Ballooning tuition presents challenges

In 1940, candy cost a penny, movies cost a nickel and Yale’s tuition cost $50. Today, students are lucky to buy a Twizzler or a movie ticket without having to apply for debt relief, let alone four years at an Ivy League school, said retired business teacher and free-lance writer Marjorie Wolfe, whose chronology of higher education expenses charts a rise of what she called “exorbitant fees in the megabucks.”

Yale College tuition for the 2005-2006 academic year was set at $31,450, part of a total $41,000 term bill, University spokesman Tom Conroy announced two weeks ago. Yale tuition had grown to $2,550 by 1970 and $6,210 in 1980, according to Wolfe’s figures. This growth was followed by a period of unparalleled increases in Yale’s tuition resulting from costly renovations projects, Deputy Provost Charles Long said. While Yale College tuition nearly doubled in real dollars from 1981 to 1998, the proportion of undergraduates getting financial aid rose only slightly, from 37 percent to 41 percent, according to data from Yale’s Office of Institutional Research.

But top Yale officials said reforms in other areas will help manage the tuition increases.

“We’ve made some major adjustments to financial aid in 1998 and in this year,” Yale President Richard Levin said. “All of those moves have helped to offset the impact of inflated tuitions.”

Long said tuition increases have been minimized under Levin’s administration.

“Yale was very aggressive in keeping tuition down starting about a decade ago,” Long said. “There were years in which it was over 10 percent [inflation], but Rick Levin made a conscious effort to lower it, and I think we made a difference.”

The increases in tuition did slow from double digits to about 3 percent or 4 percent for a time within Levin’s first few years as president, and the 2.9 percent Yale College term bill increase for the 1999-2000 academic year was the smallest such increase since 1968. But at the same time, the University’s tuition increase remained 1.5 times that of national inflation.

Law School professor Henry Hansmann said the constant tuition increases might be designed to allow Yale and other Ivies to provide additional financial aid to their more needy students. While antitrust legislation enacted in the 1980s prevents the universities from price fixing, their term bills remain close to one another, possibly in order to maintain this system, he said.

“You and your roommate might be paying a very different price for what’s the same service, if Yale is charging a price above their cost so as to charge your roommate below cost,” Hansmann said. “They couldn’t do this if Cornell could come in and offer a lower price and attract students away from Yale, so either there’s something special about Yale monopoly power, or Yale and Cornell make an agreement that they aren’t going to compete on price. This is something that colleges have historically done a lot of and still do.”

Long said although Yale officials do not confer with administrators at other Ivy League schools, competing schools have the same “market basket of goods” and grow at roughly the same rates.

The 2005 appropriations bill signed into by President Bush last December cut National Science Foundation spending by about 2 percent, and only increased funding for the National Institutes of Health by 2.7 percent, the agency’s smallest budget increase in over a decade. Long said these cuts will seriously hurt Yale’s funding and played a role in this year’s 5.5 percent term bill increase, since approximately one quarter of the University’s research budget is provided by grants from these and similar federal organizations.

At Harvard, some alumni have petitioned administrators to freeze tuition by drawing additional funds from the university’s endowment, but Long said such a system would be unstable.

“You can’t sustain that over time,” he said. “It’s dependent on the endowment being protected against inflation. The only way is to increase real income, and I don’t know how that’s possible with the federal government backing away. We’re just trying to hack away at expenses.”

Wolfe said she worries that the tuition increases have left Yale and other Ivies out of the reach of many students who might be on the cusp of admission.

“I can’t imagine at this point a family saving for the tuition,” Wolfe said. “We have three grandchildren, and the oldest is 12, but my guess is that unless they are really exceptionally bright, they will go to a state school, probably SUNY.”

Still, the benefits of attending Yale or a comparable institution are undeniable, author and columnist Daniel Gross, who writes Slate’s “Moneybox” column and contributes to the New York Times’ Economic View column, said.

“Wealth has been spread out, and there are other places that may be able to offer comparable tangible benefits in a comparable education,” said Gross, a graduate of Cornell and Harvard universities. “The intangible benefits of the pedigree, however, can give kids a big leg up in the business world.”

A degree from an Ivy League or other top-tier university provides graduates with a wage premium of 5 percent to 20 percent, according to a U.S. Census Bureau report.

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