The Cost of Higher Education
By John Pulley
Illustrations by Nate Williams
Since arriving at Middlebury College four years ago, Kristen Anderson has developed a sixth sense about this bucolic New England campus. Whether standing in the shadow of 190-year-old Painter Hall or passing a student on the way to class, the College’s budget director is cognizant of fiduciary auras that are invisible to others.
Strolling around campus on one of those rare, sweltering Vermont summer days, Anderson admires the architecture of Old Stone Row and speaks passionately about the people who live, work, teach, and study here. When asked, though, she can also tell a visitor what everything costs. She points out dormitories and academic buildings—in the current academic year, salaries and benefits for administrators, support staff, and the equivalent of 223 full-time professors total $98 million. Grants of financial aid to students will add another $30 million.
Then there is the new library that was finished two years ago ($43 million) and the Hillcrest environmental center that is currently undergoing intensive renovations ($4 million). Because maintenance and operations account for more than 10 percent of the College’s budget, she points out the new boiler ($2.5 million), one of four that annually consume more than 2 million gallons of fuel oil ($3.5 million), and a new biomass facility ($11.1 million) designed to reduce the College’s dependence on petroleum-based fuel sources.
Anderson is tasked with determining what the College can do with what it has, so she tabulates the cost of just about everything —every building, person, sculpture, computer—on this 350-acre academic campus tucked between Vermont’s Green Mountains to the east, and New York’s Adirondacks to the west, Lake Champlain shimmering in the distance (priceless). But of the myriad numbers that constitute Middlebury’s $183 million budget for the current academic year, one figure stands out. It alone has widespread currency. Everyone, it seems, knows how much the College charges students to live and study here for a year. Constituting one of the highest comprehensive fees in American higher education, the total tends to elicit a routine inquiry: Why does Middlebury cost so much and is it worth it?
Well, that is the $44,000 question.
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To understand the sticker price of a year at Middlebury, one must peel back the sticker, consider the costs that contribute to that total, and put those figures into context.
First, one discovers that the list price of $44,000 per year is less than the actual cost to educate a student, about $29,000 less. That is the amount of the automatic subsidy received by every Middlebury student, primarily by way of alumni gifts and income generated by the College’s $825 million endowment.
“Every student, whether they are a financial aid recipient or not, gets a benefit from those who have gone before, loved the place, and want to help,” says Bob Huth, Middlebury’s executive vice president and treasurer.
In a free market, benefactors rarely provide substantial subsidies to complete strangers. Imagine private donors making it possible for a Cadillac dealership to sell for $44,000 Escalades that cost $73,000 to produce.
Now, pull the sticker back some more. Consider the historical view. Over three decades, the annual cost to attend the College— $4,800 in 1976—has risen by a factor of 8.8.
During the same three-decade period:
- maximum aid available to students through the Pell Grant program, the foundation of federal student aid, increased a relatively meager 2.9 times, from $1,400 to $4,050.
- gifts received by Middlebury students from private donors rose 11.7 times, from an estimated $436 to $5,097.
- total financial aid per student expanded 22.8 times, from an estimated $508 to $11,568.
- and income generated by the College’s endowment, per student, increased 32.9 times, from $551 to $18,162.
The numbers undergird starkly divergent trends. As public financial support of private education has waned, the College and its benefactors have shouldered a disproportionate share of the burden—costs that otherwise would have been borne by students and their families. Although more than half of Middlebury’s students pay the full sticker price, students of limited financial means typically pay considerably less. The average grant awarded to incoming first-year students in the current academic year is $27,400.
David L. Warren, president of the National Association of Independent Colleges and Universities, says the trend lines bespeak a wholesale erosion of a system intended to defray the cost of post-secondary education among multiple sectors. In the past, that partnership provided robust financial support from state and federal governments, foundations and corporations, families of students, and institutions themselves.
“The idea was that in a joint and synergistic way, these six partners would make it possible for every academically capable kid to go to college, irrespective of their capacity to pay,” Warren says.
The coalition has all but come undone. Stagnant or slowly rising median household incomes have made it difficult for many families to save for college. State tax revenues, a major source of income for public institutions—if not private—have been squeezed by years of tight budgets.
Financial contributions by the federal government, ostensibly the principal partner in the consortium, have fallen well off the pace of escalating college costs. The maximum amount of Pell Grants hasn’t budged since 2001. Worse, last year’s Reconciliation Act, which sought to reduce the federal budget deficit by diverting $39 billion from other programs, skimmed $12 billion from the federal student financial aid program.
“What we are now encountering is a full-scale retreat by the federal government in its obligation to this partnership and to the students it was intended to serve,” Warren says.
In the span of a few decades, the coalition that supports higher education has been turned on its head. In terms of financial contributions, colleges have gone from last to first.
As revenue streams evaporated, a number of factors were putting upward pressure on college costs. Not least among the affected areas are the resources required to attract and retain top-shelf faculties. The educational model subscribed to by competitive liberal arts colleges mandates high-quality professors in quantities needed to maintain low teacher-to-student ratios.
“In order to have the best college,” says Huth, “you have to have the best faculty.”
Easier said than done. Competition with the private sector for top talent, along with the rising cost of benefits, particularly health care, has pushed the cost of instruction at Middlebury to 30 percent of the budget.
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The personnel-intensive nature of the post-secondary sector largely explains why the Higher Education Price Index (HEPI), an industry-specific inflation calculator, typically rises much more quickly than the Consumer Price Index (CPI), which tracks inflation in the larger economy. During the past decade, annual inflation for colleges rose 3.6 percent, on average, compared with annual average increases of 2.5 for the CPI. In 2006, HEPI rose 5 percent.
“The biggest cost driver on any campus is related to your human resources,” says Damon Manetta, a spokesman for the National Association of College and University Business Officers. “It’s simple economics. The best professors cost the most.”
Non-personnel costs have risen quickly, too. Utilities, a significant expense on most college campuses, rose 27.1 percent between 2005 and 2006, according to the latest annual HEPI report, released in May by Commonfund, which provides financial services for colleges and other nonprofit organizations.
Costs associated with construction and the maintenance of physical assets have risen rapidly, as well. In 2006, the cost of materials and supplies rose 8.2 percent, according to the annual HEPI report. The cost of operating new buildings is significant, as is the expense of upkeep for older ones. Middlebury incurs maintenance costs of $12 million annually.
Skimping on maintenance can look like an attractive option when budgets are lean, but institutions that have succumbed to that temptation have found themselves deep in arrears. Yale University skimped for years, racking up hundreds of millions of dollars in deferred upkeep. When the campus began to crumble, administrators had little choice but to spend huge sums to shore up its infrastructure.
Middlebury is under pressure, as well, to provide amenities that earlier generations of students would have considered luxurious. This “arms race” extends to everything from private dorm rooms, the coolest new technology, and beefed up campus security, to counseling services, swank workout facilities, and restaurant-quality dining halls.
“There is a greater expectation of what the college experience needs to be,” Huth says. “To be a top college, you have to meet those expectations.”
Middlebury’s new $48 million science building, for example, has state-of-the-art laboratories stocked with sophisticated scientific equipment used by undergraduates. At research institutions, the best labs often are the exclusive domain of professors and graduate assistants. That could explain why disproportionate numbers of scientists who earn Ph.D.’s are graduates of liberal arts colleges.
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Amenities notwithstanding, the comprehensive fee charged by Middlebury and other selective institutions often elicits hard swallows, particularly by parents whose progeny enroll at those colleges.
“Nobody looks at $44,000 and says, ‘What a bargain!’ ” Huth notes.
Price, however, is relative. In economic terms, the question is value. Is Middlebury worth it? The market thinks so. The College received more than 6,000 applications last year for about 600 spots in its incoming class.
Given the disparity in supply and demand, the College could alleviate financial pressures by admitting only those students who can pay full tuition. Such a stratagem is disallowed by Middlebury’s needs-blind admissions policy, which precludes consideration of prospective students’ financial wherewithal.
“We never ask how much this is costing us,” says Bob Clagett, the College’s dean of admissions. “That [in turn] costs us a lot of money.”
Digging deeper, is there a compelling value proposition for individual students? For benefactors whose gifts to Middlebury and its endowment underwrite the enterprise? For society at large?
“If places like Middlebury make good on their promises, it’s worth it,” says President Ronald D. Liebowitz, noting that private, liberal arts colleges have an impact on society that goes well beyond what might be expected of a sector that enrolls no more than 3 percent of post-secondary students. Community colleges, by comparison, enroll about half.
“It’s expensive because it’s all about people,” Liebowitz says. “The value added is all about the experiences that 18- to 22-year-olds are able to have that get them to the next level, the human-to-human contact, the mentoring, the learning in small groups. Anything that is so human intensive is going to be very expensive.”
Student-run initiatives at Middlebury, whether programs to supply local restaurants with organic produce or creation of the Middlebury Musicians Guild, are evidence of the College being “the best environment to nurture and support creativity, innovation and risk-taking,” says Liebowitz. “Many of our institutions have provided atmospheres that are too coddling.”
Any scholar worth his salt, however, would be loath to accept the president’s premise without compelling proof. But exactly how does one quantify an exchange that businesspeople refer to as ROI, return on investment? Well, not easily.
“Liberal arts education has had this problem for a long time, how to best assess student outcomes,” Liebowitz says. “It’s very difficult. Even the accrediting agencies have a hard time measuring success. A liberal arts education, by definition, defies metrics.”
Proponents of small liberal arts colleges nonetheless are passionate in their defense of intimate, high-quality learning environments that strive to provide deep educational experiences. When done well, they say, teaching gives way to mentoring, learning leads to self-discovery, and scholarship opens windows on leadership.
To focus on the bottom line to the exclusion of institutional value would miss the point, say Middlebury’s leaders.
“Higher education is different than the for-profit sector, where people get bonuses for reducing costs and making more profit,” Huth says. “If Middlebury were an educational mill, it would take great pride in producing students off the assembly line at the lowest cost.”
Take Jason Siegel ’06. Having graduated from Amity (Connecticut) Regional High School in the top 10 of his class, he applied to a number of competitive colleges, among them the Universities of Massachusetts and Vermont, Rutgers and Harvard Universities, Amherst and Middlebury Colleges. He came away from his visit to Middlebury smitten.
“Nobody else was treating me as well as Middlebury was treating me, and I was being treated nice,” Siegel recalls. “Middlebury was it. … You can always go to Harvard later on, but you can’t go to Middlebury later on.”
Arriving at Middlebury overweight, politically naïve and environmentally unaware, Siegel threw himself into academic and campus life. He studied languages, worked in the admissions office as a tour guide, helped to edit Middlebury Campus, and performed with the College’s chamber singers and theatre group, which last semester produced the American premier of Bewitched. He worked in the College’s mailroom and sat on the Spanish department’s student advisory committee.
“Here, anyone who wants to do something can be accommodated,” says Siegel, who entered a Ph.D. program at Indiana University this fall. “I’m definitely more active … more active politically … and more environmentally responsible than I was.”
His goal one day? To teach at a small, liberal arts college.
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Thirty years ago, Middlebury was a very white college in a mostly white state. Today, approximately one of every five students is a person of color, and the College has become Vermont’s most diverse institution of higher education—no small feat. There are things easier than luring academically accomplished people of color to a part of the country that is cold, rural, and blindingly Caucasian.
ReNard Rogers ’07, from Brooklyn, enrolled at Middlebury after turning down a full scholarship to attend Morehouse College. Since his arrival three years ago, Rogers has become a member of the crew team, studied Chinese and traveled to China, joined the African American Alliance and the Distinguished Men of Color, performed with Riddim, a dance troupe, and initiated a program to bridge the social divide between Regs and Febs, shorthand for students who matriculate in the fall and the spring semesters.
“I went to Middlebury thinking about experiencing things I had never experienced before and might not experience again,” Rogers says. “Middlebury is a phenomenal place … I needed that intimate, small environment.”
Campus diversity is further enhanced by international students, who constitute approximately 12 percent of the student body. At any given time, approximately 80 or 90 of those students attend through the Davis United World Colleges Scholars Program, which pays full freight for its students to attend Middlebury.
Is it worth it?
“I’m astonished that people will pay $44,000 for anything,” says Karl Lindholm ’67, an assistant professor of American studies, “but I think what they’re paying for is a serious, rigorous education by people who are committed to the enterprise…. In my mind, it’s the best undergraduate education in the country in terms of the scholarly expertise of the faculty, which will be exceeded in some other places, but it won’t be combined with their attention to your development as a student.
“I have a daughter who went to Harvard who can’t get a faculty recommendation,” he adds. “She doesn’t know anyone on the faculty. The people she got to know best are the section leaders (typically graduate students who serve as teaching assistants).”
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Large state universities are like industrial machines. Liberal arts colleges are like ecosystems. The former are subject to rust, the latter to extinction.
“I don’t take things for granted,” Liebowitz says. “I’m not so sanguine about the future of this 3 percent slice of the market.”
The College has developed a blueprint for maintaining its vitality. Adopted in May, the strategic plan, an extensive 81-page document (and 20 pages of appendices), summarizes the future direction of Middlebury, including three strategic goals.
Putting the plan into action will cost hundreds of millions of dollars. A fund-raising campaign to be announced in the next year or so will seek funds for implementation.
It calls for strengthening the College’s academic program and fostering even more intensive student-faculty interactions, primarily by hiring more professors. Compared to per capita resources at state universities, Middlebury’s 9:1 student-teacher ratio is enviable, yet higher than at peer institutions.
The strategic plan also contemplates completion of the Commons. Five communities within a community, the Commons are intended to intensify opportunities for mentoring and peer interactions on campus. The plan envisions the Commons as a place that transcends the divide between academic life and other spheres of students’ lives.
Finally, the plan calls for strengthening support for a socio-economically diverse student community. “Matriculating a diverse student body is costly,” the plan says. “Competition for the best students from families with limited resources is greater than ever.”
Wealthy institutions with endowments that are larger than Middlebury’s are shifting institutional support toward grants that don’t require repayment and reducing loans that create debt that must be repaid following graduation. (For instance, in the past five years, Princeton replaced all student loans with grants, while Brown eliminated loans for its neediest students, effecting roughly 130 matriculants each year.) Compared to its peers, the debt burden of Middlebury’s students is relatively high.
Rogers, who expects to graduate with about $20,000 in loan debt, says students have left Middlebury and transferred to community colleges because of the cost. To save money, he is living off campus his senior year, a move that is antithetical to the Middlebury ethos.
“It’s going to be hard for Middlebury to compete for these top-notch students in the future with these other colleges offering such amazing financial packages,” Rogers says.
Beyond the issue of admissions and retention, the College has concerns about the impact of loan debt on alumni. Middlebury takes pride in producing leaders who often go into fields that aren’t always the most remunerative. Significant loan debt could deter graduates from entering those professions.
“We want to make sure the debt they are incurring as undergraduates doesn’t have an impact on their vocational decisions,” Clagett says.
Siegel graduated owing $17,000, “a ton less debt than my sister who went to the University of Delaware,” he says. Still, the newly minted Middlebury alumnus isn’t sure how he will pay back the money. He recently tried out to be a contestant on Jeopardy, surviving the preliminary rounds of the selection process. Now he is hoping to get a call from the show’s producers. “Nobody should have to count on Jeopardy to pay off their loans,” he cracks.
“I’m not banking on it.”
That said, he adds, “Did I get $44,000 out of Middlebury? Definitely, and then some.”
John Pulley is a freelance writer in Washington, D.C. Previously, he was the Money & Management editor at the Chronicle of Higher Education.