The last four presidents of the United States each attended a
highly selective college. All nine Supreme Court justices did, too, as did the
chief executives of General Electric (Dartmouth), Goldman Sachs (Harvard),
Wal-Mart (Georgia Tech), Exxon Mobil (Texas) and Google (Michigan).
Like it or not, these colleges have outsize influence on American society. So
their admissions policies don’t matter just to high school seniors; they’re a
matter of national interest.
More than seven years ago, a 44-year-old political scientist named Anthony Marx
became the president of Amherst College, in western Massachusetts, and set out
to change its admissions policies. Mr. Marx argued that elite colleges were
neither as good nor as meritocratic as they could be, because they mostly
overlooked lower-income students.
For all of the other ways that top colleges had become diverse, their student
bodies remained shockingly affluent. At the University of Michigan, more
entering freshmen in 2003 came from families earning at least $200,000 a year
than came from the entire bottom half of the income distribution. At some
private colleges, the numbers were even more extreme.
In his 2003 inaugural address, Mr. Marx — quoting from a speech President John
F. Kennedy had given at Amherst — asked, “What good is a private college unless
it is serving a great national purpose?”
On Sunday, Mr. Marx presided over his final Amherst graduation. This summer, he
will become head of the New York Public Library. And he can point to some
impressive successes at Amherst.
More than 22 percent of students now receive federal Pell Grants (a rough
approximation of how many are in the bottom half of the nation’s income
distribution). In 2005, only 13 percent did. Over the same period, other elite
colleges have also been doing more to recruit low- and middle-income students,
and they have made some progress.
It is tempting, then, to point to all these changes and proclaim that elite
higher education is at long last a meritocracy. But Mr. Marx doesn’t buy it. If
anything, he worries, the progress has the potential to distract people from how
troubling the situation remains.
When we spoke recently, he mentioned a Georgetown University study of the class
of 2010 at the country’s 193 most selective colleges. As entering freshmen, only
15 percent of students came from the bottom half of the income distribution.
Sixty-seven percent came from the highest-earning fourth of the distribution.
These statistics mean that on many campuses affluent students outnumber
middle-class students.
“We claim to be part of the American dream and of a system based on merit and
opportunity and talent,” Mr. Marx says. “Yet if at the top places, two-thirds of
the students come from the top quartile and only 5 percent come from the bottom
quartile, then we are actually part of the problem of the growing economic
divide rather than part of the solution.”
I think Amherst has created a model for attracting talented low- and
middle-income students that other colleges can copy. It borrows, in part, from
the University of California, which is by far the most economically diverse top
university system in the country. But before we get to the details, I want to
address a question that often comes up in this discussion:
Does more economic diversity necessarily mean lower admissions standards?
No, it does not.
The truth is that many of the most capable low- and middle-income students
attend community colleges or less selective four-year colleges close to their
home. Doing so makes them less likely to graduate from college at all, research
has shown. Incredibly, only 44 percent of low-income high school seniors with
high standardized test scores enroll in a four-year college, according to a
Century Foundation report — compared with about 50 percent of high-income
seniors who have average test scores.
“The extent of wasted human capital,” wrote the report’s authors, Anthony P.
Carnevale and Jeff Strohl, “is phenomenal.”
This comparison understates the problem, too, because SAT scores are hardly a
pure measure of merit. Well-off students often receive SAT coaching and take the
test more than once, Mr. Marx notes, and top colleges reward them for doing
both. Colleges also reward students for overseas travel and elaborate community
service projects. “Colleges don’t recognize, in the same way, if you work at the
neighborhood 7-Eleven to support your family,” he adds.
Several years ago, William Bowen, a former president of Princeton, and two other
researchers found that top colleges gave no admissions advantage to low-income
students, despite claims to the contrary. Children of alumni received an
advantage. Minorities (except Asians) and athletes received an even bigger
advantage. But all else equal, a low-income applicant was no more likely to get
in than a high-income applicant with the same SAT score. It’s pretty hard to
call that meritocracy.
•
Amherst has shown that building a better meritocracy is possible, by doing, as
Mr. Marx says, “everything we can think of.”
The effort starts with financial aid. The college has devoted more of its
resources to aid, even if the dining halls don’t end up being as fancy as those
at rival colleges. Outright grants have replaced most loans, not just for poor
students but for middle-class ones. The college has started a scholarship for
low-income foreign students, who don’t qualify for Pell Grants. And Amherst
officials visit high schools they had never visited before to spread the word.
The college has also started using its transfer program mostly to admit
community college students. This step may be the single easiest way for a
college to become more meritocratic. It’s one reason the University of
California campuses in Berkeley, Los Angeles and San Diego are so much more
diverse than other top colleges.
Many community colleges have horrifically high dropout rates, but the students
who succeed there are often inspiring. They include war veterans, single parents
and immigrants who have managed to overcome the odds. At Amherst this year, 62
percent of transfer students came from a community college.
Finally, Mr. Marx says Amherst does put a thumb on the scale to give poor
students more credit for a given SAT score. Not everyone will love that policy.
“Spots at these places are precious,” he notes. But I find it tough to argue
that a 1,300 score for most graduates of Phillips Exeter Academy — or most
children of Amherst alumni — is as impressive as a 1,250 for someone from
McDowell County, W.Va., or the South Bronx.
The result of these changes is that Amherst has a much higher share of
low-income students than almost any other elite college. By itself, of course,
Amherst is not big enough to influence the American economy. But its policies
could affect the economy if more colleges adopted them.
The United States no longer leads the world in educational attainment, partly
because so few low-income students — and surprisingly few middle-income students
— graduate from four-year colleges. Getting more of these students into the best
colleges would make a difference. Many higher-income students would still
graduate from college, even if they went to a less elite one. A more educated
population, in turn, would probably lift economic growth.
The Amherst model does cost money. And it would be difficult to maintain if
Congress cuts the Pell budget, as some members have proposed. But when you add
everything up, I think the model isn’t only the fairest one and the right one
for the economy. It’s also the best one for the colleges themselves. Attracting
the best of the best — not just the best of the affluent — and letting them
learn from one another is the whole point of a place like Amherst.
“We did this for educational reasons,” Mr. Marx says. “We aim to be the most
diverse college in the country — and the most selective.”
AS hundreds of thousands of students rush to fill out college applications to
meet end-of-the-year deadlines, it might be worth asking them: Is where you
spend the next four years of your life that important?
The sluggish economy and rising costs of college have only intensified questions
about whether expensive, prestigious colleges make any difference. Do their
graduates make more money? Get into better professional programs? Make better
connections? And are they more satisfied with their lives, or at least with
their work?
Many college guidance counselors will say, find your own rainbow. But that can
sound like pablum to even the most laid-back parent and student.
Answers to such questions cannot be found, typically, in the sort of data
churned out annually in the U.S. News and World Report rankings, which tend to
focus on inputs like average SAT scores or college rejection rates. Handicappers
shy away from collating such information partly because it can be hard to
measure something like alumni satisfaction 5 to 10 years out. Moreover, in
taking a yardstick to someone’s success, or quality of life, how much can be
attributed to one’s alma mater, versus someone’s aptitude, intelligence and
doggedness?
But economists and sociologists have tried to tackle these questions. Their
research, however hedged, does suggest that elite schools can make a difference
in income and graduate school placement. But happiness in life? That’s a
question for another day.
Among the most cited research on the subject — a paper by economists from the
RAND Corporation and Brigham Young and Cornell Universities — found that “strong
evidence emerges of a significant economic return to attending an elite private
institution, and some evidence suggests this premium has increased over time.”
Grouping colleges by the same tiers of selectivity used in a popular college
guidebook, Barron’s, the researchers found that alumni of the most selective
colleges earned, on average, 40 percent more a year than those who graduated
from the least selective public universities, as calculated 10 years after they
graduated from high school.
Those same researchers found in a separate paper that “attendance at an elite
private college significantly increases the probability of attending graduate
school, and more specifically graduate school at a major research university.”
One major caveat: these studies, which tracked more than 5,000 college
graduates, some for more than a decade, are themselves now more than a decade
old. Over that period, of course, the full sticker price for elite private
colleges has far outstripped the pace of inflation, to say nothing of the cost
of many of their public school peers (even accounting for the soaring prices of
some public universities, especially in California, suffering under state budget
crises).
For example, full tuition and fees at Princeton this year is more than $50,000,
while Rutgers, the state university just up the New Jersey Turnpike, costs state
residents less than half that. The figures are similar for the University of
Pennsylvania and Pennsylvania State University. (For the sake of this exercise,
set aside those students at elite colleges whose financial aid packages cover
most, if not all, of their education.)
Despite the lingering gap in pricing between public and private schools, Eric R.
Eide, one of the authors of that paper on the earnings of blue-chip college
graduates, said he had seen no evidence that would persuade him to revise, in
2010, the conclusion he reached in 1998.
“Education is a long-run investment,” said Professor Eide, chairman of the
economics department at Brigham Young, “It may be more painful to finance right
now. People may be more hesitant to go into debt because of the recession. In my
opinion, they should be looking over the long run of their child’s life.”
He added, “I don’t think the costs of college are going up faster than the
returns on graduating from an elite private college.”
Still, one flaw in such research has always been that it can be hard to
disentangle the impact of the institution from the inherent abilities and
personal qualities of the individual graduate. In other words, if someone had
been accepted at an elite college, but chose to go to a more pedestrian one,
would his earnings over the long term be the same?
In 1999, economists from Princeton and the Andrew W. Mellon Foundation looked at
some of the same data Professor Eide and his colleagues had used, but crunched
them in a different way: they compared students at more selective colleges to
others of “seemingly comparable ability,” based on their SAT scores and class
rank, who had attended less selective schools, either by choice or because a top
college rejected them.
The earnings of graduates in the two groups were about the same — perhaps
shifting the ledger in favor of the less expensive, less prestigious route. (The
one exception was that children from “disadvantaged family backgrounds” appeared
to earn more over time if they attended more selective colleges. The authors,
Stacy Berg Dale and Alan B. Krueger, do not speculate why, but conclude, “These
students appear to benefit most from attending a more elite college.”)
Earnings, of course, and even graduate school attendance, are but two of many
measurements of graduates’ success post-college.
Earlier this year, two labor and education professors from Penn State, along
with a sociologist from Claremont Graduate University in California, sought to
examine whether graduates from elite colleges were, in general, more satisfied
in their work than those who attended less prestigious institutions.
Writing in April in the Journal of Labor Research, the three researchers argued
that “an exclusive focus on the economic outcomes of college graduation, and
from prestigious colleges in particular, neglects a host of other employment
features.”
Mining a sample of nearly 5,000 recipients of bachelor’s degrees in 1992 and
1993, who were then tracked for nearly a decade, the authors concluded that “job
satisfaction decreases slightly as college selectivity moves up.” One hypothesis
by the authors was that the expectations of elite college graduates — especially
when it came to earnings — might have been higher, and thus more subject to
disappointment, than the expectations of those who graduated from less
competitive colleges.
Still, one of those authors, Scott L. Thomas, a sociologist who is a professor
of educational studies at Claremont, said high school students and their parents
should take any attempt to apply broad generalizations to such personal choices
with a grain of salt.
“Prestige does pay,” Mr. Thomas said in an interview. “But prestige costs, too.
The question is, is the cost less than the added return?”
His answer was one he said he knew families would find maddening: “It depends.”
For example, someone who knew he needed to earn a reliable salary immediately
after graduation, and as a result chose to study something practical like
business or engineering, might find the cost-benefit analysis tilted in favor of
a state school, he said.
“Students from less affluent backgrounds are going to find themselves in
situations where college is less about ‘finding themselves,’ and more about
skills acquisition and making contacts that will lead straight into the labor
market,” Mr. Thomas said. For such a student, he said, a state university,
particularly a big one, may also have a large, passionate alumni body. It, in
turn, may play a disproportionate role in deciding who gets which jobs in a
state in a variety of fields — an old-boy (and increasingly old-girl) network
that may be less impressed with a job applicant’s Ivy league pedigree.
“If you’ve attended a big state school with a tremendous football program,” Mr.
Thomas said, “there’s tremendous affinity and good will — whether or not you had
anything to do with the football program.”
In the end, some researchers echo that tried-and-perhaps-even-true wisdom of
guidance counselors: the extent to which one takes advantage of the educational
offerings of an institution may be more important, in the long run, than how
prominently and proudly that institution’s name is being displayed on the back
windows of cars in the nation’s wealthiest enclaves.
In this analysis, one’s major — and how it aligns with the departmental
strengths of a university — may be more significant than the place in the
academic pecking order awarded to that college by the statisticians at U.S.
News.
“Everything we know from studying college student experiences and outcomes tells
us that there is more variability within schools than between them,” said
Alexander C. McCormick, a former admissions officer at his alma mater, Dartmouth
College, and now an associate professor of education at Indiana University at
Bloomington.
“This is the irony, given the dominance of the rankings mentality of who’s No. 5
or No. 50,” Professor McCormick added. “The quality of that biology major
offered at School No. 50? It may exceed that at School No. 5.”
This article has been revised
to reflect the following correction:
Correction: December 17, 2010
An earlier version of this article referred incorrectly
The rising
cost of college — even before the recession — threatens to put higher education
out of reach for most Americans, according to the biennial report from the
National Center for Public Policy and Higher Education.
Over all, the report found, published college tuition and fees increased 439
percent from 1982 to 2007 while median family income rose 147 percent. Student
borrowing has more than doubled in the last decade, and students from
lower-income families, on average, get smaller grants from the colleges they
attend than students from more affluent families.
“If we go on this way for another 25 years, we won’t have an affordable system
of higher education,” said Patrick M. Callan, president of the center, a
nonpartisan organization that promotes access to higher education.
“When we come out of the recession,” Mr. Callan added, “we’re really going to be
in jeopardy, because the educational gap between our work force and the rest of
the world will make it very hard to be competitive. Already, we’re one of the
few countries where 25- to 34-year-olds are less educated than older workers.”
Although college enrollment has continued to rise in recent years, Mr. Callan
said, it is not clear how long that can continue.
“The middle class has been financing it through debt,” he said. “The scenario
has been that families that have a history of sending kids to college will do
whatever if takes, even if that means a huge amount of debt.”
But low-income students, he said, will be less able to afford college. Already,
he said, the strains are clear.
The report, “Measuring Up 2008,” is one of the few to compare net college costs
— that is, a year’s tuition, fees, room and board, minus financial aid — against
median family income. Those findings are stark. Last year, the net cost at a
four-year public university amounted to 28 percent of the median family income,
while a four-year private university cost 76 percent of the median family
income.
The share of income required to pay for college, even with financial aid, has
been growing especially fast for lower-income families, the report found.
Among the poorest families — those with incomes in the lowest 20 percent — the
net cost of a year at a public university was 55 percent of median income, up
from 39 percent in 1999-2000. At community colleges, long seen as a safety net,
that cost was 49 percent of the poorest families’ median income last year, up
from 40 percent in 1999-2000.
The likelihood of large tuition increases next year is especially worrying, Mr.
Callan said. “Most governors’ budgets don’t come out until January, but what
we’re seeing so far is Florida talking about a 15 percent increase, Washington
State talking about a 20 percent increase, and California with a mixture of
budget cuts and enrollment cuts,” he said.
In a separate report released this week by the National Association of State
Universities and Land-Grant Colleges, the public universities acknowledged the
looming crisis, but painted a different picture.
That report emphasized that families have many higher-education choices, from
community colleges, where tuition and fees averaged about $3,200, to private
research universities, where they cost more than $33,000.
“We think public higher education is affordable right now, but we’re concerned
that it won’t be, if the changes we’re seeing continue, and family income
doesn’t go up,” said David Shulenburger, the group’s vice president for academic
affairs and co-author of the report. “The public conversation is very often in
terms of a $35,000 price tag, but what you get at major public research
university is, for the most part, still affordable at 6,000 bucks a year.”
While tuition has risen at public universities, his report said, that has
largely been to make up for declining state appropriations. The report offered
its own cost projections, not including room and board.
“Projecting out to 2036, tuition would go from 11 percent of the family budget
to 24 percent of the family budget, and that’s pretty huge,” Mr. Shulenburger
said. “We only looked at tuition and fees because those are the only things we
can control.”
Looking at total costs, as families must, he said, his group shared Mr. Callan’s
concerns.
Mr. Shulenburger’s report suggested that public universities explore a variety
of approaches to lower costs — distance learning, better use of senior year in
high school, perhaps even shortening college from four years.
“There’s an awful lot of experimentation going on right now, and that needs to
go on,” he said. “If you teach a course by distance with 1,000 students, does
that affect learning? Till we know the answer, it’s difficult to control costs
in ways that don’t affect quality.”
Mr. Callan, for his part, urged a reversal in states’ approach to
higher-education financing.
“When the economy is good, and state universities are somewhat better funded, we
raise tuition as little as possible,” he said. “When the economy is bad, we
raise tuition and sock it to families, when people can least afford it. That’s
exactly the opposite of what we need.”
This
article has been revised to reflect the following correction:
Correction:
December 4, 2008
Because of an editing error, an article on Wednesday about the increasing cost
of higher education gave an incorrect context for two figures: the 439 percent
increase in college tuition and fees and the 147 percent increase in median
family income since 1982. Those figures were not adjusted for inflation. The
error was repeated for the data in an accompanying chart. A corrected chart
appears at nytimes.com/national.
The article also described incorrectly the report for the National Center for
Public Policy and Higher Education that cited the figures. It is produced every
other year, not annually.
Arizona State University, anticipating at least $25 million in
budget cuts this fiscal year — on top of the $30 million already cut — is ending
its contracts with as many as 200 adjunct instructors.
Boston University, Cornell and Brown have announced selective hiring freezes.
And Tufts University, which for the last two years has, proudly, been one of the
few colleges in the nation that could afford to be need-blind — that is, to
admit the best-qualified applicants and meet their full financial need — may not
be able to maintain that generosity for next year’s incoming class. This fall,
Tufts suspended new capital projects and budgeted more for financial aid. But
with the market downturn, and the likelihood that more applicants will need
bigger aid packages, need-blind admissions may go by the wayside.
“The target of being need-blind is our highest priority,” said Lawrence S.
Bacow, president of Tufts. “But with what’s happening in the larger economy, we
expect that the incoming class is going to be needier. That’s the real
uncertainty.”
Tough economic times have come to public and private universities alike, and
rich or poor, they are figuring out how to respond. Many are announcing hiring
freezes, postponing construction projects or putting off planned capital
campaigns.
With endowment values and charitable gifts likely to decline, the process of
setting next year’s tuition low enough to keep students coming, but high enough
to support operations, is trickier than ever.
Dozens of college presidents, especially at wealthy institutions, have sent
letters and e-mail to students and their families describing their financial
situation and belt-tightening plans.
At Williams College, for example, President Morton Owen Schapiro wrote that with
last year’s negative return on the endowment and the worsening situation since
June, some renovation and facilities spending would be reduced and nonessential
openings left unfilled.
Many students, increasingly conscious of costs, are flocking to their state
universities; at Binghamton University, part of the New York State university
system, applications were up 50 percent this fall. But with this year’s state
budget problems, tuition increases at public universities may be especially
steep. Some public universities have already announced midyear tuition
increases.
With endowment values shrinking, variable-rate debt costs rising and states
cutting their financing, colleges face challenges on multiple fronts, said Molly
Corbett Broad, president of the American Council on Education.
“There’s no evidence of a complete meltdown,” Ms. Broad said, “but the problems
are serious enough that higher education is going to need help from the
government.”
And as in other sectors, she said, some financially shaky institutions will most
likely be seeking mergers.
Nationwide, retrenchment announcements are coming fast and furious, as state
after state reduces education financing.
The University of Florida, which eliminated 430 faculty and staff positions this
year, was told recently to cut next year’s budget by 10 percent, probably
requiring more layoffs. Financing for the University of Massachusetts system was
cut $24.6 million for the current fiscal year.
On Thursday, Gov. Arnold Schwarzenegger of California proposed a midyear budget
cut of $65.5 million for the University of California system — on top of the $48
million reduction already in the budget.
“Budget cuts mean that campuses won’t be able to fill faculty vacancies, that
the student-faculty ratio rises, that students have lecturers instead of tenured
professors,” said Mark G. Yudof, president of the California system. “Higher
education is very labor intensive. We may be getting to the point where there
will have to be some basic change in the model.”
Private colleges, too, are tightening their belts — turning down thermostats,
scrapping plans for new gardens or quads, reducing faculty raises.
But many are also increasing their pool of financial aid.
Vassar College will give out $1 million more in financial aid this year than
originally budgeted, even though the endowment, which provides a third of its
operating budget, dropped to $765 million at the end of September, down $80
million from late June. President Catharine Bond Hill of Vassar said the college
would reduce its operating costs, but remain need-blind.
Many institutions with small endowments, however, will probably become more
need-sensitive than usual this year, quietly offering places to fewer students
who need large aid packages.
At Dickinson College in Pennsylvania, Robert J. Massa, the vice president for
enrollment and student life, said that about 200 applicants last year might have
been accepted if they had not needed so much financial help, but that that
number might rise to 250 this year.
Dickinson’s endowment was $280 million in mid-October, Mr. Massa said, down from
$350 million in June. And while more than three quarters of the college’s
operating budget comes from student fees, some endowment revenue will have to be
replaced.
“Here’s the rub,” Mr. Massa said. “I really don’t think that colleges can afford
to increase their tuition price at higher than inflation this year. I don’t
think the public will stand for it. What we’ve done in higher education is let
our dreams and aspirations dictate our cost structure.”
Most colleges will have a better sense next month of how many students are
struggling, when second-semester tuition bills come due.
Paola Aguilar, a sophomore at Shenandoah University in Winchester, Va., is
worrying about whether she can afford to return next year.
“My mom became a Realtor last year to try to earn more money, but that didn’t
help,” Ms. Aguilar said. “I’ve talked to the people here, and they’ve helped me
out a little more for next semester, but as of right now, if I don’t get more
help, I’ll have to leave next year and go somewhere cheaper, near home.”
Tracy Fitzsimmons, Shenandoah’s president, said she began hearing about
students’ financial anxieties in mid-September.
“They’d tell me they were thinking they might have to move off campus next
semester and stay three to a bedroom, or give up the meal plan and just eat one
meal a day,” Ms. Fitzsimmons said.
Shenandoah has started an emergency grant fund for students, increased its loan
program and prepared to stretch out spring tuition payments for hard-pressed
families.
Economic uncertainty touches every facet of higher education.
“We are planning to begin a capital campaign of $150-185 million,” said Karen R.
Lawrence, president of Sarah Lawrence College. “We will still do that. We’re not
compromising our ambitions, but the timing will be a little bit deferred.”
At the wealthiest institutions, endowment revenue usually covers about a third
of operating costs, and most colleges and universities spend a percentage of
their endowment, based on its average value over the previous three years,
helping to smooth out economic ups and downs.
In recent years, with tuition rising faster than inflation, college
affordability has become a significant issue. And with the sharp growth of
endowments in recent years — Harvard’s hit $36.9 billion this summer — some
politicians, notably Senator Charles E. Grassley, Republican of Iowa, have
pushed for a requirement that colleges spend 5 percent of their endowments. Many
of the wealthiest institutions responded by expanding financial aid last year,
with dozens of them replacing loans with grants.
This fall, more universities are taking steps to increase affordability.
Benedictine University, a Roman Catholic institution in Illinois, is freezing
tuition; Vanderbilt University will replace loans with grants; Boston University
has expanded scholarships for students who graduated from Boston public schools;
and the University of Toledo announced free tuition for needy, high-performing
graduates of Ohio’s six largest public school systems.
Presidents of many expensive private colleges are wondering how much more
tuition pressure families can bear.
“I wouldn’t deny that a tuition freeze has occurred to me, but we can’t afford
heroic gestures,” said Sandy Ungar, president of Goucher College in Baltimore.
Given the current climate, some say, colleges need to re-examine all of their
economic assumptions.
“Several years ago, we started thinking about sustainability in environmental
terms,” said Dick Celeste, the president of Colorado College. “Now we need to be
thinking about sustainability in economic terms.”
Thu Oct 30, 2008
9:20am EDT
Reuters
By Andrew Stern
CHICAGO (Reuters) - Higher education has been a growth
industry in the United States, evidenced by swelling enrollments, expanding
campuses and growing endowments. But the global economic crisis has caught
colleges and universities in a vice.
With their endowments shrinking along with stock markets, some schools may raise
tuition more than usual, even as students complain it is already too expensive
and struggle to get loans.
"This will definitely test many schools," said Ronald Watts, the finance chief
of Oberlin College, an elite private school in Ohio whose endowment of nearly
$750 million has shrunk by about 15 percent in the past four months.
To be sure, schools have proven resilient in past recessions, helped by rising
student enrollment as people seek a leg-up in a bleak job market.
"It's not going to be as drastic as what corporations are doing," Watts said.
"You don't just eliminate people and lay off faculty and expect not to destroy
your academic program."
Nevertheless, a few schools have already announced fresh tuition hikes, and
school officials said they were keeping a close eye on their finances. And, with
schools under financial pressure, local economies all over the country are
likely to suffer.
Tuition increases have outpaced inflation for years. Tuition and fees at public
universities have risen 175 percent since 1992, while the consumer price index
rose 48 percent.
At the University of Wisconsin in Madison, the school's $1.8 billion endowment
has shrunk by 18 percent since the start of the year, Sandy Wilcox of the
University of Wisconsin Foundation said. Dipping into the endowment to make a
promised contribution to the school's budget only shrinks it further.
Wisconsin, like many schools with substantial endowments -- 400 have endowments
over $100 million and 76 above $1 billion -- use a three-year averaging system
to smooth out how much they pay out from earnings.
RAINY DAY FUND
The wealthiest schools have come to rely on endowments and there has been
growing pressure from Congress to boost payouts, threatening to take away their
nonprofit, tax-free status if they don't comply.
For most other schools, small endowments serve as a "rainy day fund" that can
disappear quickly in tough times, said John Griswold of Commonfund, which
manages money for nonprofits.
"Schools we're most concerned about are smaller, less well-endowed private
colleges," said Roger Goodman, vice president at Moody's Investors Service,
which assigns credit ratings to 500 schools. He said endowment balances have
likely plummeted by 30 percent or more.
"You still need a college degree to be a full participant in the work force," he
said. "What we may see is a shifting (of applicants) from the higher-priced,
small, private colleges, to a lower-priced four-year university, and from the
four-year universities to community colleges for a couple of years."
A survey of 2,500 prospective students by MeritAid.com found 57 percent were now
considering less-expensive colleges due to the economic downturn.
Many prospective students encounter sticker shock when confronted by the $50,000
price tag at schools like Oberlin, Boston University and Bennington College in
Vermont.
But financial aid and federal loans remain available, and families whose assets
have declined qualify for more aid.
Boosting access to college is one plank of Democratic presidential hopeful
Barack Obama's platform. This may add pressure on publicly-funded universities
to boost enrollment, which has already climbed 10 percent since 2002.
Sticker prices at private colleges are usually much higher than pubic schools,
but students rarely pay full price.
"Sometimes a small, liberal arts college will actually be better for a student
and more affordable than in-state (public schools)," said Ken Himmelman,
Bennington's dean of admissions.
Public universities, which educate roughly 75 percent of the 17.5 million U.S.
students, are anticipating cuts in state appropriations, which cover a
substantial chunk of their costs.
State tax receipts have declined due to the economic slowdown and the bursting
of the housing bubble.
"They'll look to the university to cut. They don't want to cut prisons, or
roads," Wisconsin's Wilcox said.
MAKING CUTS
Massachusetts' public universities have cut budgets by 5 percent as their part
in covering a state-wide shortfall.
Some public and private schools have declared hiring freezes and made efforts to
reduce expenses because of shrunken endowments, and actual or expected declines
in gifts and government support.
The state of Arizona cut its contribution to the state university system by 4
percent this year and 5 percent next year -- with another mid-year cut possible,
Its more than 118,000 university students may have to absorb a tuition hike next
year of 10 percent or more.
Hawaii lowered its contribution 2 percent, though enrollment rose 6 percent.
Pennsylvania's public universities will raise tuition 4 percent next year ahead
of state cuts.
California sliced 1 percent off its $3 billion contribution to universities but
more cuts are expected as tax revenues lag projections. This spring, New York
reduced its contribution and warned another 30 percent cut may be in the offing.
The bursting of the housing bubble has dried up home equity loans many families
have used to pay tuition. And the stock market drop has shrunk some families'
savings for education.
Often, much of the media's focus is on wealthy private schools with
multibillion-dollar endowments like Harvard and Yale, which have promised to
cover costs for many of those fortunate enough to gain admission.
But at less well-heeled private schools, which make up most of the United
States' unrivaled roster of 4,300 nonprofit institutions of higher learning,
significant tuition increases may be unavoidable.
"If history repeats itself, you're going to have falling state support on a
per-student basis, rising enrollments, and probably rises in tuition," said Paul
Lingenfelter, president of State Higher Education Executive Officers.
Some schools may try to wring more out of their campuses. Professors may have to
teach more courses, schools may rent out underutilized campus buildings, or even
sell dormitories to hoteliers and lease them back, suggested Richard Vedder, who
heads the Center for College Affordability and Productivity.
"Schools normally rely on tuition increases" to offset falls in government and
donor support, Vedder said. "But as economic conditions worsen, students are
going to be resistant, plus there is political pressure not to raise tuition. In
dollar terms, budgets may be equal to last year, and some may be forced into
some sort of austerity mode."
LAST month, Harvard reached into its deep pockets — its endowment is $35
billion — and changed the way it calculates student financial aid. The aim, its
press release says, is “to make Harvard College more affordable for families
across the income spectrum.” Last week, Yale, whose $22.5 billion endowment is
growing even faster than Harvard’s, followed suit. Yale’s president, Richard
Levin, said he didn’t want students to have to choose “between Yale and Harvard
based on cost.”
Who will benefit? Mostly the people Harvard calls “middle- and upper-middle
income families,” by which it means those earning $120,000 to $180,000 each
year. Yale stretches its new plan to include families earning $200,000. (The
median family income in the United States is around $50,000.)
Next year, each of these institutions will add more than $20 million to what
they now spend on financial aid, reducing the cost of a college year for
families earning $180,000 to $18,000, from $30,000. That’s good news for
students at Harvard or Yale. But it’s bad news for many hoping to attend other
private four-year colleges — and for the nation in general.
The problem is that most colleges will feel compelled to follow Harvard and
Yale’s lead in price-discounting. Yet few have enough money to give more aid to
relatively wealthy students without taking it away from relatively poor ones.
Most colleges already tend to favor the affluent because their budgets require
it. More than 90 percent of America’s private colleges have endowments less than
1 percent the size of Harvard’s. Giving an upper-middle-class applicant even a
generous partial scholarship puts less strain on their budgets than giving a
full scholarship to a student whose family can afford to pay nothing.
In 2004, Lawrence Summers, then Harvard’s president, pointed out that
three-fourths of the students at selective colleges come from the top income
quartile and only 9 percent from the bottom two quartiles combined. And as
Donald Heller, a professor of education at Pennsylvania State University, has
shown in a number of studies, colleges are increasingly awarding grant money in
the form of so-called merit scholarships not based on financial need. More of
this assistance is going to students in the top income quartile than to any
other income group.
It is understandable that Harvard and Yale want to make themselves more
affordable. But the way they’re going about it sets an example that is likely to
make it even harder for low-income students to attend the best college for which
they are qualified. Harvard’s stated motive is to stop prospective students from
“voting with their feet” by choosing public universities or other private
colleges. But surely this is not a very serious problem for a university that
each year turns away hundreds of high school valedictorians and whose yield (the
percentage of admitted applicants who enroll) is around 80 percent.
At Yale, Mr. Levin has acknowledged that another motive for the new policy is to
blunt the growing pressure on wealthy universities to spend more income from
their endowments. But is supporting upper-middle-class students the wisest way
to dispense the additional money?
In fact, the new policy represents a step backward from the leadership that some
elite colleges previously exerted. During the Summers presidency, Harvard
focused on the problems of needy students by combining increased financial aid
and recruitment in low-income areas, raising its percentage of students eligible
for federal Pell grants to 11.9 percent in 2006, from 9.4 percent in 2004.
Harvard demonstrated to other colleges that there is undiscovered talent in the
two bottom income quartiles.
In a society that claims to believe in equal opportunity, our top universities
should lead by example. The scandalous fact is that between 2004 and 2006 — an
era of enormous private wealth accumulation — 27 of the 30 top-ranked American
universities and 26 of the top 30 liberal arts colleges saw a decline in the
percentage of low-income (Pell-grant-eligible) students. The problem Mr. Summers
described is only growing worse. While some upper-middle-class families have to
sacrifice in order to pay for college and may deserve more financial help, most
of their children find a way to attend college. Low-income students earn
bachelor’s degrees at less than one-third the rate of high-income students.
Only a few colleges can afford to make tuition affordable for both the poor and
the affluent. For every college to become accessible to talented students
regardless of income, the federal government must create enhanced grant
programs, progressive tax incentives and programs that reduce the debt of
graduates who spend time in public service. Otherwise, America will be the
loser, no matter who wins the Harvard-Yale game.
Roger Lehecka, a former dean of students at Columbia,
consults for scholarship
programs for needy students.
Andrew Delbanco is the director of American studies
