Tuition at U.S. Colleges Increases 4.3%, Lowest in 37 Years

By Janet Frankston Lorin

June 29 (Bloomberg) -- Tuition and fees at private U.S. colleges and universities for the 2009-2010 school year will rise an average 4.3 percent, the lowest percentage increase in at least 37 years, according to a survey.

The average percentage increase is the same as in the 1972- 1973 school year, when the National Association of Independent Colleges and Universities began its annual survey. The Washington-based lobbying group collected data from 350 schools for a final report to be released today.

Colleges, led by Harvard University in Cambridge, Massachusetts, Dartmouth College in Hanover, New Hampshire, and Stanford University near Palo Alto, California, are slashing spending and firing staff as endowments plunged as much as 30 percent in the last year. At the same time, schools curbed tuition increases because of the recession’s effect on families’ ability to pay, said Tony Pals, a spokesman for the association. Some private colleges with large endowment losses are likely to have larger tuition increases in the next two school years as budgets become further constrained, said John Isaacson, whose headhunting firm specializes in higher education.

Higher tuition “doesn’t look good politically, but it raises a lot of money,” Isaacson said in an interview. “They have to compensate with increased financial aid.” His Boston- based firm, Isaacson, Miller, conducted a presidential search for Dartmouth College and is assisting the ongoing recruiting at Williams College in Williamstown, Massachusetts.

Harder Phase Ahead

Private schools rely on endowment income as well as tuition for operating money, Isaacson said. Because many universities spend endowment income based on a three-year average investment return, the fiscal year ending this month would include two years with high returns, he said. That means spending from endowments is likely to decrease more in the next two years at schools that rely heavily on endowment income, he said.

Decisions made during the last school year -- construction delays, salary freezes and tightened spending controls -- are “low-hanging fruit,” Isaacson said. “The next phase is harder” and may include bigger tuition increases.

The National Association of Independent Colleges and Universities survey didn’t include room and board. Tuition and fees constitute about two-thirds of the cost for students enrolled in private four-year colleges, according to the College Board, the New York-based nonprofit that owns and administers the SAT test.

Increased 5.9%

Tuition and fees at private four-year colleges and universities in 2008-2009 were an average of $25,143, a 5.9 increase from the year before, according to the College Board. The College Board surveyed 1,106 private schools and will release its data for the next school year in October. The National Association of Independent Colleges and Universities survey doesn’t specify the average tuition and fees.

Private schools also increased the student financial aid for the coming school year, Pals said. The average increase in student aid provided by schools, called an institutional grant, was 9.2 percent, according to the survey. This is the first year the association collected student aid data.

Among schools in the Ivy League, a group of eight schools in the northeastern U.S., Princeton University in Princeton, New Jersey, increased its tuition and room and board by 2.9 percent, the lowest since 1966. The estimated cost to attend for freshmen, which also includes miscellaneous expenses such as books, supplies, telephone and fees, is $50,620, said Emily Aronson, a spokeswoman.

Yale, Harvard Increases

The cost for freshmen to attend Yale University in New Haven, Connecticut, for 2009-10 is $50,550, which includes tuition and fees, room and board, books and personal expenses, said Dorie Baker, a spokeswoman. The increase in tuition and room and board from the previous year was 3.3 percent.

Tuition, fees, and room and board at Harvard College for the next school year will be $48,868, a 3.5 percent increase over last year, said John Longbrake, a spokesman for the school.

Tuition increases are hardest on students who don’t receive financial aid, said Sandy Baum, a senior policy analyst with the College Board and a professor of economics at Skidmore College in Saratoga Springs, New York. Those students’ families also are likely to have been hurt by the recession, she said.

Harvard and Yale eliminated financial contributions from students whose parents earn less than $60,000 per year. The schools have also adopted policies that offer financial aid assistance for families earning as much as $180,000 at Harvard and $200,000 at Yale.

U.S. colleges and university endowments lost an average of 24 percent in the last six months of 2008, according to the Commonfund Institute in Wilton, Connecticut. The group is the research arm of Commonfund, which manages about $24 billion for nonprofit institutions.

To contact the reporter on this story: Janet Frankston Lorin in New York jlorin@bloomberg.net .

Last Updated: June 29, 2009 00:01 EDT

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