Undergrad tuition and fees to rise 4.5% next year

Though the rate of increase dropped, officials do not plan to match tuition hikes to the inflation rate. University Trustees approved a 5.3 percent increase for undergraduate tuition and a 4.5 percent rise in total fees for the 1997-98 academic year. The increase -- from $21,130 to $22,250 -- is the smallest rise in undergraduate tuition and fees in 29 years. Last year's undergraduate tuition increased 6.2 percent. Graduate students will also see a 5.3 percent hike in tuition and fees -- from $21,992 to $23,158. The total costs for undergraduates will rise from $28,096 to $29,354 -- 1.6 percent more than the current inflation rate of 2.9 percent. Budget Director Michael Masch said that although the University is committed to the "maximum possible declining rate of increase" in costs, it is not committed to bringing that increase in line with inflation. Average residential charges and the cost of a 15-meal dining plan will both increase 2 percent. Residential costs had not risen for two years. "Other than Cornell, we have the lowest total charges" in the Ivy League, Masch noted. Cornell's total costs are set at $29,050 for next year. "Of the 'Ivy-plus' schools our average annual rate [of increase] has been among the lowest," he added. He attributed the need for higher tuition largely to lost government revenue, such as an annual $15 million "general instruction grant" which the state abolished last year. "Even if we [were to] maintain spending at the rate of inflation, we would lose revenue elsewhere," Masch said. And he noted that the federal government reimburses research at a lower rate than before, a change which cost the University an estimated $5 million last year. "This is under the 'education-friendly' Clinton administration," Masch said. The University's expenses have also increased. Masch explained that an Environmental Protection Agency requirement to remove chlorofluorocarbons from air-conditioning coolant will cost the University $750,000 dollars. Masch said a widely-read proposal in a recent Time magazine article -- suggesting that Penn spend a larger percentage of its endowment return -- was not a feasible solution. "I thought the Time article missed the point completely as to why we raise endowment funds," he said. The University's $1.9 billion endowment received 17 percent annual rate of interest on its endowment over the last three years. Since 1979 it has returned 15.9 percent. Time argued that the University could cut tuition significantly if it -- and other Ivy universities -- spent approximately 2 percent more of its endowment than the 3-5 percent it spends now. Masch argued that to spend more would be risky, since there have been irregularities in the market. "What if there's a collapse in the stock market," he said. "Is [the endowment yield] a long-term trend or not?" Associate Treasurer Lucy Momjian agreed, saying that "since the early '80s [the endowment] has done quite good," but that this is an "exceptional market."