While students may be dismayed by the ever-rising cost of their Penn education, the 5.4 percent tuition increase approved by the University Board of Trustees last week is consistent with those of Penn's peer institutions.
Students at Dartmouth and Princeton universities will experience tuition increases of 5 percent and 4.9 percent respectively for the 2005-2006 academic year.
However, this increase is the largest that the University has effected in some time and is a full percentage point jump from last year's 4.4 percent increase. It is the first time in five years that tuition has increased by more than 5 percent, bringing the total charge for tuition, fees and room and board to $41,766 per year.
According to Executive Vice President Craig Carnaroli, increases are often inevitable despite University efforts to keep tuition fees stable.
"While we do our best to contain operating costs, each year the University has increases in the cost of running the University," Carnaroli said.
Such costs include compensation and benefits for faculty and staff and increased funding to expand public safety. Also, the University has experienced sharp rises in utility and insurance expenses.
Carnaroli noted that Penn is in a different economic position from those of peers like Harvard and Yale because of the University's comparatively small endowment, which causes tuition to be more vulnerable to changes in the cost of running the University.
"Penn's economic model is such that we tend to be a little more tuition-dependent than our peer schools," Carnaroli said.
According to Vice President of Budget and Management Analysis Bonnie Gibson, undergraduate and graduate tuition revenue makes up more than 50 percent of the University's unrestricted revenue -- money that does not have a predetermined use.
At Penn, unrestricted revenue contributes to faculty compensation, financial aid, operating costs and current expenses, which include educational costs like computing and the Blackboard educational Web site. A small amount helps fund capital improvements, like renovations to buildings.
Despite the University's great dependence on tuition revenue, there is regularly a disparity of over $200 million between the actual cost of education at Penn and the total revenue brought in by tuition.
"We do not cover the cost of education via tuition," Gibson said.
"You can't deliver the kind of education that Penn delivers even for the tuition that we charge," she added.
For this reason, the University remains reliant on the expansion of its endow-ment through fundraising and philanthropy.
However, Penn is not alone in this. According to Steven Gill, budget director and associate provost for finance at Princeton, "Tuition doesn't come anywhere near covering the full cost" of education.
Gill noted that schools must maintain a delicate balance between controlling the financial burden on families and that on themselves.
"It's a balancing act," Gill said. "We need for tuition to bear its fair share of the budget."
