Jan. 24, 2007

Keeping (Tuition) Up With the Jones

On Sunday, Princeton University shocked many higher education observers by announcing that it would freeze tuition next year, prompting speculation on whether other institutions would follow. Some experts believe that Princeton’s move could prompt similar decisions from the relatively few private colleges that compete with that university not only for students but in terms of wealth.

Looking for a job?

See all 201 new postings

Browse all job listings:

Faculty: 3,703
Administrative: 2,312
Executive: 191
FEATURED EMPLOYERS

Regardless of whether anyone follows Princeton, another college’s shift in tuition strategy may be more reflective of what competitive private institutions tend to do. Grinnell College is getting ready to move its tuition — currently significantly below that of Princeton and Grinnell’s competitor liberal arts colleges — up to that level, for all new students. Grinnell officials say that their move will finance a range of policy shifts that will make the college more affordable and more equitable for low-income students.

But the Grinnell counterpoint to Princeton also illustrates the tricky economics and campus politics of tuition policy. Students at Grinnell are generally unhappy with the shift, feeling that it will hurt access — regardless of what college administrators say. And while experts on higher education have been reluctant to criticize Princeton’s move, a number make the point that its decision — popular with students and generating lots of good press — will most help the wealthiest families.

While Grinnell students aren’t thrilled, they also aren’t taking over buildings — and that’s because Grinnell plans to carry out its increase in the politically astute way that colleges have made similar hikes: The big increase will be paid by new students, not the continuing students who are there now. Tuition at Grinnell is currently $28,566. The plan calls for continuing students to pay only a typical increase (probably 4 to 5 percent when finalized). Freshmen next fall will pay an additional $4,200 (or 15 percent) plus whatever regular tuition increase is approved. The $4,200 figure is designed to bring Grinnell up to where Carleton, Oberlin, Macalester and similar colleges are, and Princeton too, for that matter. (Fees for room and board are also expected to go up by standard amounts, although Grinnell officials say that they didn’t lag behind their peers there.)

Like Princeton, Grinnell has an endowment that is the envy of its peers. At $1.47 billion, Grinnell has more money than any other liberal arts college (and ranks No. 36 among all colleges and universities, beating many institutions with 10 times or more Grinnell’s enrollment of 1,500). So why is Princeton citing its endowment to freeze tuition while Grinnell is going up in price?

“We have been motoring along for about 20 years at a tuition figure and fees that was about 10 percent below the average of our peer schools, and we didn’t have a view that being lower was doing great things for us,” said Russell K. Osgood, president of Grinnell. About half of the money from the additional tuition will be used by Grinnell for various academic enhancements. But the rest will go back to students in the form of aid enhancements that Grinnell officials say they couldn’t otherwise afford:

The college’s estimates for costs of books and other expenses beyond tuition, room and board have been revisited for the first time in years. Osgood said that they have been “inaccurately low,” so the change will result in larger aid packages for every eligible student. A typical student will see an increase in aid of $1,000 from this change.
The college, which normally expects students to contribute $2,000 in summer earnings for college expenses for the next year, will waive that requirement for one summer of a degree program if students want to do “socially productive” work that doesn’t pay well. In other words, for the first time, it will be possible for the financial aid student to take that non-paying internship or do academic research for a major project — opportunities often available only to those not on financial aid.
The college will increase by 200 percent, potentially up to $500,000, the total of loans it plans to forgive each year at graduation.
Over five years, the college hopes to phase out the need for any student to borrow anything to pay for Grinnell.

Osgood said that he realizes that many people associate tuition rates with actual cost, and so are quick to applaud a move like Princeton’s and criticize one like Grinnell’s. But he argued for an emphasis on what students actually pay — in which case he said that his college’s tuition increase will be a benefit for low-income students. “I believe the focus ought to be on guaranteeing access for people who have need,” he said.

There are limitations, he added. Public institutions have different missions, so such a policy may not be appropriate. And Osgood said the course of action he is taking would give him pause if Grinnell hadn’t been charging less than its peers and if it didn’t have an aid policy of meeting full need of all admitted students, and admitting students without regard to need. And while Osgood is confident that Grinnell should be raising its prices, he wouldn’t go too far — whatever good the money might provide. “If you wanted to charge $200,000, which no one is doing, you would run the risk of scaring all customers away.”

Many students don’t like Grinnell’s approach. Benjamin Weyl, editor-in-chief of The Scarlet and Black, the student newspaper, said that many students feel that they don’t know where the new money will be going and worry about whether future students will enroll. Weyl said that he liked the idea that Grinnell cost less than some of its peers and wished that were seen as a point of pride. “No one can accuse Cooper Union, which is free, of being a lackluster school,” he said. Weyl said that some students have been chatting on a Grinnell Web site about the viability of the college following the Cooper Union model.

The reality is that what Grinnell is doing now is far more typical of the behavior of elite private colleges than are the policies of either Princeton or Cooper Union. There is a tradition — derided by some as the “Chivas Regal effect” — of colleges that are below the price of their peers or even would-be peers raising their prices, in some cases dramatically. The theory is that prospective students associate quality with price. The University of Richmond in 2005 increased its tuition by 27 percent (only for new freshmen — continuing students had only modest increases) as part of a campaign to improve academically.

At the time, President William E. Cooper said bluntly that Richmond was “leaving money on the table” by charging less than other institutions. “We had all these people with a kid at Dartmouth or a kid at Syracuse, and a kid here, and we were the cheap school.”

Northwestern University is another institution that once had tuition significantly behind its peers. But rather than play that up as an advantage, the university determined that it was missing the chance to make academic improvements. So in the fall of 1998, it increased tuition by one rate for new freshmen (who were charged $22,2392) and another rate for continuing students (who paid $20,244). The extra funds generated by the freshmen (and over time, from all students) paid for smaller classes, new technology, more on-campus housing, and a range of other improvements. Northwestern didn’t lose students.

One analyst of higher education policy, who asked not to be named, said that the “why leave money at the table?” argument was quite valid. By “hammering the very well to do,” as Grinnell will be doing, a lot more money opens up for programs to help low-income students, he said. He noted that as more public flagship universities seek permission to raise tuition substantially, in part to pay for financial aid, they are essentially making the same philosophical argument.

Princeton has — prior to the announcement of the tuition freeze — made a series of changes in financial aid policy over the years that have greatly increased grants and eliminated loans. But the analyst said that the question for a Grinnell or Princeton is really whether “you are soaking or benefiting the high income people,” although few in higher education like to talk about it that way. In fact, because Princeton is as generous as it is to people of modest means, those paying full freight at Princeton aren’t terribly needy, he said. “One could argue that the Princeton decision just gave a lot of very well to do people a very big break.”

Meanwhile, of course, Princeton is getting a lot of favorable attention. Osgood, of Grinnell, said he wishes Princeton well.

— Scott Jaschik

Want it on paper? Print this page.
Know someone who’d be interested? Forward this story.
Want to stay informed? Sign up for free daily news e-mail.

Comments

Tuition Hike

Having paid full tuition, room and board for four years, based on an early decision admission, and having the college aid office only offer loans and inquiries about second mortgages and retirment savings; I would have to say that Grinnell does no favors to middle class (under $200,000) two wage earner households. We have paid out over $140,000 of tuition room and board, for our first child with two to go. Grinnell’s response: increase tuition to keep up with other institutions. Yale and Harvard have now adopted a program to limit tuition to 10% of parental income. Doesn’t this make sense? By the way, my wife and I went to Grinnell, and those rooms aren’t any bigger than when we attended (and we are finding they are much smaller than state schools and other schools offering competitive tuition rates).

Grinnell Parent, at 4:30 am EST on February 18, 2008

What about the endowments?

Engaging reading. A factoid about Grinnell: it was lucky to have the late Robert Noyce, co-founder of Intel, as a very generous alum. Thus — Grinnell did not have to rely as much on tuition for a very long time.

All it takes is one billionaire ..

C. Bigsby, at 8:05 am EST on January 24, 2007

Grinnell has it right; Princeton has it wrong.

However, Grinnell must pledge that this policy will not encourage it to accept more wealthy, full-paying students, while rejecting low-income students who are more talented and qualified. That is the only danger with this policy.

Note to Grinnell: If you want to gain more public support for this policy, and positive PR, issue a press release that states the exact out-of-pocket costs that students at various income levels will pay (including loans). The headline should be “Grinnell Lowers Costs for Low-Income and Middle-Class Students,” not “Grinnell Raises Costs for Wealthy Students.”

Oh, and research shows that it is much more psychology effective to not require students to borrow loans at all than to forgive these loans at graduation.

Best of luck with the Revolution.

Mr. Common Sense, at 10:10 am EST on January 24, 2007

Middle Class

I think these policies may be hurting middle-class students. Only upper middle-class and wealthy students can afford to pay full tuition. These days, a family making $100,000, particularly if they live in an expensive area, cannot afford 40k+ of tuition. Many middle-income parents earn too much to get much aid in grants, but can’t afford full tuition, so their children must go to cheaper schools or take out major loans. My mother-in-law, a single schoolteacher in NYC, made too much money for my husband to qualify for much aid in grants, so he had to forgo an Ivy for a public institution, and still graduated with 50K in debt.

Anne W., at 11:25 am EST on January 24, 2007

Re: Mr. Common Sense

Mr Common Sense wrote: “Oh, and research shows that it is much more psychology effective to not require students to borrow loans at all than to forgive these loans at graduation.”

Psychology effective, but financially not so much... A school that forgives loans of those who graduate encourages graduation and probably a greater diversity in its student body. If a college isn’t limiting its enrollment with its costs, it will certainly have to do so with other factors, especially if it is free.

Not to be an elitist, but there needs to be some sort of limitations on who gets into college, right? Or else you’ll saturate the market and a college education becomes the high school education of 25 years ago. Wait, I think that’s already happening....

Tell me I’m wrong.

Christopher Milton, at 12:35 pm EST on January 24, 2007

From One Extreme to Another

So, let me get this straight. Students who have successful parents, and can afford to pay for college get to spend their money on students who don’t have any. Sign us all up for that one! What about free money from the rich for the middle-class? Oh wait, we wouldn’t want to do something silly like help the average student on our campuses (not poor enough for a free ride that wasn’t earned, and not rich enough to pay for everyone).Middle-class students should stop trying in school and get their parents to quit their jobs one year before going to college. When they arrive, the college of their choice will welcome them with open arms, money from wealthier students, and programs designed to give them unfair advantages over others (in the name of equality, no doubt).

Mike B, at 1:25 pm EST on January 24, 2007

The rest of the story...

“Should it matter to parents of incoming Penn students that tuition helps cover the annual deficit at its faculty club, which in past years has reached $700,000, and contributes toward the average $121,000 in compensation that Penn pays its professors, including a tuition-reimbursement program that lets professors send their children to Penn or anywhere else at a steep discount equivalent to half of Penn’s annual tuition?”

Quoted from the complete article, “Why Colleges Cost Too Much” at...

http://www.time.com/time/magazine...cle/0,9171,1101970317-137412,00.html

Kevin, at 2:11 pm EST on January 24, 2007

Re: Anne W.

Tuition and loans are totally different issues. A school could have low tuition but require high loans (as your husband apparently found out), or a school could have high tuition and require low loans (as I hope Grinnell and others pursue).

As far as I’m concerned, the best policy for a college is to raise it’s prices for the rich, and lower debt for all. I hope that is the strategy that Grinnell will pursue.

Mr. Common Sense, at 6:45 pm EST on January 24, 2007

Mr. Uncommon Sense...

My hope is that the rich (whoever that is by your definition) will cease sending their kids to Grinnell, altogether. Anyone who is discriminated against because someone else has determined that they’re “rich” should take their business elsewhere. And yes, it’s discrimination to charge someone more for the same product or service simply because you think they can better afford it. What nonsense...

Kevin, at 9:10 am EST on January 25, 2007

Taxing the Rich

Doesn’t our tax system work the same way, as far as making the rich pay more? That’s the way it should be, because the rich benefit more from the services. I’d argue that, unfortunately, the rich benefit more from college than the poor, so they should pay more.

Mr. Common Sense, at 11:50 am EST on January 25, 2007

Setting the tax

Yes, that’s how the tax system works; but that’s probably Kevin’s point. The tax system is set up by legislatures fulfilling their constitutional duties and who are ultimately answerable to the public. University administrators have no such constitutional mandate, and the higher taxes they choose to impose constitute in some people’s mind a double taxing: the individuals they deem rich likely have already been taxed at a higher rate by those state and national legislatures. So, the college and universities have identified a good they wish to pursue, but they want others to pay for it, and they’ll present the fees in an opaque manner as possible so that the more-well off don’t recognize that they are being told to subsidize others.

DM, at 10:35 am EST on January 26, 2007

Great point, DM

DM makes a fantastic point. I’m trying to wrap my head around it. I’m trying to think of a situation where rich people pay higher taxes for an item than other people.

Well, rich people pay higher taxes for real estate and cars when they buy more expensive models. The other thing is that the government spends money on college, so when rich people go to college, the government is sort of giving them some of their tax money back, so it makes sense to then charge rich people a higher price.

The whole key to raising prices for rich people is that there is an important limit to these increases: rich people can choose to avoid schools that charge them too much. Unfortunately, poor people can’t really freely CHOOSE to attend a school that’s too expensive for them. As far as I’m concerned, the main point of financial aid is to give poor students the opportunity of free choice, which is the main opportunity that rich people have.

Mr. Common Sense, at 12:00 pm EST on January 26, 2007

re: Mr. Common Sense and DM

There are two problems here: the definition of rich, and the sense of entitlement. Is $100,000 income rich if someone lives in a high-cost state and has no pension and so has to save for retirement? By the time taxes and health-care contributions are paid, along with a single $40,000 tuition, the remaining income approaches poverty level. What happens when the second child comes along, and the schools continue to treat you as rich? By the way, don’t bother trying to save for retirement; the colleges consider that money available for tuition also.

As for some people’s sense of entitlement, why should I pay for someone else’s tuition? I paid for my own college and grad school with work and loans. I’ve busted my butt for 30 years to advance myself and make a decent living for my family. I pay a boatload of taxes to support the government programs for people who are less well off, and am fine with that. But why should someone else consider it right and just that I should directly subsidize another family’s tuition? I’m not “rich.” I’m just a hard-working stiff who has paid his dues and should be entitled to enjoy a little of the fruits of that without having a college decide to force me into debt to pay someone else’s tuition.

One last observation. The colleges are engaged in “the big lie.” Tell if often and loud enough, and people will believe it. The lie: that they offer need blind acceptance and meet every family’s demonstrated need. First, they make the rules as to who needs what, and write the rules to force people into debt. Then, they jack up the tuition to take money from those not considered needy, and transfer it to those considered more deserving. So who is paying for that tuition assistance that allows colleges to claim goodness? Parents of students, not the colleges. Not the professors and other college employees who are well compensated, with tuition plans, great benefits and full pensions. No, these are the ones deciding that I should go deeper into debt to pay another family’s tuition bills. It’s theft, plain and simple.

Burned, at 5:26 pm EST on January 29, 2007

One of the main questions is: what do we consider rich? I don’t have a problem with a billionnaire or millionnaire being asked to pay $50,000 for a year of college. Do you? After all, if millionnaires and billionaires pay high prices, maybe that can money can be transformed into aid for middle-class families who earn $100,000...

Mr. Common Sense, at 11:15 am EST on January 31, 2007

Our son applied to Grinnell under its early decision program, where he signed a binding contract to attend next fall if admitted. Our delight in his being admitted has been washed away by this stunning and unexpected tuition increase. A major factor in our allowing him to apply early decision was that Grinnell’s tuition was lower than other, comparable schools. We are shocked to learn of what the college refers to as a “tuition adjustment,” and would never have allowed him to enter into this contract had we known this was coming.

New Grinnell parent, at 5:01 pm EST on January 31, 2007

Re: Grinnell parent

I’m guessing that you can break that contract with Grinnell if you decide that the school is now unaffordable (or not worth the extra expense).

But get used to the “college bait-and-switch"...let’s not forget that almost every college increases students’ out-of-pocket costs each year, by an amount that students cannot predict in advance....

Mr. Common Sense, at 11:52 am EST on February 5, 2007

Grinnell Tuition and Loans

I guess things have changed a bit since I graduated in 1979. In the four years prior, when I was dealing with tuition payments and hikes, which we blithely assumed was on account of the inflation of the period and increased energy costs, my aid was split between a grant established for students from my part of New York State — but really a bribe to get me to come to Grinnell — and student loans. It was a matter of honor among those in my class that we repaid those loans promptly to allow the same benefit for future Grinnellians, and perhaps to demonstrate that our education had a positive effect on our finances. It would be inconceivable for us to expect to have those loans forgiven. If offered, we would not have applied. If given, we would have refused. Ultimately, we expected to pay as much as those with wealthy parents.

It therefore saddens me that my alma mater has taken a “soak the rich” strategy. It is a slight to everyone who was not rich when entering college. I readily admit that my strong feelings in this regard is based on my family history. My grandfather was a surgeon whose prime years were during the Great Depression. Regardless of what actually transpired, he always maintained that his poor patients would repay him when better times returned. My grandfather’s wisdom was that he recognized that the faith he placed in his patients to “pay when they can” was as important to their health as the surgeries he performed on them or the medicines he prescribed. I only wish that Grinnell would place the same faith in their students to eventually pay reasonable, cost-based tuition and fees that they did in my day.

Carl Peter KlapperClass of 1979

Carl Peter Klapper, at 5:20 am EDT on April 12, 2007

Jobs Related to Keeping (Tuition) Up With the Jones

or search for jobs directly.

Assistant Professor: Marketing & Strategy — Job ID 923
SUNY — Empire State College

Empire State College’s Center for Graduate Programs in Saratoga Springs, NY, seeks applications for a full-time, ... see job

Introductions to Clinical Medicine Faculty — Bahamas
Ross University

Ross University School of Medicine Bahamas Campus, located on the beautiful island of the Grand Bahamas, invites applications ... see job

Deputy Director of Housing for Operations
Princeton University

Position Summary: Reporting to the Director of Housing, the Deputy Director for Operations will have ... see job

Research Technician III
University of Georgia

Job Summary This is a new position, necessitated in part by scheduled needs of existing grants that now ... see job

Assistant Professor of Immunology
University of Colorado at Denver and Health Sciences Center-Ninth and Colorado

Posting Description: The University of Colorado Denver seeks an Assistant Professor to work in the ... see job

Assistant Professor of Biology — Conservation Biologist
College of Staten Island

The College of Staten Island, a senior college of the City University of New York (CUNY), seeks a Conservation Biologist for ... see job

Assistant Professor — Plumbing
Johnson County Community College

A career at Johnson County Community College is more than a job. We believe it’s important to invest in our employees and ... see job

South Asia Studies Lecturer in Hindi
University of Pennsylvania

The nation’s first university, Penn is a world-renowned leader in education, research, and innovation. Situated on a ... see job

Assistant Director, Academic Planning and Assessment
George Washington University

GW is seeking an innovative and well-prepared individual for the position of Assistant Director, Academic Planning & ... see job

Vice President of Student Services
El Paso Community College

El Paso Community College (EPCC) is a dynamic, innovative, and rapidly expanding multicampus organization serving the needs ... see job