Q: No matter which way the economy swings, elite colleges will continue to thrive, but most other schools face trouble—or so says a report earlier this year by Moody’s Investors Service. “Tuition levels are at a tipping point,” Moody’s said, adding, “We anticipate an ongoing bifurcation of student demand favoring the highest quality and most affordable higher education options.” And more doom and gloom in Time magazine last May: David Hawkins, director of public policy and research at the National Association for College Admission Counseling, also used the tipping-point analogy, explaining that “the cost of college is really beginning to alarm families. And that creates a real threat to enrollment.”
Can your school continue to attract students at its current rate of tuition growth?
In 1832, during a cholera epidemic, the University of the City of New York opened in Lower Manhattan. It charged a tidy sum of $80 for annual tuition—a bargain compared with Harvard’s $176. Yet many of the new school’s students graduated without paying a cent, and by the mid-19th century, half of the school’s students received generous financial aid. By 1919, tuition, room, and board had inched up to a still-affordable $500 (now equivalent to $6,600). Today that institution survives in Greenwich Village as NYU, America’s second most expensive university. It costs $59,337 a year, up 4.5 percent from last year.
In his State of the Union address last January, President Obama warned, “Let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down.”
Yet the true cost of college is muddled by financial aid packages, many of them based not on need but on the dubious term “merit.”
We asked presidents of colleges and universities that host Phi Beta Kappa chapters how they can stave off tuition inflation. Sixty-two of the 70 respondents commented further (see below), many of them targeting unnecessary financial aid. Offering discounts to students who aren’t hard up can cost some schools as much as half their operating budget, some presidents reported.
“There is too much bickering and dickering by families seeking a better deal, families who do not need the money, families who like the prestige of receiving a ‘merit’ scholarship,” writes John McCardell of The University of the South, in Sewanee, Tennessee, who answered our question with a yes. “All financial aid recipients are meritorious. We should cease to employ the distinction between ‘need’ and ‘merit.’ To do this will bring down our discount rates and also allow us (as my institution has done) to lower tuition.”
At a certain point, however, keeping costs down becomes futile. Fisk University President Hazel O’Leary responded no to our question, adding, “We have reduced expenses for the past six years and see little advantage in further cost saving that will not affect the quality of the academic and co-curricular programs.”
In the end, many campus leaders suggested, the task of keeping college affordable should not be theirs alone. As lawmakers slash budgets, they do so at society’s peril.
Can your school continue to attract students at its current rate of tuition growth? Name the first thing you can do to reduce tuition price.
Yes
“Our current tuition rises are below inflation, which helps. Continuing reductions in state support make tuition decisions very difficult. After a continuing series of losses in state support, the only way to significantly reduce expenses is a reduction in programming.”
– Newark campus of Rutgers University
Yes
“We have had no tuition increase for the past two years. Three years ago we increased it by about 3%. Thus, allowing for even very modest inflation, our tuition has fallen in real dollars over the past three years. We have continued to reduce administrative costs but have had to grapple with a significant reduction in state funding in the past two years.”
– Texas A&M University
Yes
“My “Yes” answer is part informed, part hopeful. In the short term I know we can, but longer term there may well be issues for us. Reduce tuition price: There are no easy answers here for us, at all, if you mean reduce tuition a meaningful amount. If there were, we would have done it. Like most institutions our big ticket items are salaries, benefits, and financial aid. We scrubbed the staff ranks, and we see little or no low-hanging fruit … 2008/9 took care of that. We’re negotiating as hard as possible on benefits costs, but at the same time we are seeking a more competitive salary scale for our faculty, which was enlarged by 15% or more (tenure track!) over the past six years. Honestly, the most practical answer (relative answer) would be to increase enrollment by four or five percent; we’ve run the numbers and we could avoid a full scaling of costs.”
– John Bravman, Bucknell University
No
“Our current rate of tuition increase is in the 3% range, which may be sustainable. At present we are doing all we can to garner greater efficiencies in the delivery of our education, with utilization of on-line technology, investments in solar and other alternative sources of energy, etc.”
– Michael Engh, S.J. Santa Clara University
Yes
“We need to change the vocabulary. Instead of “elite” – how about exclusive. The real change agents for HIED will be those institutions that are “inclusive”. I am proud to be associated with one of the inclusive universities in our country. Now, to answer your questions – influence the legislature to stop cutting HIED budgets and start investing.”
– John M. Dunn, President, Western Michigan University
Yes
“Flexibility from the state.”
– Michael Lovell, University of Wisconsin-Milwaukee
Yes
“Increase state taxes, thereby stabilizing state subsidy of the university.”
– UNC-Chapel Hill
Yes
“Price, not much; *cost*, yes, by increasing our endowment and thus being able to support a 40-ish % discount rate and continue to assist low- and medium-income students in being able to afford to attend Whitman. In other words, we need to distinguish between the sticker price, the average cost to the student, and the cost to the College of providing an excellent undergraduate education. We are a liberal arts & sciences, undergraduate-only institution. We believe that small classes and a high level of experiential learning, i.e., a high level of one-on-one faculty student interaction (and, at least in the sciences, a large number of expensive pieces of research equipment) are the best way to produce the next generation of world leaders. The cost to the College of providing this type of education has risen faster than inflation in recent years (a good comparison is the rise in the cost of dental care, for instance, which is also a very time-intensive, one-on-one, service). With a strong endowment we can do more to hold down the rate of increase in the amount of our costs that we pass on to our students. I’d add that we already have a strong track record in this regard—the average debt of a Whitman graduate is *less* than the average debt of a student graduating from the Univ. of Washington.”
– Andrea Dobson for George Bridges, President of Whitman College
Yes
“This question oversimplifies, even distorts, the complex equation that involves institutional financial aid and the management of operating revenue. The distinction between the real or total cost of private education (much greater than published tuition) and the actual net average price families will pay suggests that tuition cannot be reduced at all … without some new infusion of large subsidies to do so or the drastic reduction of programs, services, and the human scale that has always best characterized a superb liberal arts education.”
– William Fox, St. Lawrence University
Yes
“Facilite student-initiated voter registration and election information.”
– Richard Hughey, UC Santa Cruz
Yes
“Operate the university more efficiently.”
– University of Kansas
Yes
“Reduce expenses (operating costs, staff, etc.)”
– Roderick J. McDavis, President of Ohio University
Yes
“The reason we can continue to attract students is because we have already begun to moderate tuition increases despite the fact that the state has been continuing to disinvest in higher education in New Jersey. Also, we have learned that we must become more entrepreneurial in program development and in fund and friend raising. TCNJ continues to have great demand because in fact we can prove the value proposition to our students and their families.”
– R. Barbara Gitenstein, President, The College of New Jersey
Yes
“Increase endowment.”
– Wendy B. Libby, President, Stetson University
No
“Implement a capital campaign with an emphasis on endowing scholarships for our students who can ill afford the current tuition. We must attract more students annually in order to reduce the cost per credit hour. At our University, we have reduced expenses for the past 6 years and see little advantage in further cost saving that will not impact the quality of the academic and co-curricular programs.”
– Hazel R. O’Leary, Fisk University
Yes
“Leverage financial aid more effectively.”
– Mount Holyoke College
No
“I don’t think we will see an absolute reduction in tuition but will continue to reduce the rate of increase. Over the last five years, we have reduced the rate from 5.5% to 3.5% (for fiscal year 2014) and plan to continue moving in this direction. This requires careful attention to control of expenses, fundraising for student scholarships, and management of endowment assets.”
– Richard F. Wilson, Illinois Wesleyan University
Yes
“Aggressive financial aid.”
– Stanford University
Yes
“Stop the decline in state support.”
– Kent State
No
“Persuade the U.S. government to overturn unfunded federal mandates that increase our overhead and administrative costs.”
– Washington College
Yes
“At my institution, Trinity Washington University, we already have comparatively low tuition: $20,500 this year, the lowest among privates in the Washington region. Our increases have been just 2% in the last few years, barely covering increased costs. More importantly, our average discount for full-time students is 40%, meaning they get about $8,000 off the price. Our student body is nearly 80% Pell eligible, and with Pell and other grants, many students have very little out-of-pocket expense. We serve a remarkably low income population quite successfully and our enrollment has nearly doubled in the last decade and is still growing. The harbingers of gloom and doom focus only on elite universities with high prices and do not take into account the large number of universities like Trinity that are doing a great job making college accessible and affordable for low income students.”
– Trinity Washington University
No
“Distribute only need-based financial aid.”
– John Neuhauser, Saint Michael’s College
Yes
“Trinity will not reduce tuition because it is already $10,000 below tuition of peers. When the economy picks up tuition increases will be a much less relevant topic.”
– Dennis Ahlburg, Trinity University, San Antonio, Texas
Yes
“We do not need to reduce our tuition to attract students. The value of our program is recognized by parents and students alike.”
– Not needed
Yes
“It’s impossible to reduce the rate of price increase in tuition without addressing the issue of cost control—which inevitably means reductions in staffing, since so much of our budget is devoted to personnel. Moving more business services to the web is probably the easiest initial step. Cutting the time of attendance—from four to 3.5 or even 2 to 3 years, using lower cost providers for some credits—is probably the easiest way to cut costs for individual families.”
– Carol Christ, Smith College
Yes
“There is no single step that will make a significant and permanent difference in the price of tuition. For institutions without huge endowments and without a highly significant “brand,” there are several cost drivers of scale. Some of them, however, are vital to our ability to achieve “full enrollment.” So to reduce some drivers of cost–tuition discounting and student activities and athletics–would also reduce enrollments substantially. Achieving reductions in costs without losing enrollment seems possible only through the elimination of those academic programs that attract students only when no other spaces are available. The faculty uproar that would follow such a step would be disproportionate to its impact on enrollment. It is lamentable but true that several academic disciplines on my campus do not attract any enrollment except by default. For thirteen years, I have been able to find the means to avoid these kinds of reductions on a significant scale. Unfortunately, I am reaching the limits of my resourcefulness.”
– Charles M. Edmondson, Alfred University
Yes
“Continue to reduce expenses on the administrative side.”
– Creighton University
Yes
“Reduce, or eliminate, “merit” (which really means “non-need”) financial aid, and make every financial aid award offer final and non-negotiable. There is too much bickering and dickering by families seeking a better deal, families who do not need the money, families who like the prestinge of receiving a “merit” scholarship. All financial aid recipients are meritorious. We should cease to employ the distinction between “need” and “merit.” To do this will bring down our discvount rates and also allow us (as my institution has done) to lower tuition.”
– John McCardell, The University of the South, Sewanee, Tennessee
Yes
“Adding more students (without adding costs) to reduce the cost of overhead per student.”
– Steve Bahls, Augustana College, Illinois
Yes
“Increase endowed financial aid.”
– Randy Helm, Muhlenberg College
Yes
“I recently wrote an editorial on this subject. My #1 priority would to to make the moderation of tuition increases a critical priority in the institutional strategic plan.”
– Leo Lambert, Elon University
Yes
“Sticker price or net price? The single largest expenditure we have is financial aid, equivalent to 50% of our operating budget in foregone revenue. We could reduce sticker price by reducing financial aid, but at a price: we would have a much less interesting and diverse student body, ethnically, intellectually, and socio-economically. As far as actual expenditures, nearly 75% of our operating budget goes to compensation, the majority of it to faculty. To make truly significant cost reductions, we would have to reduce faculty and increase class sizes.”
– Ron Thomas, University of Puget Sound
Yes
“Reallocate existing resources to the areas/activities you want to strengthen or build new.”
– Richard V. Hurley, University of Mary Washington
Yes
“Raise more money for financial aid.”
– Mary Lyons, University of San Diego
Yes
“Get students to graduate in 4 years rather than 6.”
– Jay Gogue, Auburn University
No
“Manage large-scale costs, e.g., health insurance, energy, contingent faculty. We also are looking hard at financial aid, though that cost will continue to rise. Finally, we are focused on growing our endowment and seeking alternative sources of revenue.”
– Philip A. Glotzbach, Skidmore College
Yes
“Increase other revenue sources, such as executive education, philanthropy. But in fact we have some elasticity on in-state rates, if mitigated by more scholarships. The mix is challenging.”
– Peter Syearns, provost, George Mason University
Yes
“Add more need-based scholarships.”
– University of Miami
Yes
“Develop more robust financial aid strategies! More efficiencies.”
– Brady Deaton, University of Missouri
Yes
“Those colleges that offer merit-based aid should redeploy those dollars to need-based aid. This will not only keep the price down but promote needed socio-economic diversity in the student body. Given the proportional dominance of compensation costs (salaries and benefits) in all college or university budgets, it will be essential to manage–and sadly, I fear, to restrain–compensation increases.”
– Steven Poskanzer, Carleton College
Yes
“Reduce faculty lines and financial aid, both of which would cause harm.”
– James F. Jones, Trinity College
No
“Change faculty-teacher/student ratios”
– Swarthmore College
Yes
“Growth rate of tuition has been modest and responsible. Growth rate of financial aid has been significant and is unsustainable. Start a national conversation about what we might do about the growth rate of financial aid, that would be more productive. Few pundits and fewer politicians understand the financial aid arms race and its impact on the cost of college.”
– Richard L.Torgerson, Luther College
Yes
“Legislators need to synchronize their sense of the value and role of public higher education with that of parents and students. While legislators seem to focus on the benefits accorded to the individual student who graduates, sight is lost on the public benefits. Educated, degreed citizens add social capacity to a community in addition to economic support. Businesses need talent and universities are the pipeline of that talent. I would argue that the savings and resources provided more than justify increases in state support. Educating a student appears to be 1/6 the cost of imprisoning a citizen. An increase in appropriations and/or scholarship support keeps tuition down.”
– San Francisco State University
No
“Re-engineer administrative processes.”
– University of New Hampshire
Yes
“Attract additional philanthropic funding to support the increasing academic experiences our students expect and deserve.”
– Mary Ann Baenninger, College of Saint Benedict
No
“We are committed to tuition increases below the cost of living for the foreseeable future.”
– Fairfield University
Yes
“Expand other sources of revenue to subsidize undergraduate tuition”
– David Maxwell, President, Drake University
Yes
“It’s not realistic for most schools to attempt to reduce tuition sticker price, though it is essential to slow its rate of increase. The goal should be to increase the availability of need-based financial aid for those families that lack the financial means to afford all or part of the sticker price.”
– Taylor Reveley, William & Mary
No
“This is a difficult question to answer because it is difficult to separate tuition reduction from other variables like financial aid and student indebtedness. The real question is who will pay for higher education and at what level are they willing to invest?”
– Nancy Oliver Gray, Hollins University
Yes
“I want to comment on the first question. The issue is not tuition (sticker price); it’s actual cost to families. As long as an institution can provide the requisite financial aid, it will continue to attract students. Unfortunately many families still link cost and quality. At Kalamazoo, given our limited endowment, we are beginning to see real pressure on the financial aid budget. Given the fact that we cut our budget 6% to address the estimated loss in endowment revenue four years ago, we have very few areas left to cut if we wish to sustain quality. One option would be to review staffing levels and use of overtime in the non-academic and student life areas to see if we have any redundancy. Unfortunately I do not think this would have a significant impact on our budget.”
– Eileen Wilson-Oyelaran, Kalamazoo College
Yes
“Replace some of the dollars in the operating budget that derive from tuition paid by students and their families with dollars that derive from other revenue sources.”
– David R. Anderson, St. Olaf College
No
“Also reduce the amount of tuition discount.”
– Southwestern University
Yes
“The university works consistently to keep tuition at the lowest level possible and offers generous financial aid to keep the doors of opportunity open, including more aggressive pursuit of private giving and strategic administrative streamlining. Our record enrollment speaks to our success. Additionally, the State of Illinois offers a four-year guaranteed tuition rate for entering undergraduates to provide families with predictability in financial planning.”
– Paula Allen-Meares, University of Illinois at Chicago
Yes
“Put a clear focus on academic program quality over all other demands for institutional funding. At the same time, continue to develop alternative sources of revenue.”
– Axel Steuer, Illinois College
Yes
“I would recast the nature of the challenge. Preparing young people for the intellectual and knowledge demands of the 21st century is an increasingly expensive proposition. In particular, the cost involved to meet the capacity of our highest achievers, our most academically precocious students, has reached an alarming rate. The question is, who owns the problem? If it is a collective matter, a matter of national survival, then we have more than enough wealth as a nation to meet the challenge. If it is a personal matter, tied solely to personal gain, then the cost will become increasingly problematic. We don’t leave the military defense of the nation to private families; why should we leave the intellectual power of the nation’s citizens to individual financing?”
– Joseph Urgo, St. Mary’s College of Maryland
Yes
“We intend to look at academic budget optimization that includes both non-instructional as well as instructional costs. Liberal arts colleges today must also examine how we can build more collaborative programs with similar institutions to hold down costs related to new positions and new programs. By examining the real cost of higher education — price minus discount — we need to increase net tuition revenue and provide the resources necessary for our faculty to have the best facilities for teaching and equipment to meet the changing needs in pedagogy. We feel that the demand will continue as long as the overall market will respond affirmatively to the importance of a liberal arts education.”
– Jack R. Ohle, President, Gustavus Adolphus College
Yes
“We cannot reduce tuition, but we can slow its growth by rationalizing faculty work loads and engaging in need-sensitive admissions policies.”
– Goucher College
No
“Reduce costs through examination, reconsideration, and decision-making about academic and extracurricular programs (with subsequent faculty/staff reductions and program reorganization, consolidation, and elimination).”
– Rob Pearigen, Millsaps College
Yes
“Over the last five years, Ohio State has held tuition increases to an average of only 3% annually. According to a College Board survey, undergraduate tuition at four-year public campuses increased by an average of 6.5% during that same timeframe. We offer a world-class education at an affordable price; our tuition is second lowest among Ohio’s selective public universities. Ohio State has increased financial aid significantly to maintain access for qualified students. This fall, the university awarded $128 million in institutional scholarships and grants. Additionally as of July 31, 2012, more than $171 million has been raised for student scholarships and support. By committing resources to financial aid, both institutional and through endowed funds, an Ohio State education remains attractive and affordable. Ohio State has been noted as a thought leader in finding innovative approaches to generating additional income. In the last two years, the University has generated more than $1 billion through new financing strategies (Century Bond, parking lease, streamlining, major affinity agreement). Additionally, since 2007, Ohio State has raised $1.6 billion in private funding. We believe continued efforts on increasing revenue, along with an increased focus on fundraising, are ways The Ohio State University is helping to manage tuition costs for our students.”
– E. Gordon Gee, The Ohio State University
Yes
“We have made a commitment to not increase our total cost of attendance beyond 3% for the forseeable future – all the while increasing our quality and growing our faculty and staff in modest, measured ways. Our “magic,” if you will, is to grow our student population in a modest, measured way – from 1350 to 1425 and controlling our discount. If I could, I would measure our increase down to 2%.”
– John Roush, Centre College
Yes
“The goal of attracting students requires the coupling of better understanding of tuition growth with understanding the value proposition of the educational experience for both the indivdual and societal return-on tuition investment. While one might argue that the fundamental value propositions of public and private institutions are similar, public institutions have a covenant with the state that is under enormous pressure in the context of decreasing public financial support.”
– Lou Anna K. Simon, Ph.D. President, Michigan State University
