Yale Raises Annual Cost by 4.5%!

Parents Forum
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<p>Yale Raises Annual Cost 4.5%, Following Other Ivies
2007-03-26 16:56 (New York)</p>

<pre><code> (Adds financial aid in fifth paragraph.)
</code></pre>

<p>By Matthew Keenan
March 26 (Bloomberg) -- Yale University, the world's second-
wealthiest school, will raise the cost of undergraduate tuition,
fees and room and board 4.5 percent, almost twice the current
rate of inflation.
Total costs will increase to $45,000 for the next academic
year from $43,050, the New Haven, Connecticut, school said in a
statement today. The increase at Yale, which has an $18 billion
endowment, falls below last year's average gain of 5.7 percent
for private, four-year schools, said Tony Pals, spokesman for the
National Association of Independent Colleges and Universities.
<code>Like its peer institutions, its endowment also happens to
be way above the national average,'' said Pals, whose Washington-
based organization represents about 1,000 U.S. schools.</code>It does
have those sums to draw upon to help temper the increase in
tuition.''
Yale's increase is similar to that at Ivy League peers
including Harvard University, and outpaces the consumer price
index, which rose 2.4 percent for the 12 months through February.
The Bush administration and members of Congress have called for
colleges to do more to hold down costs.
Yale will spend about $62 million for undergraduate
financial aid next year, 3.5 percent more than the $59.9 million
in assistance granted this year, Yale spokesman Tom Conroy said.
The 2007-08 total doubles the school's expenditure in 2000.</p>

<pre><code> Ivy League Increases

Harvard, in Cambridge, Massachusetts, also raised its
</code></pre>

<p>tuition and fees 4.5 percent, to $45,620. Among the other Ivies,
Cornell University in Ithaca, New York, increased costs 5.1
percent to $45,971; Brown University in Providence, Rhode Island,
lifted fees 5 percent to $45,938; and the University of
Pennsylvania, in Philadelphia, raised costs 4.9 percent to
$46,124.
In addition, Dartmouth College in Hanover, New Hampshire,
will charge students $45,483, a 4.9 percent boost, while New
Jersey's Princeton University will assess $43,980, up 4.2
percent.
Only Columbia University in New York, the highest-priced Ivy
League school in 2006-2007, hasn't announced next year's rates.
The Higher Education Price Index, compiled by the Commonfund
Institute in Wilton, Connecticut, showed that colleges' costs to
operate jumped 5 percent in the year ended June 2006 and might
rise 3.1 percent this year. The index monitors expenses such as
faculty and administrative salaries, health care and other
benefits, and utilities.</p>

<pre><code> National Average

The national average for tuition, fees and room and board at
</code></pre>

<p>private four-year colleges rose $1,624 to $30,367 for the current
academic year, according to the College Board, a New York-based
nonprofit organization that oversees the SAT college-entrance
exam. Pals, of the college and university association, said
student costs are likely to rise by a similar amount next year.
Sarah Lawrence College, a liberal arts school in Bronxville,
New York, will assess $50,810 in tuition and fees for 2007-2008.
George Washington University in Washington will charge $50,660
for the next academic year.
Yale's endowment trails only Harvard's $29.2 billion fund.
Yale also has the second-biggest endowment per student, about
$1.6 million, while Princeton has $1.9 million, according to the
New York-based Council for Aid to Education.
Income from the endowment has enabled Yale to waive parental
contributions for families earning less than $45,000 a year and
reduce payments for those making between $45,000 and $60,000.
About 5,300 undergraduate students attend Yale and 6,100 are
enrolled in its graduate programs.
The stated price ``doesn't tell the entire story about
affordability at Yale,'' Pals said. The school said 41 percent of
current students received need-based financial aid and that an
average scholarship award is $23,500.</p>

<p>--With reporting by James M. O'Neill in New York and Brian K.
Sullivan in Boston. Editors: Gienger (gfh).</p>

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<p>"The school said 41 percent of
current students received need-based financial aid and that an
average scholarship award is $23,500."</p>

<p>Which means 59% received no aid, and thus had lowest family income of around $175k. Median income of these families was likely around $275-300k+, and their incomes/assets increased at rates well higher than 4.5%. Cost of attending Yale ("affordability") for top 3% families is the lowest it is has been in 25 years.</p>

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<p>Songman: you placed an explanation point at the end of your post title. Do you have a thought about Yale's 4.5% increase? Is it too much? Is it too little? </p>

<p>I noted that the article while the article lists the $45K pricetag for non FA recipients, it doesn't list the avg COST to the university per student (which is much more than $45K).</p>

<p>(BTW, I was a recipient of generous FA from them)</p>

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<p>He was probably referring the increase being double the rate of inflation, a trend that has been continuing for many years. One has to wonder why.</p>

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<p>I just placed as an FYI post for my fellow CC members.....My views as a financial planner regarding the rate of inflation, or CPI would appear to be very radical to most. In short I believe that the figures the government cites are rigged to keep entitlements and retirement capped at small increases. Even the colleges admit that their costs have increased far in excess of the consumer price index... but that is a debate for another day....My only comment regarding tuition increases is that the total cost to attend college is somewhat like medical care- if the ultimate user has no idea what the actual costs are per student and someone else is picking up part or all of the tab, the price is meaningless. I think the actual truth lies in the fact that tier 2 and 3 private colleges and state universities have seen an enormous increase in applications which indicates to me that many middle class and slightly upper middle class families are forced to do a benefit/ cost analysis regarding colleges as I believe the higher costs are not realistic for the average family in the $50,000-$200000 per year income ranges. I find this comment in the article very interesting- "Yale also has the second-biggest endowment per student, about $1.6 million, while Princeton has $1.9 million, according to the
New York-based Council for Aid to Education." </p>

<p>While these universities</p>

<p>are private and theoretically should have a right to dispense their funds in any manner that they choose, it is obvious that they have more than enough funds to maintain their operations. The interest/dividends alone that Yale earns is probably somewhere in the 2-3% per year range. Or about $450-600 million per year. Keep in mind that they do not pay ordinary income tax or capital gains tax on any securities sold in the endowment. Therefore on an after tax basis the income earned is equivalent to $750 million for a tax paying corporation in purchasing power.....and yet they receive government funding for research, receive protection for intellectual property and get to keep ownership on patents and ROYALTIES from projects that your taxes and mine financed.....good work if you can get it Huh? And with that 59% of the students receive no aid or scholarships.........hmmmmmmm</p>

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<p>"He was probably referring the increase being double the rate of inflation, a trend that has been continuing for many years. One has to wonder why."</p>

<p>The increase has NOT been double the rate of growth in assets/income for the 59% of students paying full freight. In fact, it is significantly lower, making Yale a better buy for the rich than it has been in more than two decades.</p>

<p>No wonder the number of applications keeps going up.</p>

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<p>Hi Songman: Actually Yale's endowment has been managed by one of the best institutional managers around: David Swensen. He arrived at Yale in 85 when the endowment was $1.3B and has overseen its growth to roughly $18B today. If Yale had achieved average returns of other college endowments, it would only have been about $10B today. That's why one article called him Yale's "$8 Billion dollar man". It's about a 17% annual yield since '85. Not too bad. (he's authored a recent best seller about how most mutual fund companies' high fees should be avoided and really aren't the best vehicle for most peoples' investments). Its income from endowment is much greater than 2-3%.</p>

<p>That being said, Yale is very wealthy. But being wealthy doesn't mean you're obligated to give the farm away. It still should actively court other avenues of revenue (donations, gvt funding, fees and tuition). That 59% of students don't qualify for FA is an assessment based upon EFC of their parents -- even WITH the high price tag. What does that say? That Yale is cheap and trying to squeeze folks? I read it differently. Even at $45K/year, there are many families who will not qualify for FA -- their assets/income are that high. What is notable is that Yale and other top schools are actively seeking ways to remove financial barriers for families that do qualify for FA. They have eliminated the parents' contribution for families w/annual income under $50K/year. I don't know if they have any plans to do the Princeton/Davison "grants only - no loans" feature for lower income students. However, they're committed to being generous to those really needy ones.</p>

<p>Like I said before, the 4.5% increase for the paying students still doesn't cover the cost to the university to educate each student. Yale is blessed to have the resources to spend more on its students than it receives in tuition. If something like the FAFSA form determines that a family w/income of $200K/yr. should have to pay the full $45K/year, why is that wrong? And that student is welcome to take loans and work (plenty of which is available to Yale students : min wage is about $11/hr.)</p>

<p>Yale paid for about 2/3 of my costs to attend and I'm a grateful cheerleader. I even took Swensen for "Financial Markets" my senior year. Good lecturer!</p>

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<p>It says that they don't accept many students with any need, no less signficant need, and intend to keep it that way. (Hey, it's their money, and they can choose to do with it what they want.)</p>

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<p>mini: I disagree with that completely. Since you've been a CC member a long time, you know that there are a few schools with such reputation and prestige that they don't need to sell themselves. Consequently, those admissions offices can really craft the incoming classes according to the various missions they espouse. </p>

<p>They also have a need-blind admissions policy meaning that the adcom has NO idea what and if the true financial picture of the applicant really is (of course, if the kid writes in his essay about his yearly visits to the Cote D'Azur or that his mother is Gloria Vanderbilt may indicate something...LOL). Once admitted, Yale will meet the demonstrated need all four years.</p>

<p>Did you read the article cited? Their undergraduate FA budget has doubled since 2001. To the order of $62M, I believe. They've also recently instituted need-blind admissions for International students too. Their Graduate school is completely free (tuition & room & board). Same with their Graduate Music school. </p>

<p>The fact that educational opportunities before college and financial resources do affect eventual success in a great way -- but this is a national problem which we work to level. Despite this, Yale expends enormous energy in trying to attract rural, inner city and international applicants.</p>

<p>If it's only about money then why don't they just offer free rides to the ones w/o any need? They can BUY the most interesting class, couldn't they?</p>

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<p>Here's a little fact, this is a prestigious school. The wealthy would not attend if just anyone could afford it!!</p>

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<p>The 46k to go to the top schools doesn't even cover the actual cost of attending the school. At Cornell, only 60% of the cost is covered by what the student and/or the student's parents pay, assuming that the student receives no financial aid. The rest of the cost is covered by gifts from alumni. One reason why it costs so much is because a great portion of the money is used to maintain a low faculty to student ratio.</p>

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<p>It has been stated here many times that the wealthy are the ones who are benefiting from the cost more so than anyone else. Now, let's define wealthy.</p>

<p>When a family making 100k who is paying the same (efc =COA due to home equity) as a family who is making 350K, and a family making under 60k (or whatever the top school's cut off for parental contribution is) does not have to make any contribution, there is something wrong with that. It seems to me, that the student whose family earns 100k is subsidizing everyone! </p>

<p>This is at least one of the reasons, high achievers in this income range look for schools offering merit aid. The merit aid offered (usually in the 10K - 16K) is enough where one does not have to take out loans equalling that of a third world GDP.</p>

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<p>And parents and students look to state schools - there is a reason schools like SUNY Geneseo and UNC are hard to get into and, according to what I am reading, getting harder every year!</p>

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<p>"When a family making 100k who is paying the same (efc =COA due to home equity) as a family who is making 350K, and a family making under 60k (or whatever the top school's cut off for parental contribution is) does not have to make any contribution, there is something wrong with that. It seems to me, that the student whose family earns 100k is subsidizing everyone! "</p>

<p>I don't think families that earn 100k are subsidizing everyone especially since tuition + room and board doesn't cover the entire cost of attending as I have mentioned before. If your EFC = COA, then it would be fair that you do not receive finaid because finaid is for students whose families really cannot afford to go to the school. Sure, families won't live as comfortably as they would like when they have to fork over 46k a year, but probably more comfortably relative to the families that can't afford to put their kid in college without the finaid.</p>

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<p>To those that stated "it is their money and they can spend it anyway that they like" my response: NO it isn't their money if they receive any government funding . And they do through grants for research and by the very nature of their tax exempt status.......it is time in this country that we stop funding organizations that are allowed tax exempt status yet they hoard their resources and allocate them according to a plan that is more like a profitable business enterprise rather than a non profit organization. And T26E4 I have Swensen's book also. Swensen is able to invest in alternative investments in which the average person cannot invest in..... When a grant is given to Harvard or Yale to do research and they are allowed to retain intellectual property rights that is just improper in my book. I find it amazing that many people rationalize that someone who makes $100,000 + a year should pay the full tuition bill because they can. Yet when I say that Yale should pay tuition for every admitted student I always hear from the low income crowd "oh no that is not the same thing" ...Why not ? Yale can afford it!....Isn't that your response to the family who makes $100,000 a year or has an EFC of 20,000 + ?</p>

<p>Yet somehow others through either dumb dysfunctional decisions that they or their parents made or through no fault of their own except the lousy roll of life's dice should go to college for free? A philosophy I will never understand when colleges receive handouts from the government. Most of the families in the $100,000-200,000 gross income range survive on their after tax income which is much lower than people realize and not all of them can pay the entire bill for a 4 year LAC or state university for that matter. This is reality yet others seek to argue the trees and not the forest. They feel they are entitled to free tuition because of some badge of honor they earned as they perceive themselves to be victims of a harsh capitalist system that exists in the USA. I have said enough - flame away if you like....but that is my view and I am sticking to it.</p>