The University Board of Trustees voted this morning to approve a 4.4 percent increase in tuition and fees for the 2004-2005 academic year. The total cost of tuition, fees and room and board will be $39,634, an increase of about $1,700.
The rise in cost -- which includes a 4.8 percent increase in tuition and a 4 percent increase in room costs -- compares favorably with Penn's peer institutions. Total cost for the University will be just below the median cost of the 17 schools in its peer group -- five or six of which will surpass the $40,000 mark for next year.
Tuition is the largest source of the University's unrestricted revenue, representing 28 percent of next year's budget.
Administrators cited several factors as contributing to the tuition increase, including rising energy and health care costs and an increased demand for financial aid due to the current economy.
Though University Treasurer and Senior Vice President for Finance Craig Carnaroli noted that the rate of tuition growth has dropped significantly over the past 20 years, the yearly change continues to remain above inflation.
"Our inflation isn't necessarily consumer inflation," Carnaroli said. "Our expenses are different."
Carnaroli cited the unique pressures on universities, including the rising costs of employee salaries and benefits.
Executive Director of Administrative Affairs of the Office of the Provost Bonnie Gibson said that funding health care benefits continues to play a major role in rising operating costs.
"Our health care benefits have been increasing at a double-digit rate for seven years now," Gibson said. In addition, "utility costs have been really very difficult for us this year," with natural gas prices rising considerably.
Facing such rising costs -- which show no indication of slowing down in the near future -- administrators said they must work to keep Penn affordable.
"We will continue to try to put as little pressure as we can on our students and our families while recognizing that the costs of higher education are going up, and we need to keep pace," University President Judith Rodin said.
Even with the increase in tuition, the budget is "going to be tight" next year, Carnaroli said.
Rodin commented on other measures that the University is taking to deal with increased costs.
"We would have raised tuition more had we not ratcheted down considerably ... all of our personnel salaries for next year," she said.
"We really are trying to clamp down on expenses," Rodin said.
Though Penn's tuition increase remains at or below the rates of its peers, the rise continues to push total costs for undergraduates toward the $40,000 mark -- a benchmark Gibson said will be surpassed for the 2005-2006 academic year.
"The concern that all of us have is simply [that] it is so expensive to go to an elite university," Trustee Chairman James Riepe said.
Riepe noted that compared to its peers, Penn has one of the highest percentages of students receiving financial aid but has a smaller endowment for aid.
However, administrators stressed that Penn's need-blind admissions policy and pledge to meet the full demonstrated need of each student continue to allow Penn to recruit a diverse student body.
"We're always clear when we communicate to people that we do provide financial aid and [that] it is on a need basis," Carnaroli said. "People should not be intimidated from applying here because of the retail price."
In addition, three major construction projects were approved by the trustees: a laboratory and vivarium at the School of Veterinary Medicine Teach and Research Center, renovations to the Vet School's Ryan Hospital and continuing construction at the University Museum of Archaeology and Anthropology.
