Tuitions Rise Sharply, and This Time Public Colleges Lead the Way

State budget cuts prompt average increase of 7.7%, the largest since 1993

By ANDREW BROWNSTEIN

Triggered by an economic downturn that has squeezed state support for higher education, public colleges raised tuition this year at the highest rates since 1993, according to a

ALSO SEE: A searchable database of tuition rates at individual colleges Average College Costs, 2001-2 TUITION HIGHLIGHTS: Private 4-year colleges with largest rate of increase Private 4-year colleges with largest dollar increase Public 4-year colleges with largest rate of increase Public 4-year colleges with largest dollar increase Colleges where 4 years of tuition will top $100,000

survey released last week.

Private-college tuition, cushioned from state politics, sustained more-moderate increases, but still drifted further above the rate of inflation than in recent years.

Many observers fear that a protracted decline in contributions to colleges, combined with the uncertainty caused by the terrorist attacks since September 11, may push colleges to raise their sticker prices even higher.

For now, the contrast is stark. While the average private-college tuition rose 5.5 percent this year, the public sector saw an average increase of 7.7 percent -- nearly triple the rate of inflation, according to the College Board's annual survey of tuition and financial aid. (The rate of inflation, as measured by the Consumer Price Index, grew only 2.6 percent in the year ending September 1.)

This year's survey marks the first time since 1996 that increases at public institutions have outpaced those at private colleges. It also marks the largest increases in either sector since the double-digit jumps of the late 1980s and early '90s.

"These are hard times again," Gaston Caperton, president of the College Board, said at a news conference. "Anybody who is not serious about what this downturn means," Mr. Caperton warned, is headed for "disaster."

To make matters worse, the financial-aid forecast remains unfavorable, the board reported. Loans made up 58 percent of all student aid this year, compared with 41 percent in 1980, when the Pell Grant was at the height of its buying power.

Hoping to reverse that longstanding trend, the board last week announced the formation of a Blue Ribbon Financial Aid Panel. Consisting of leaders from business, academe, and nonprofit foundations, the panel will hold several forums around the country before submitting a report to Congress in December 2002.

The 35-member panel will be led by Michael S. McPherson, president of Macalester College and a champion of financial-aid reform. Morton Owen Schapiro, president of Williams College, will coordinate its research.

While the College Board's news was hardly surprising for college administrators, who have grappled with the economic downturn for close to a year, it did offer many their first look at hard numbers.

Average sticker prices for undergraduates, based on the College Board's survey of 2,800 institutions, were:

* $17,123 at four-year private colleges, an increase of $890, or 5.5 percent. The increase last year was 5.2 percent.

* $3,754 at four-year public institutions, an increase of $267, or 7.7 percent. Last year's increase was 4.4 percent.

* $7,953 at two-year private colleges, an increase of $414, or 5.5 percent. Last year's increase was 7 percent.

* $1,738 at two-year public institutions, an increase of $96, or 5.8 percent. Last year's increase was 3.4 percent

Out-of-state students at four-year colleges had to pay average additional costs of $5,764, compared with a $5,510 surcharge last year, according to the survey. Out-of-stage surcharges at two-year institutions averaged $3,319, compared with $3,237 last year.

Average costs for room and board were up 4.7 percent at four-year private colleges, 6.6 percent at four-year public colleges, and 3.9 percent at two-year private colleges, according to the survey.

This year, the slowing economy led colleges and legislatures in some states -- including Illinois, Iowa, and South Carolina -- to impose double-digit tuition increases.

"Forty states are reporting severe problems, from Idaho, which has experienced a minor downturn, to ones that are seriously hurting, like Washington," which has a $1-billion hole in its budget, said Edward M. Elmendorf, vice president for government relations and policy analysis at the American Association of State Colleges and Universities. Nonetheless, Mr. Elmendorf noted that the smaller state colleges that his organization represents had an average tuition jump of just 5.5 percent this year, suggesting that the bulk of the public colleges' increase had come from large research institutions, which must compete with private universities more directly.

Students at private colleges certainly weren't immune to sticker shock. Tuition at 67 colleges will now cost more than $100,000 for four years, based on this year's tuition prices. Last year, there were only 35 such colleges.

In addition to persistent costs, like technology and faculty salaries, colleges in both sectors endured record health-insurance costs and larger-than-normal utility bills.

The much-publicized boom in freshman enrollment, which has brought unprecedented tuition dollars into university coffers, has done little to offset the overall cost of higher education.

The reason may be simple supply and demand. "There's little need to control prices when you're not worried about losing students," said Sandy Baum, a professor of economics at Skidmore College who was consulted on the College Board survey.

Most observers agree that colleges are just beginning to feel the pain of the broader economic situation. Many private colleges set their tuition in April or May, when the existence of the downturn was still uncertain.

"It's going to get worse before it gets better," Mr. Elmendorf said. "When the economy goes down, it often takes one-and-a-half to two years before the full impact is felt."

The future? "I don't want to say that I cry when I think about it, but the factors in place now don't look promising," said Ronald Ehrenberg, a professor of industrial and labor relations at Cornell University. He rattled off a collection of sobering facts: State tax revenues are down, endowment spending is up, annual giving is down, and financial-aid demand is up.

Then there's September 11, the "wild card" in any economic forecast. Many experts fear that layoffs will force parents to rethink plans for sending their children to college. On the legislative front, Connecticut, Illinois, Iowa, and Maine have frozen spending in the wake of the terrorist attacks.

Furthermore, the conventional wisdom is that some donors, flush with cash from the stock-market boom of the 1990s, will turn cautious. If they want to give, the theory goes, they are more likely to donate to charities linked to victims of terrorism.

"Fund raising at most nonprofits has ground to a halt," said Patricia A. McGuire, president of Trinity College, a women's college in Washington, who was at last week's College Board news conference. "I have not talked to a single president who is doing fund raising the traditional way."

She added that the need for counseling services, already a growing concern before September 11, is "skyrocketing." So is the desire for additional security on Trinity's urban campus. That cost "is twice the size of my library budget," Ms. McGuire said.

Few voices in academe responded with optimism to the data released last week. But David L. Warren, president of the National Association of Independent Colleges and Universities, believes that private colleges are well positioned to weather the storm.

He said that most private colleges have learned their lesson from the recession of a decade ago, when many were lambasted by politicians and parents alike for responding with exorbitant tuition increases. Many have outsourced some operations or forged partnerships with other colleges to trim costs. While Mr. Warren cautioned that some colleges may need to undergo cost-cutting mergers in the next two years, there will be "no more than four or five." There may also be tuition increases, he said, but nothing too drastic.

"It will in no way reflect where we were in the 1980s and '90s, where there were double-digit increases, or where the publics are now, up to 7 percent," Mr. Warren said.

He added that he is hopeful that the new College Board panel will "turn up the volume" on calls to reform the financial-aid system.

Mr. McPherson, the panel's chairman, is well respected in academe as a college president and author, with Mr. Schapiro, of many books on tuition and financial aid. The panel also includes leaders of the American Council on Education, as well as executives of the Turner Broadcasting System and the Bill & Melinda Gates Foundation.

While the panel "certainly faces a tough battle" in its effort to change public opinion and influence lawmakers, said Mr. McPherson, "it is my intention and Gaston Caperton's intention to have an impact." "It is my view that if people had a good grasp of where we're headed, they'd be more receptive to change," he said. "In my opinion, we're headed for an increasingly stratified society in terms of education and income."

In February, the Advisory Committee on Student Financial Assistance, which advises Congress and the Education Department, revealed that a large percentage of needy students were blocked from pursuing a higher education because of a lack of need-based aid and the growth of politically popular programs geared toward the middle class.

In its report on tuition, the College Board discussed the critique of a financial-aid analyst who recently noted that it had underestimated the average tuition increase in the projections for each of the past four years (The Chronicle, September 7).

The analyst, Mark Kantrowitz, publisher of a Web site about financial aid, declared that the figures had "little relationship to reality."

The board corrected some information and clarified that "several hundred institutions" had submitted changes to earlier figures.

"Most of these revisions are minor," the report said. "Some result from simple human error... and many result from the increasing complexity" of tuition formulas.

"This kind of survey is not a precise science," said Lawrence E. Gladieux, a consultant to the board. "It's a best approximation."

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