Posted on Mar 6, 2005
Matt Simon's parents have encouraged their son to choose the college that best suits him, regardless of how big of a pinch it will put on the family's budget.
But the Albany High senior isn't oblivious to the financial impact of his choice, particularly since his parents are already footing the bill for his sister's education at Brandeis University. The cost of attending the Boston-area school this year is close to $40,000, including room and board, and it's likely to cost even more next year.
“They said, 'Don't worry about it,' but obviously they're going to be thinking about it,” said the 17-year-old student, who was in Albany High's College Center last week scouting scholarships on the Internet at www.fastweb.com.
It's that time of year when college-bound seniors are finding out which schools they've been accepted at – Matt got into Goucher College, a private liberal arts college in Baltimore that was tops on his list of 11 prospective schools – and waiting to hear about what grants and loans will be available to help cover the cost.
This is also the time of year when trustees at private colleges are setting tuition and fees for next fall. The cost of attending the nation's colleges and universities has outpaced inflation over the past two decades, and it looks like that trend will continue.
TAB AT UNION
The comprehensive cost of at least four private colleges in the Capital Region will increase in the 2005-06 school year – one by as much as 7.5 percent. Union College in Schenectady will charge its students $41,595 for tuition, room/board and other fees in the coming year.
College officials are quick to point out that although $41,595 is the sticker price – the published price – less than half the student body actually pays that much.
“The average institutional grant is $21,000 – that's Union's own grant money that we give to 58 percent of students,” said Beth Post, director of financial aid at Union College. “In addition to that, there's state and federal money. That brings it up to about $24,000 in grants for those students.”
That $24,000 in aid brings the cost down to $17,595 a year – less than half the school's advertised price. Some students find additional grants and scholarships to help cover the cost. Average student debt for Union students who graduate in four years is about $17,000, Post said.
“Never, ever eliminate a school based on cost,” Albany High School counselor Marty Anderson advises parents and students looking at colleges. “A private school may be just as affordable as a public school, based on the financial aid a student may receive.”
IN-STATE COSTS
It's easy to see why some doubt that view when the total cost for attending a two- or four-year public school is so much less. An instate undergraduate attending the University at Albany this year is paying about $13,044, including room, board and fees.
There is a proposal to raise tuition by 13 percent for in-state bachelor's candidates at the University at Albany this fall, increasing it from $4,350 to $4,950. The Legislature and the governor will make a decision on that later in the year.
The advertised cost of college today is overwhelming to many Americans. A 1998 study by the American Council on Education found that most overestimate the actual cost and underestimate the amount of available financial aid, including institutional grants that need never be paid back.
More financial aid is available today than ever before – some $120 billion in 2004-05 alone, according to the College Board.
However, advocates for the poor are always concerned about proposals to cut state grant programs, such as the Tuition Assistance Program. They also fear the impact of the Bush administration's proposed eligibility changes for the Pell Grant program – which would mean fewer students would qualify for the grants – and his proposal to abolish the Perkins Loan Program.
NEW YALE POLICY
Recognizing that some low-income families never get beyond the sticker shock of the highest priced institutions, Yale University officials last week announced free tuition for all matriculating students from families with incomes under $45,000.
Harvard University implemented a similar policy last year, though the family income threshold was $40,000.
So what's behind the annual price hikes at American colleges and universities? The answer to that question will differ for the publics and the privates, though all will cite things like rising health-care costs, energy costs and institutional aid for students.
In the case of public schools, there's been a shift nationwide away from taxpayer funding of state colleges and universities. Lawmakers are transferring more of the total cost burden to students and their families, in part due to cash-strapped state budgets.
Private colleges operate in a different sphere, one in which there is an expectation that costs will be high due to certain desired “inefficiencies,” such as low student-faculty ratios.
VIEW AT UNION
Dan Lundquist, director of admissions at Union, said the overall cost of attending Union will jump by 7.5 percent next year because the school is “catching up” with peer institutions.
“Number one, and I don't think I can make this point enough, Union was relatively under priced. We had a decade of increases that were too modest,” Lundquist said of the 1990s. “The trustees will tell you the percent cost increase is high. However, for the cost of attendance, we're still moderately priced.”
What Lundquist means by “moderately priced” is that the college is priced in the same range as peer institutions. That's part of why raising prices won't necessarily have a negative impact on Union's applicant pool, enrollment and so on.
Consumers often associate high value with high price, so the prestige of an institution can actually be adversely affected if tuition rates are much lower than similar institutions, according to Joseph Pastore, professor emeritus of the Lubin School of Business at Pace University in New York City.
“If you look at the ordinary demand curve, generally speaking, the demand goes down, as price goes up,” said Pastore, who is chairman of the board of trustees at Siena College in Loudonville. “But at private colleges, as the price goes up, the demand goes up – assuming personal incomes keep pace.”
One of the great ironies is that Ivy League schools like Harvard and Yale set the price point for many other private colleges, though neither of the colleges is tuition-dependent. Their endowments are so large that they could easily afford to make tuition free for all admitted students.
ENDOWMENTS LOWER
Schools like Union and Siena need the tuition to cover the cost of doing business. Their endowments are on a different scale than the Ivies – millions as compared with billions.
The more schools like Union charge, the more institutional grants they can give to students from low-income families.
“It's been called 'the Robin Hood effect,' ” Pastore said. “It's greater at some institutions than others.”
To some, it doesn't sound like an efficient way to do business – first set a sticker price that's shocking, then offer massive amounts of aid to a majority of the student body. A Siena alumnus recently asked Pastore why it's done that way.
The short answer: because breaking ranks is too risky.
“For an Ivy to suddenly drop its tuition and say: 'We're not going to give financial aid any longer' – that would be so counterculture,” Pastore said. “Parents and students like to receive aid, especially merit-based aid. Doing away with the practice is not likely to benefit a college, especially if comparable colleges fail to follow.”
STAND BY WILLIAMS
Williams College in Williamstown, Mass., took a stand against the ever upward pricing current, making headlines by freezing tuition from its 2000-01 school year to its 2001-02 school year. The college could afford it because its endowment surpassed $1 billion in 1999, according to the Chronicle of Higher Education.
As a result of the tuition freeze, Williams lost millions of dollars in tuition and gained no more esteem than the prestigious school already had, Lundquist said.
“The people who it benefited were the affluent,” said Lundquist, explaining that the neediest students never pay full tuition anyway.
Public concern about rising college costs hit a fever pitch in the late 1990s, when the Clinton administration and Republican lawmakers were calling for federal penalties on schools that raised their tuition too much and a congressional panel was charged with investigating the issue.
The first draft of the panel's report concluded that “American higher education is, for the most part, a bargain,” angering the lawmakers who created the panel, according to a Jan. 30, 1998, article in The Chronicle of Higher Education.
“In the initial draft, the commission had highlighted the fact that the growth of tuition and fees at colleges had moderated in the last several years,” the Chronicle article said. “In the final report, the commission warned that the recent slowdown will be temporary unless colleges can gain better control over the sorts of expenditures – such as construction expenses, faculty salaries and technology outlays – that drive up tuition charges.”
INCREASE AT SIENA
The cost of attending Siena College in Loudonville next year is $28,260, a 5.8 percent increase over this year.
Tuition at the school – though still much lower than many other private colleges – increased a whopping 367 percent from 1982 to 1992, according to a 2003 college tuition survey of New York state schools by U.S. Sen. Charles Schumer. Faculty and staff costs make up the largest percent of college budgets. At Siena, about 60 percent of the college's $60 million budget is salaries, Pastore said.
One of the things that has driven costs up at Siena over the past several decades is the waning presence of Franciscan friars on the faculty. At one time, half the faculty were friars and now they are a small minority of the 185-member faculty.
“They're not teaching for free, but they weren't getting market rates. They were getting enough to support the friary,” Pastore said. “That was a tremendous financial advantage.”
The professors who teach at the University of Pennsylvania aren't teaching for free either. That's part of why Sheldon Wilson's family will be paying a pretty penny to attend the prestigious private college if he is accepted.
“I have to get a lot of scholarships,” said the Albany High senior, who plans to major in business and Japanese and go on to a career at Sony.
The cost of going to college is never far from his mind these days.
“I worry about it because my dad brings it up a lot,” Wilson said. “My mom is more relaxed. She tells him I'm not getting a job until summer.
Pastore, the Siena College trustee, said he and his wife took out a home equity line of credit on their home in Westchester County some years back so they could send their three children to the private colleges they wanted to attend.
“We have a lot of equity in the house and we were willing to take on debt,” said Pastore, the son of a factory worker and bookkeeper and the first in his family to go to college.
At Albany High School's College Center, Matt Simon looks for information about colleges and tuition grants at a Web site called fastweb.com.
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