Trends in Higher Education
Richard T. Vedder is a distinguished professor of economics at Ohio University. In his book, “Going Broke by Degree – Why Colleges Cost So Much,” several of his insights (quoted in bold italics) match Colgate’s performance to a “T”.
“Tuition fees are rising faster than inflation or family income, a phenomenon not sustainable.”
In 2004, Colgate University had the ninth highest tuition of all colleges and universities in the country. Its tuition rate is now seventh highest in the nation. Overall costs for students rose from $29,950 for the 1999-2000 school year to $51,090 for the 2008-2009 school year. The Trustees have approved a 3.6% increase in tuition, fees, room and board to $52,880 for 2009-2010. Depending on room and board arrangements, costs could be as high as $54,169.
“Data provided by colleges and universities reveal that there has been a significant shift in resources from instructional purposes to other areas - a cross subsidization of activities.”
By this, Vedder means spending precious resources on projects not critical to the primary mission, i.e. education. Through the Hamilton Initiative LLC, initially funded by Colgate Board of Trustee members Tony Whaling and George Wesson, Colgate is buying-up the downtown commercial district. To date, ten buildings, housing 30 storefronts, offices and apartment properties have been purchased at a combined cost of more than $13 million. Outgoing President of the Trustees John Golden recommended on March 31, 2007, “…that the Board conduct a study to determine the optimum size of the University and of the Village of Hamilton.”
“In some schools luxurious new facilities are adding to costs.” In 2002, two capitol projects - one to expand the library, the other to build a science center, morphed into the largest cost overruns in Colgate's history. The Case Library and Information Center was originally budgeted at $40 million, but cost $60.4 million. The Library opened more than 18 months later than anticipated and cost an additional $20.4 million or 51% more than planned. The Robert Ho Science Center was originally budgeted at $45 million, but completed at $58 million, an increase of 29%. The tuition hike for 2008-2009 is 5%. to The tuition hike for 2009-2010 was 3.6%.
“Historically, scholarships have been based on need. Recently, however, it appears colleges are increasingly giving merit-based scholarships to improve the pool in order to improve rankings with U.S. News etc.” By this, Vedder refers to "expenditures beyond the core business of the school." From 2002-2007, endowment monies used for student financial aid held steady at an average below five percent of the total fund, despite the endowment growing from $403 million in 2000 to $709 million by August 31, 2007, with a goal of $800 million.
“The big personnel explosion in education has not been in new faculty but in non- teaching bureaucrats who do little to improve learning but must be paid by tuition fees.” From 1968 to 2006, while student enrollment increased 96 percent (arising from the school going co-ed), the number of administrative employees jumped from 54 to 216, a 300% increase. Since 1989, the student body has held relatively steady at about 2,800 students per year, while the Colgate administration has grown from 117 to 216, an 85% increase.
“Only 21 cents of every higher education dollar over the past generation has actually gone toward student instruction.”
Sens. Max Baucus, D-Mont, Chuck Grassley, R-Iowa of the U.S. Senate Committee on Finance sent letters to 136 colleges with endowments of at least $500 million. The senators requested information detailing each university’s use of its endowment for student financial aid. “Just like Congress is not going to be responsible if our constituents don’t watch over us, university trustees and administration may be not be responsible if you don’t look over them,” said Sen. Grassley.
Colgate was included in the request for information. They have not made their response public. Click here for a complete list of the questions, and answers from Berea College.