Skyrocketing tuition: Administration explains education’s price tag

Students, parents, faculty, and staff gathered in Rangos Ballroom for Carnegie Mellon’s annual undergraduate tuition meeting last Tuesday night. Bill Elliott, the university’s vice-president for enrollment and the meeting’s host, reported that Carnegie Mellon’s tuition surpassed that of all its peer institutions for the first time this year.

First-year students paid $34,578 in tuition and fees, compared to this year’s average tuition rate among competitors of $31,805.

The meeting included presentations by several notable members of the administration, each measuring the university’s growth in a different way. Melissa Tanto, an analysist for Institutional Research and Analysis, evaluated Carnegie Mellon’s performance in the most recent rankings by U.S. News & World Report. Elliott reported on this year’s tuition rates and those of our peer comparison schools. Provost and Senior Vice-President Mark Kamlet spoke about Carnegie Mellon’s strategic initiatives, and Vice-President and Chief Financial Officer Deborah Moon presented an overview of the university’s financial pressures.

Members of the campus community in attendance then offered their feedback about the issues presented.

This year’s tuition marks an increase of nearly 8 percent over last year’s rates, Elliott said. Over the past 10 years, Carnegie Mellon’s tuition rate has increased 41 percent, compared with 38 percent among the university’s peers.

Carnegie Mellon’s small endowment in relation to its peer institutions is partly to blame for this gap, Kamlet explained in his presentation titled “Strategic Initiatives at Carnegie Mellon.”

Currently, the market value of the university’s total endowment is $941 million. Whereas the average endowment per student among peer institutions is $444,628, Carnegie Mellon’s is less than $100,000.

Students and parents present at the meeting argued that the university’s division into six individual colleges often makes for a fragmented student body. The separation, they said, would make alumni more interested in contributing to their individual colleges and less to the university as a whole, leading to a smaller endowment.

“Anything that pulls the entire university together is lacking,” said Emily Leathers, one of the students who attended the meeting. The chair of Student Senate, Leathers is a senior in computer science and civil and environmental engineering.
Elliott said such a pattern was to be expected because of the university’s structure.

“We segment our audience in the admissions process when we make them apply to one of the six colleges,” he said.
Attendees suggested implementing more fundraising events, alumni activities, and school spirit to increase alumni contributions that would increase the endowment.

The reason for Carnegie Mellon’s comparatively small endowment is that it is much younger than its peer institutions, Kamlet said.

He said Carnegie Mellon can only evaluate its progress as a university comparable to its peers since 1967, when the Carnegie Institute of Technology and the Mellon Institute merged to become Carnegie Mellon University.

“Because we’re so young, we don’t have the length of time and family wealth that all of the other schools we compete with have,” Kamlet explained.

In the last 50 years, he pointed out, Carnegie Mellon has transformed from a regional, technical school for the children of steel mill workers to one of the country’s leading research institutions with certain programs and departments consistently ranked in the top 10.

“We have come farther, faster than any of our peer institutions,” Kamlet said.

Statistics show the university is making the best use of the endowment money that it does have. U.S. News & World Report ranked Carnegie Mellon first in endowment efficiency, a measure of the school’s performance in relation to the size of its endowment. The university’s score was more than four times higher than that of older universities with larger endowments, including Harvard, Yale, and Dartmouth.

Furthermore, the university’s endowment has grown 31 percent over the last three years.

“The number of donors of the university is four-, five-, or six-fold more than what it was four, five, or six years ago,” Elliott said.

Moon spoke at the meeting about Carnegie Mellon’s current financial pressures and listed endowment at the top of the university’s list of current financial challenges. The second was the continuing need to invest in updating the university’s technological infrastructure.

“We’re living in an environment that requires constant connectivity,” Moon said.

Other financial needs included renovating labs and classrooms, restructuring the university’s debt, and cutting university health care costs to half the national average in order to offset the rising price of medical benefits.

Moon spoke about the university’s continuation of a capital campaign to meet its goals, no less than 50 percent of whose funds will be put towards the endowment, as well as an additional 10 percent to facilities. She reported that phase I and early phase II results indicated that the university has actually surpassed its financial goals.

However, money received from private donors, a figure that includes endowment, accounts for only 11 percent of this year’s operating revenue. Tuition and fees, on the other hand, account for 33 percent of that figure. Though administrators may be able to predict the growth of the endowment, they are more hesitant to predict the future of tuition.
Elliott said the administration has not decided on the cost of tuition for the 2007–08 academic year. He did say that the university will continue to adjust the figure every year, as opposed to setting tuition and holding it for the duration of a student’s four years here.

“We can’t even figure out what the value of money would be six to 12 months from now,” he said. “We would end up overcharging freshmen and sophomores significantly.”