November 6, 2008

Tuition Rate Expected To Rise Less Than Usual

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In the midst of a national financial crisis, college students must face the additional burden of increased tuition costs. Tuition for the current academic year for private institutions increased by 5.9 percent and by 6.4 percent for in-state public colleges, according to College Board’s most recent pricing report. The inflation rate for the same period was less, at 5.6 percent.
Though average tuition outpaced inflation for another year, most colleges decided not to increase tuition relative to inflation as much as in past years, acting “socially responsible,” according to Prof. Ronald Ehrenberg, industrial and labor relations and economics.
“Tuition prices rose this year a steady amount because the rate of inflation was so high this year,” Ehrenberg said. “Historically, tuition rises 2 to 3 percent more than the rate of inflation but this year institutions were more socially responsible.”
Cornell raised tuition for students in the endowed colleges 4.9 percent, increasing from $34,600 to $36,300 for 2008-2009 students.
Although C.U.’s tuition rates rose less than the rate of inflation did, Paul Streeter, interim vice president for planning and budget, said that he does not see the consumer price index as the best way to gauge Cornell’s costs. Many college administrators look to the Higher Education Price Index (HEPI) as a more realistic view of inflation.
According to the Commonfund Institute website, the index “is a more accurate indicator of changes in costs for colleges and universities” because it “measures the average relative level of prices in a fixed basket of goods and services purchased by colleges and universities each year through current fund educational and general expenditures, excluding research.” The Commonfund Institute issues and distributes HEPI annually to college administrators.
Though administrators decided this year’s tuition costs before the economic crisis really unfolded, the economic downturn will play a major role when college administrators decide on next year’s tuition prices.
“The financial need of students is going to be higher next year and it is likely annual giving will decrease,” Ehrenberg said. “Presumably the administration will be sensitive to the fact that families are hurting and that if they increase tuition, they risk pricing themselves out of the market.”
In the face of the current economy, many students are looking to public colleges with cheaper tuition rates. According to The New York Times, SUNY Binghamton received an increase of 50 percent in applications this year, probably from students “seeking higher education at lower prices.”
While University administrators have yet to develop tuition for next year, the school plans on making a concerted effort to make its education “accessible to all levels of income” Streeter said. Although tuition is a major source of the University’s income, it is not its only source.
“Tuition doesn’t really fully cover cost,” Streeter said. “As other resources decrease, the solution will not be made up solely by tuition. Our first priority is going to make sure that our prices are affordable.”
Cornell’s seven undergraduate schools, endowment and contract, add another level of complexity to the tuition cost.
Streeter said, “How we deal with setting tuition in a given year has to do with among other things, how much funding we get from the State of New York.”
This has not only been a University-wide effort, but a nation-wide effort. According to Streeter, “there has been pressure from the federal government and public to control tuition increases.” In 2007, the Senate passed Higher Education Act Reauthorization Legislation, which was the federal government’s attempt to protect Americans’ rights to equal opportunity.
“Congress is on the backs of universities to make sure we remain accessible to all income classes,” Ehrenberg said. “Last year, the government pressured universities to spend at least 5 percent of their endowment on financial aid. Cornell’s policy over that last decade has been to spend over 5 percent of its endowment on financial aid.”
While America has always prided itself on its educated populace and high level of human capital, rising tuition prices combined with the economic downturn threaten the ability of many Americans to receive higher education.
“The basic problem and Congress’ concern is that we no longer lead the world in students who receive college degrees,” Ehrenberg said.
Unsurprisingly, many Cornell students are not happy that the tuition rate — though it will likely rise less than the usual annual increase — has increased. Hansen Chang ’11 hopes that he will be able to find a job after college that allows him to pay off debts.
“That’s why I need to get a job that pays me 100 grand when I graduate,” Chang said.