TIME: Almanac 1993/TIME Almanac 1993.iso/time/092589/09258900.002

Text File | 1992-09-23 | 7.6 KB | 150 lines

                                                                                EDUCATION, Page 72

Sticker Shock at the Ivory Tower


Parents are raging over "Chivas Regal" tuitions, but private
colleges are crying poor

By Susan Tifft


    When the College Board released its annual cost survey
showing that private school tuitions would rise an average of
9% this fall, Kellie Kenner raced for her calculator. Since the
20-year-old junior entered Emory University two years ago, her
total bill, including tuition, has jumped from $13,900 to
$16,100, an increase of almost 16%. Despite a patchwork quilt
of aid that includes scholarships, loans and an on-campus job,
Kenner's father, a train conductor, must now pay $6,000 out of
pocket to send his daughter to school this year -- $2,000 more
than in 1987. To help make ends meet, her mother recently took
a job as a data processor. "I told my parents I'd go somewhere
else," Kenner says, "but they wanted me to stay."

    As their children register for the new school year, most
parents, like Kenner's, are willing to scrimp and sacrifice.
But they are increasingly outraged at the platinum price tags.
For nine years, hikes in tuition and other fees have averaged
roughly twice the rate of inflation, boosting bills at elite
private schools like Sarah Lawrence and Princeton to the edge
of the $20,000-a-year mark. And the spiral shows no sign of
stopping. By 2005, according to the investment firm Paine
Webber, the price of a college education is likely to climb to
$62,894 annually.

    As the bills mount, many parents suspect that institutions
are kicking up their fees at will, knowing that families will
pay almost anything to give their child the cachet of a Harvard
or Yale degree. "It's Chivas Regal pricing," says Kalman Chany,
president of Campus Consultants Inc., a Manhattan-based
financial-aid consulting firm. "The most selective schools can
afford to charge what they want because they've got lines out
the door of people who want to go there."

    College administrators vehemently reject that accusation.
Increasing tuition charges, they say, merely reflect their own
increasing expenses. In particular, they cite soaring costs for
building construction and maintenance; salary-inflating battles
to woo and keep top-flight faculty members, especially in
science and business; and the dizzying price of keeping up with
technology, ranging from computerized card catalogs to the
latest in lab paraphernalia. Hardware and faculty often go hand
in hand: when Duke lured physicist John Madey away from
Stanford, it promised to build a lab for his free-electron laser
research. Cost: $5 million.

    Cuts in federal student aid during the Reagan years have
also taken a toll, forcing schools to contribute more from their
own coffers. Like other labor-intensive businesses, colleges
feel the bite of rising fringe benefits. At Brown, for instance,
outlays for employee health-care premiums have quintupled since
1986. Then there is the need, fostered by feverish admissions
competition, to provide more and better student services -- such
as tennis courts and state-of-the-art gyms.

    Aggressive fund raising has eased the crunch to some
extent. As many as 60 schools are now conducting drives with
goals of more than $100 million; three are seeking to break the
$1 billion mark. But changes in the tax code have made giving
less attractive, and many endowments are still feeling the
aftershocks of the 1987 market crash. "How can we look so rich,
yet feel so poor?" asks Donald Kennedy, president of Stanford,
which faces a projected $11 million shortfall this year.

    One reason for public skepticism is that some elites convey
a let-them-eat-cake attitude -- a result, no doubt, of their
enormous wealth and the knowledge that they are purveyors of
one-of-a-kind diplomas. Harvard, for example, cautiously spends
only 4% to 5% of the annual income it realizes from its $4.1
billion endowment, the largest in the country. (In 1988 the
yield totaled $184 million.) The rest is reinvested. Despite its
secure position, Harvard felt the need to jack up this year's
tuition and other fees 6.5%, to $19,395. "What we distribute
from endowment may sound low today, but it did not in 1979,"
explains Harvard president Derek Bok, alluding to a period when
stock returns were disappointing.

    But even a Harvard cannot afford whatever it wishes. Nearly
60% of major research universities report that they are cutting
back as they re-examine the long-held and costly belief that
they must offer a full range of disciplines. In April,
Washington University announced plans to shut down its sociology
department. Columbia University is phasing out linguistics.
"There has got to be more focused investment," says Robert
Zemsky, director of the higher education research program at the
University of Pennsylvania, which urged in a report last week
that schools close marginal campuses and adopt more businesslike
budgeting practices.

    Calls for fundamental change and bottom-line thinking are
sure to upset some in the education establishment. But the
consequences of not changing are already apparent. Tired of
sticker shock at the pricey privates, more and more families are
turning to state-supported schools, where the total bill this
year averages $6,671 for an in-state resident.

    When the Justice Department announced in August that it was
investigating some 20 private colleges for price fixing in the
areas of tuition and financial aid, the news elicited shocked
gasps from the ivory tower. Last week the Government added six
more schools to the list, including Bryn Mawr and Wellesley.
Many administrators fear that if Washington concludes that
students should be like baseball players -- free agents able to
dicker for the most attractive aid package -- the ensuing
bidding wars could boost charges for less sought-after
candidates. "Do we really want to turn colleges into bazaars
where students say, `Cornell offered me so much, now what can
you do to top that?'" asks one college president. In fact, such
free-market decision making is already common, despite the
decades-old practice among many top schools of meeting annually
to discuss the aid packages being offered to their applicants.

    Whatever comes of the Justice Department inquiry, there is
little relief in sight for most students and their
over-extended parents. The causes that drive up tuition bills
today are likely to worsen in the years to come. One key factor
is an imminent faculty shortage. A study released by the Andrew
W. Mellon Foundation last week predicts that there will be only
eight candidates for every ten teaching positions in the arts
and sciences during the decade starting in 1997, a development
that is certain to inflate professorial salaries. In a
time-honored bit of corner cutting, some schools are already
increasing student-faculty ratios. Others are thinking about
involving undergraduates in teaching and putting their best
professors on video.

    None of these expedients is desirable. Yet higher
education, like the health-care industry, must either contain
costs now or risk becoming the monopoly of the wealthy, a
condition that would be socially undesirable. The alternative
is ever increasing prices, with the cost spread among parents,
students, federal and state government, and private donors.
Quality, as educators never tire of saying, costs money -- and
there is no easy solution. Laments Frederick Bohen, senior vice
president at Brown University: "We're talking about a bunch of
lousy choices."


-- Sam Allis/Boston, Michael Mason/Atlanta and Janice C.
Simpson/New York