April 12, 2005

Higher tuition coincides with more aid for some

By now, Americans have come to expect and bemoan the astounding sticker price of a college education. Yet the rising cost of attending a four-year college raises the concern that such costs are outpacing the rate of increase of family incomes in the United States.

Statistics show a trend that lends some credence to this concern. From 1992 to 2002, the median family income rose 10 percent, while the cost of attending a four-year institution rose 38 percent, according to US News and World Report.

This rapid increase shows no signs of slowing down. Last year alone witnessed a six percent hike in tuition and fees at private colleges and a 14 percent jump at public institutions, bringing the mean to $19,710 and $4,694 respectively, according to the College Board. These rates come at a time when the income gap between rich and poor families in America has widened.

The University has not been immune to the trend of tuition increases. In recent years, tuition has increased by about five percent annually, a rate comparable to increases at peer institutions according to Michael Behnke, vice president of the University and dean of college enrollment.

This steady rate of increase represents a greater rate than national inflation, which is currently about three percent, an inevitable trend according to Behnke. "Attracting top faculty and keeping them, and providing both them and the students with the facilities that support their work, will always result in tuition increases larger than measures of inflation or consumer prices for commodities."

However, American families have not always been faced with such high university costs. In the latter half of the 1970s, tuition increases did not keep pace with inflation, which crept into the double digits. Consequently, tuition at both public and private colleges dropped in real terms. The 1980s ushered in the beginning of a rise in tuition rates, when private universities began to outstrip tuition increases at public universities. Now both private and public institutions are witnessing significantly increasing rates of tuition.

Behnke maintains that there are other important indicators to consider for the cause of this trend. "One is the proportion of family income used for education expenses. For those who actually pay—those not on financial aid—it's been relatively flat for many years," said Behnke.

This reality is a consequence of the high-tuition/high-financial aid model, which now pervades higher education. This model was largely initiated by Harvard University in the late 1970s. In his book, Knowledge & Money: Research Universities and the Paradox of the Marketplace, Roger Geiger traces the lineage of this high-tuition/high-aid policy to 1978, when Harvard upped its tuition by 18 percent—a vast increase—which began a trend among other universities. "Pricing leadership was exerted by the institutions with the strongest market position and the greatest capacity to offer their students financial aid," Geiger wrote.

This year, 56 percent of students at the University received financial aid, bringing the total grant money provided to nearly $50 million. "This obviously impacts the size of the yearly tuition increases in that not all students are paying all the increase," Behnke said. "Income for those [families] who actually pay full tuition has increased much more than has median family income. The gap between the rich and the poor in this country has grown in recent years," Behnke said. "We must meet the challenge of keeping a quality higher education affordable for the poorer segments of our society through financial aid."

Many administrators like Behnke think that this model is working. "It is important to note that all studies indicate that students, at least the serious students that we attract, base their decision much more on quality than on price," he said.

In fact, during the mounting tuition hikes of the 1980s, colleges' higher prices became associated with quality and prestige. As Geiger wrote, "More and more institutions embraced the high-tuition approach and their bad social consciences always mollified by doling out increasing amounts of institutional financial aid."

On average, the University has a somewhat less affluent student body than its peer institutions, according to Behnke. In self-reported data supplied by a sample of the student body, 48 percent of those sampled reported a family income of more than $100,000. The median income for a four-member family in the United States was $65,093 in 2003.

Tuition represented 19 percent of the University's revenues last year, according to Richard Saller, provost of the University. Tuition dollars are used to pay for faculty and staff salaries, maintenance of the physical plant and other services that keep the University running, Saller said.