Tuition hike of 4 to 5 percent likely for next year

Economic recession, rising administrative costs and the expansion of financial aid programs have all contributed to the steady, nationwide increase in higher education tuition over the past several years.

Although Penn has yet to release the tuition cost for the 2004-05 academic year -- typically announced in March -- the indication is that tuition will yet again show an increase between 4 and 5 percent.

Last year, the University registered a 4.8 percent rise in total charges, which includes tuition and room and board. This brought the total cost for the 2003-04 academic year to $37,960. This was a marginally smaller increase than the previous three years, which peaked at an increase of 5.8 percent for the 2001-02 school year.

Tuition costs have been increasing steadily across the country, with Penn's increases falling below the national average. Over the past several years, tuition has risen between 5 and 6 percent for four-year private institutions and over 14 percent for four-year public institutions.

Princeton and Cornell universities recently announced their tuition rates for the 2004-05 academic year. Princeton's total costs rose 4.5 percent with Cornell announcing a 4.8 percent rise in endowed tuition, which is not subsidized by the state.

Penn's tuition increase should reflect the same rising costs that Cornell and Princeton have faced. "When you look at Penn against its peer group, we fall right in the middle of the pack," said Craig Carnaroli, senior vice president for finance. "We are usually eighth or ninth out of 16."

Penn's endowment, at approximately $3.8 billion, is principally used to fund instruction, usually in the form of endowed chairs. Although the University had a "very good six months," according to Carnaroli, and showed an 11.7 percent investment return on the endowment, it is not unrestricted.

"Virtually every institution has very little say over what happens with their endowment dollars," said Tony Pals, public relations director for the National Association of Independent Colleges and Universities. "They are restricted for use by the donors, so there is only so much it can do to lower the cost of student tuition. It certainly does play a limited role."

Tuition increases can be attributed to a variety of factors, both economic and administrative. These increases tend to vary greatly from institution to institution.

"Typically the nature of cost drivers are what we call 'the four L's,'" Pals said. "Those four L's are labor, labs, laptops and libraries."

Labor refers to the salaries and benefits for university employees -- including health care, which has been rising rapidly.

Costs of construction, information technology and other academic resources such as library acquisitions have also risen rapidly over the last several years. These increases have resulted in raising tuition costs to keep pace with the expenses of running a university.

The economic recession has also affected rising tuition costs nationwide. Low returns on endowments because of the drop in the stock market, as well as decreasing private donations, have placed more of the burden on tuition.

The poor economy has also affected financial aid programs. "The recession has definitely had an impact," Carnaroli said. "The biggest result has been the increase in demand for student aid, with financial aid growing faster than tuition."

The recent and projected economic improvement may stem the steady rise in costs in the future. However, Penn students can expect another increase in tuition costs for 2004-05.

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