September 8, 2005

Tuition Dollars Explained

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University tuitions are like leapfrogs – they are good at jumping.

Between the 2003 and 2004 school years, tuition and mandatory fees for Cornell’s endowed schools rose 4.9 percent, from $28,754 to $30,167. For the contract schools, the spike was even higher – a 9.7 percent increase from $14,624 to $16,037 for New York residents and a 10.2 percent increase from $25,924 to $28,567 for non-New York State residents.

Yet according to Carolyn Ainslie, vice president for planning and budgeting, “the back of the envelope calculation of undergraduate education at Cornell, on average, is more in the range of $50,000 to $60,000.”

This price considers not only faculty salaries but also facilities cost and maintenance, libraries and their employees, academic support, lecturers and other things that contribute to an undergraduate’s education, such as research or tutoring programs, Ainslie said.

The University’s division of planning and budgeting, after factoring these types of expenses, along with financial aid, into the cost of undergraduate education, estimated in its 2004-2005 Financial Plan that “- students and their families paid about half of the overall cost of a Cornell education in 2002-2003.”

However, gauging exactly how much of students’ tuitions go towards paying for their education is difficult, because “money comes in, it’s pooled together and it goes out,” explained Prof. Ronald Ehrenberg, director of Cornell Higher Education Research Institute.

“You can’t really figure out one-to-one what’s happening,” he said.

The logical question then is, if students pay for only half their education, where does Cornell get the rest of the money?

A glance at the University’s 2005-2006 Financial Plan reveals that Cornell has three primary sources of funding – user fees, government support and private donations.

User fees, which refer to student tuition and fees from medical services, have increased from 54 percent to 55.5 percent of the University’s revenue over the past 10 years.

In the same time period, government support, which helps fund contract colleges, financial aid and sponsored programs, dropped from 33.1 percent to 27.5 percent.

The third source, gifts and payouts from the endowment and other investments, went up from 12.9 percent to 17 percent.

“Higher education is very dependent on both gifts and endowment,” Ainslie said.

Gifts help fund specific programs, such as the John S. Knight Institute for Writing in the Disciplines, as well as specific buildings, like Gannett Health Center.

Payouts from the endowment are applied towards expenses such as faculty salary, library maintenance and library materials acquisition, Ainslie said.

During 2003-2004, Princeton had $59,040 per student in the income generated from its endowment. In contrast, Cornell had $6,600.

Ehrenberg observed that “if Princeton charged nothing for each student, [it] would still be better off.”

A university’s endowment or wealth depends on several factors, including its age and the wealth of its students’ families, Ehrenberg said.

He explained that many of Cornell’s peers, such as Princeton and Yale, “attract many more upper-class students in an income sense than we do.” These students have better connections and graduate from their universities to become wealthy alumni and generous donors. Although Cornell has its share of affluent graduates, it “has a more egalitarian distribution of income within its student body,” Ehrenberg said.

The endowment certainly weighs into the cost of tuition. According to Ainslie, private donations to the University have increased over the past couple of years, but the actual payout from the endowment has decreased in the last two years because of market performance.

The endowment contribution is not the only tuition resource to decline.

“On a dollar base, we’ve had multiple cuts in our support from the government. [This] puts direct pressure on the tuition portion,” Ainslie said.

Moreover, the expense of attracting and retaining world-class faculty has increased as salaries and benefits become more competitive. For example, average nine-month faculty salaries at Cornell’s endowed colleges jumped up from $69,553 in 1994-1995 to $111,395 in 2004-2005, according to the University’s 2005-2006 Financial Plan. National healthcare costs have also witnessed a 12 to 13 percent jump in the last few years, Ainslie said.

Asked if she anticipates Cornell’s tuition to rise again, Ainslie said that the sticker price in the brochure will increase.

“We certainly hope that we continue to be accessible to students here,” she said. “We make sure that we make financial aid resources available to help those who have financial need.”

Archived article by Xiaowei Cathy Tang
Sun Senior Editor