Why did Cornell choose to raise tuition at a time when many are experiencing stiff financial hardship; why is the University’s financial aid lower than all of its Ivy League peers?
Amid concerns about the true value of a college degree in the era of “Zoom University,” School of Industrial and Labor Relations Prof. Ronald Ehrenberg, who studies how institutions of higher education operate, explained the nuances behind some of these questions.
Cornell’s tuition and mandatory fees for the current academic year total $58,568 for endowed colleges — a 54 percent increase from the $37,954 price tag a decade ago, and a 286 percent increase from the $15,164 a student would spend ten years before that.
But while the University’s sticker price has increased significantly in the past few decades, the total cost of attendance for many families hasn’t necessarily risen with it, primarily due to Cornell’s relatively generous financial aid policies. According to Ehrenberg, the net cost of attendance for students in the bottom 80 percent of family income distribution has actually not gone up in the last 20 years.
“The only students who are actually paying more are financial aid recipients who are in the upper quintile — the top 20 percent of the family income distribution — and students who are not receiving any financial aid,” Ehrenberg explained.
Even so, many families of undergraduate students expressed sharp discontent that Cornell elected to increase tuition by 3.6 percent at a time when much of the United States still faces unprecedented unemployment and economic hardship. However, Ehrenberg said that this was a practical necessity, given the massive cost of coronavirus testing and the University’s commitment to maintaining previous financial aid standards.
“A major reason for the tuition increases is because we needed to generate funds for financial aid,” Ehrenberg said. “Under our need-based financial aid policies and need-blind admissions, when every students’ needs go up, we have to automatically increase their financial aid.”
According to Cornell’s latest financial statements, the University endured significant operating losses in the most recent fiscal year amid soaring expenses. In the spring, President Martha E. Pollack projected that the University could lose up to $210 million due largely to “an anticipated $145 million that will be needed to meet the increased financial aid needs of our students.”
Although the pandemic has roiled Cornell’s financial position, many of its closest peers have nevertheless long historically offered better tuition grant packages to students.
In 2020, Cornell offered the lowest average amount of financial aid among Ivy League institutions, averaging $39,868 per student — compared to, for example, $51,191 per student at Yale and $50,655 per student at Princeton. Cornell’s cost of attendance is not significantly lower than other Ivy League institutions, suggesting that this variation is not simply due to charging lower tuition and fees.
Nor is the difference primarily due to a larger percentage of students requiring financial aid at peer institutions, with 52 percent of Cornell undergraduates receiving aid of some kind, compared to 60 percent at Columbia and 54 percent at Dartmouth.
Instead, Ehrenberg said that Cornell’s relatively less-generous financial aid can be explained by the University’s endowment, whose $7.2 billion in assets is lower than all but Brown’s and Dartmouth’s, despite having, by far, the Ivy League’s largest student population. Cornell’s investment returns have also often lagged behind peers, resulting in an endowment that has grown more slowly than those of other colleges.
As a result, Enhrenberg said, raising tuition is often the only way Cornell can generate enough revenue to offer sufficiently large financial aid packages.
Despite high tuition costs, an Ivy League education may still be a worthwhile investment. Those who graduate from college make an average of one million dollars more in their lifetime than those who don’t; Cornell undergraduates, in particular, have a mean starting salary that is more than $10,000 higher than the U.S.’ median income.
While college graduation rates across the U.S. are stagnating despite climbing enrollment, Cornell seems to have avoided this trend. The University has maintained graduation rates of more than 90 percent in the past two decades, including international students and those receiving financial aid. However, Cornell data suggests that some underrepresented minority groups have fared worse on this metric.
Some argue that this disparity suggests that financial hardship may play a major role in a student’s inability to graduate on time.
“Certainly, there may be some people who have financial problems,” Ehrenberg said. “That’s sad if our financial aid policies can’t provide the support that they need. If so, that’s an issue that the University should be worrying about.”
While some point to the high cost of college as a barrier to upward mobility, Ehrenberg argued that undergraduate universities actually serve as an important vehicle by which to increase upward mobility of underrepresented minority groups.
“Society believes that we work in the social interests,” Ehrenberg said. “Part of the social interest is the research that we produce, which generates new knowledge and leads to industrial growth. But part of the social benefits is the fact that we do serve — and we should serve — as vehicles of upward mobility for people from underserved groups. We have a tremendous social obligation to do this.”