The sticker price of a Penn education has been steadily ticking upward. Tuition has risen as much as twice the rate of inflation in recent years, and experts don’t foresee any change.
“I don’t see anything right now that’s going to moderate tuition increases,” said Joni Finney, director of the Institute for Research on Higher Education at the Graduate School of Education. “All the incentives are to increase tuition.”
She said that private and public research universities, as well as highly-competitive liberal arts colleges, will “continue to raise prices as much as the market can bear.”
Taking into account total yearly cost of attendance from 2006 to present, one can extrapolate that with a steady growth rate, in 10 years it will cost $88,390 per year to attend Penn. In 20 years, it will cost $110,370. If a current 22-year-old senior at Penn has a child when they turn 30, Penn will cost $123,568 per year when that child is 18.
A spike like this might be fine if one’s parents went the Wharton-to-Wall Street route, but for middle- and lower-income families, paying for Penn will seem even more daunting than it already does.
More students and their families could be put off by the high price tag, and some won’t even bother learning about financial aid possibilities. Alex Catalan, a college counselor at The Seven Hills School in Cincinnati and a 2015 GSE graduate majoring in higher education, said Penn’s price has already biased certain students from applying.
“Students from the lowest and even middle income brackets don’t look at schools like Penn because of the flat tuition fee. They simply look elsewhere,” Catalan said.
Dean of Admissions Eric Furda said efforts like the current push to simplify the Free Application for Federal Student Aid and outreach workshops that Penn offers in the community like “Ivy In Your Backyard” can help with this disparity. But he acknowledges that there’s still work to be done.
“The gap of information that low-income students have is for a whole range of reasons, from lack of counseling to a lack of other resources to just trying to survive day to day,” he said.
Even if certain students get turned off by the high price before filling out an application, more and more Penn students get some form of need-based financial aid each year. According to Student Financial Services, 45 percent of students are on some sort of aid package for the 2015-16 school year, up from 36 percent 15 years ago. Fortunately, Penn has been able to meet the growing demand for financial aid.
“Since 2008 our financial aid budget has doubled,” said Vice President for Budget and Management Analysis Bonnie Gibson.
When asked if the increase was sustainable, Gibson said “fundraising for financial aid continues to be one of the president’s top priorities.”
Furda pointed out that compared to some peer institutions, Penn’s endowment isn’t actually all that reassuring to be able to meet such a need.
“We’re doing this with an endowment of $9 billion compared to institutions that have endowments three times as large as ours,” he said. “We’re operating in that group while we don’t have the financial resources.”
Furda said Penn makes up the difference with tuition dollars and fundraising, and Gibson confirmed annual giving as the primary means of raising funds for financial aid. But the yearly increase of students who receive aid requires substantial yearly increases in fundraising as well. If those numbers can be sustained, Penn can continue to help make tuition affordable for students from a variety of backgrounds. If not, economic diversity among the student body could suffer.
Catalan said middle-income students might be the first ones to look elsewhere if their financial aid package isn’t comprehensive enough. That would amplify an economic rift in Penn’s student body.
“Students who are from the middle class and the lower middle class are hurt most [by rising tuition],” he said. “They don’t have access to federal grants and they often times get low financial aid packages. Those students are already looking at other schools.”
But Finney isn’t so sure. She said as long as those middle-income students can get accepted to places like Penn, “their families will find a way to pay for it.” She said that the only places that might draw them away are less expensive, but still prestigious, in-state public universities. She drew on the example of students choosing University of California, Berkeley over Stanford.
“You could see some movement to the public if [private schools’] prices just keep marching forward,” she said. But she added that even without middle-income students, schools like Penn still only educate a “tiny, tiny fraction” of the nation. The loss of the middle class of students at Penn wouldn’t really make an impact, “except that it’s symbolic,” she said.
So what’s to be done?
Catalan said the only way he sees college costs stabilizing universally is for a prestigious school to decide to freeze their own tuition. It may seem like there is no incentive to do this, but he said it could provide a competitive edge for a school that didn’t raise their cost of attendance.
“A college education is a commodity — there’s a lot of marketing and strategy that goes into this,” he said.
If one school froze their price, others would theoretically follow suit in order to compete. It would be the opposite of the current positive feedback loop of perpetually-increasing tuition prices.
“The change needs to start with Harvard or Yale or Penn or Brown and that will then ripple through to have other schools change,” he said.
Finney said that many schools “often want to emulate what elite institutions do,” seen most clearly in the attempt on behalf of a number of state colleges to become research universities.
If one school took the plunge, the problem of rising tuition costs could start to be resolved, leading to greater accessibility and access to places like Penn for larger amounts of student with a variety of economic backgrounds. But Catalan added that it would require a weighty acknowledgment on behalf of these types of schools “that there is a factor of pricing that keeps students from attending schools like Penn.”
He’s skeptical that anything else would keep prices stable. Even if talk of free community college by politicians becomes a reality, Catalan thinks it won’t really have an effect.
“It might put some pressure on them but I doubt that will happen,” Catalan said. “The majority of student who attend schools like Penn are paying close to full tuition. There’s still going to be demand.”
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