In an effort to stay competitive with other elite academic institutions, the University will raise tuition by 5.1 percent next year to increase revenue, which has been depleted due to the faltering economy. University officials have been openly discussing a tuition increase for months, but officially stated that the cost of attendance will rise from $36,051 to $37,854 in a statement released in late March.
"The University has always been committed to making certain that all its students can enjoy a rigorous Chicago education," President Randel said in the statement. "While we work to keep cost increases as low as possible, we are also increasing aid to make sure that all of our students, regardless of the financial circumstances of their families, remain able to the attend the University."
According to administrators financial aid will increase proportionally to the rise in tuition, an important factor in attracting top high school students. "As in the past, all current and new students will receive the support they need," said Alicia Reyes, Director of the Office of College Aid.
Universities across the country have made comparable jumps in tuition. Harvard University announced that it will raise its tuition by about 5 percent next year, and Princeton University 4 percent. The nationwide increase has come as endowments have taken a hit in the down-turned stock market, and administrators have been forced to look elsewhere for much needed funding.
The University always keeps an eye on the public financial statements of peer colleges, not necessarily to gauge their own rates, but to stay within the parameters of acceptable economic norms. In the past, the University has raised tuition less than what is needed to meet current costs in order to not price itself out of the market. Over the past ten to fifteen years, college tuitions have increased at a rate almost twice as fast as regular inflation or, as it is commonly called, the Consumer Price Index (CPI). The cause for this trend lies in the types of expenditures that colleges must face: products like periodicals and computer supplies-vital to a thriving university-are becoming more expensive than regular consumer goods.
"Universities use different functions than those that go into computing the CPI for other areas of the economy," said Donald Reaves, chief financial officer of the University. "For one, we are a very labor intensive institution. Hiring the amount of faculty and staff that we employ is a very expensive venture."
According to Reaves, the main factor that has driven prices up is the intense competition inherent in the academic industry.
"We are competing with many world class institutions to get the best faculty and students," he said. "Our peer institutions attempt to offer lucrative financial aid packages to get the best students and high salaries to hire renowned professors, and we must be able to compete financially in these areas."
While the University's endowment has experienced relatively mild losses compared to some other academic institutions, it has yield two consecutive quarters of negative returns. In order to stop the shaving of expenditures-such as cutting programs and faculty positions-the University has chosen to increase the cost of attendance.
"We're going to have to raise prices because, in the end, it's all about quality," Reaves said.