Tuition to be pegged to inflation

The thousands of Yale students who receive financial assistance had plenty to cheer about Monday when the University announced that its tuition costs could drop by over 50 percent next year. But the many students who pay full freight to attend Yale got some good news, too.

The cost of attending Yale for those students will be $46,000 — the lowest increase in recent memory and one that matches rate of inflation. Slipped into the fifth paragraph of the University’s news release on the newly unveiled financial-aid initiative, Yale announced that tuition, room and board would be pegged to the expected level of consumer price inflation, 2.2 percent.

In contrast, those costs have increased, on average, by 5 percent over the last three years. Similar tuition increases at universities across the country in recent years have prompted harsh criticism from students, parents and Congressional leaders in recent months, putting pressure on schools like Yale to freeze tuition or limit annual increases and bolster financial-aid offerings.

Yesterday, the University did the latter, unveiling a sweeping new financial-aid plan. The cap on next year’s tuition increase was designed to provide some financial benefit to the families that do not receive any aid from Yale, University President Richard Levin said Monday.

“By the way we’ve designed this financial-aid policy, we’ll be giving relief, in effect, to 95 percent of the families in the income distribution,” Levin said in a telephone interview. “The top 5 percent, they’ll get relief from tuition being held to inflation.”

The University will make up for the lack of revenue through the nearly 40-percent increase in spending from Yale’s $22.5 billion endowment projected for the next fiscal year, Provost Andrew Hamilton said Monday.

“The increased payout from the endowment projected for [next year] is allowing us to invest in specific areas of high institutional priority,” Hamilton said in an e-mail. “Of these none is more important than increasing the access to a Yale College education for students of all income levels.”

In a statement, Congress’ leading critic of rising tuition, Iowa Sen. Chuck Grassley — the ranking member of the Senate Finance Committee — praised Yale’s aid plan and tuition freeze Monday.

Grassley had suggested that universities with endowments over $500 million be required to spend at least 5 percent of their endowments annually in order to tamp down tuition increases and provide more generous financial aid. A recent report by the Congressional Research Service said that in 2005-’06, Yale could have forgone raising its tuition and other fees merely by increasing its endowment payout by a miniscule six one-hundredths of 1 percent.

Yale, meanwhile, spent a five-year low of 3.7 percent of its endowment this year, which Levin suggested last week “might be shortchanging the present generation” in the name of long-term fiscal preservation.

As a result, Yale will now institute a minimum endowment payout of 4.5 percent and will increase its endowment spending next year to $1.15 billion, an increase of 37 percent over this year’s spending of $843 million, the University announced last week in a prelude to Monday’s announcement. Grassley said he hopes Yale’s increased spending serves as a model for other universities.

“Yale’s action shows that despite some squawking, the sky won’t fall when universities increase the amount of money they spend from their endowments, and when they do, it can mean big help for families struggling to pay college costs,” the senator said in the statement.

“I hope we hear more good news from other colleges and universities in the days ahead,” Grassley added, “but today, I congratulate Yale for its new policies.”

The problem with limiting tuition increases to the rate of inflation, Yale administrators have long warned, is that expenditures in higher education typically increase at a rate far above the rate of inflation, in large part to pay for rising faculty and staff salaries.

In other industries, the productivity of workers — and thus their salaries — edges higher every year, said Ronald Ehrenberg, a Cornell University professor who specializes in the economics of education, in an interview with the News last year. But although professor productivity remains constant, universities must still boost their salaries every year in order to remain competitive with other industries, he said.

“We try really hard to maintain class size and small student-faculty ratios,” Ehrenberg said. “If they raise tuition at the rate of inflation, then faculty salaries will only go up at the rate of inflation, and faculty salaries will fall in relation to salaries in other fields.”

Because of that, while tuition will be pegged to inflation next year, “we’re not committing further out in the future,” Levin said.

Compared to last year, total costs for a Yale student without financial aid jumped 4.5 percent this academic year, with tuition rising to $34,530 and room and board increasing to $10,470. Total costs this year at private, four-year universities soared an average of 5.9 percent over last year, according to the College Board.

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