:

The system offices of UC, CSU, and the community colleges should continue taking steps to promote the awareness, development, and adoption of open educational resources as alternatives to textbooks and other learning materials. Further, CSU should continue its efforts to develop, implement, and promote the Digital Marketplace. While doing this, CSU should monitor any resistance from students and faculty to ensure that the Web based education content aligns with their needs and preferences.

AGENCY COMMENTS

UC agrees with the recommendations contained in the report and believes they will be helpful, especially in terms of ensuring that the system is employing the most successful strategies to ensure textbooks are affordable. Although CSU does not specifically agree or disagree with our recommendation that the system should require campuses to reevaluate bookstores' pricing policies and to seek input from students as necessary to determine whether bookstore profits are needed to fund campus activities, CSU agrees with the remaining recommendations. Finally, while the community colleges stated the report will be useful to the system in its efforts to improve textbook affordability for students, the community colleges assert that the system office and the board of governors do not have the authority to direct colleges or require districts to take the actions recommended in the report without additional statutory authority.

1 The term buyback refers to a bookstore's practice of buying back, at the end of an academic term, textbooks that students purchased from the bookstore at the beginning of that term.