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Tuition has layers

and | Friday, February 27, 2015

Early in the movie Shrek, Lord Farquaad looks down from his tower over the town of Duloc and addresses the knights who will go on his behalf to rescue Princess Fiona from the castle where she has been locked away. “Some of you may die,” he laments, “but it’s a sacrifice I am willing to make.” On the ground, one of his subjects holds up a sign reading “applause.”

The Observer published a ritual of a story Feb. 12 concerning the University’s annual tuition increase. The Observer has run this story every year that we have been here because Notre Dame has increased tuition every year that we have been here. This year’s story was accompanied by a single chart showing the percentage rate at which tuition has increased in each year since 2004. These percentages have declined. As Austin Hagwood pointed out in his Feb. 17 column and as anyone with a high school math background understands, looking only at annual percentage increases ignores the real story, namely that Notre Dame’s tuition and fees have doubled since 2005. Add room and board to that and hold annual increases constant at 3.7 percent (a 55-year low), next year’s class of 2019 will be the first to see its cost of attendance break $60,000 as freshmen and the first to break $70,000 when they become seniors. Tuition alone will surpass $100,000 in 2032.

In February 2014, The Observer supplemented its coverage with an interview with University Vice President for Finance John Sejdinaj (B.A., ’84). He is a longtime board member of the Alliance for Catholic Education and South Bend Center for the Homeless

“We don’t want to be too high, and we don’t want to be too low versus our peer groups. So we’re always watching what our peers are doing and where we’re at,” he said about tuition.

Let that sink in.

In The Observer’s 2012 tuition story, University Executive Vice President John Affleck Graves echoed those sentiments.

“The problem is, [parents] send us the children because they think we can give a high quality education, we can give a good residence life experience, so if we don’t do that just because we want to save some money, in the end I think we’re shortchanging the students,” Graves said. “And that’s the last thing we want to do.”

So the response from administration officials to questions about Notre Dame’s $62,000 price tag has leaned heavily on “all my friends are doing it” and “it’s for the kids.”

Apart from touting the 3.7 percent figure, a statistic which loses any meaning in the context of rising absolute costs, the University rightly points out that over the long term, financial aid has increased at a greater rate than tuition.What is unfortunate is that there apparently hasn’t been a corresponding effort to reduce costs.

As students who intend to give to the University after we graduate but with concerns about this issue, we felt compelled to investigate. This week, we aggregated the University’s financial statements from the 2000-2014 Annual Reports. Adjusting for inflation, the University’s total operating expenses are up 67 percent since 2000. The University spent $1.007 billion to exist last year. “Academic Support” expenditures, a separate category from “Instruction,” went up 54 percent in 2012-13 alone and were $94.2 million in 2014.

Of the seven categories of expenses in the University’s financial statements, all but one have increased by 47 percent or greater (in real dollars) since 2000. The only one which has remained stable is “Public Service,” down 2.67 percent since 2000.

Cost-control problems are not unique to Notre Dame, but we think they are symptomatic and illustrative of the University’s many disparate goals.

Notre Dame wants to be at least three things: a highly ranked national research university, a university with some rooting in the liberal arts and a Catholic university.

The first goal requires us to recruit and retain respected faculty, house various Centers for X and Institutes of Y and have top graduate programs. These need to be funded, and collecting $262 million in tuition and fees every year is a start. Pacing tuition with other prestigious schools is also a way of signaling our own merits, as suggested by Mr. Sejdinaj above.

The second goal explains our 14-course core curriculum and president who is a fellow of the American Academy of Arts & Sciences. It requires a student body that values and feels capable of pursuing a liberal education.

The third goal requires some kind of institutional commitment to a Catholic worldview and holistic understanding of education. It ties the University to the teachings of Christ, who was skeptical of worldly power, and devotes us to fighting for the disadvantaged in some way.

Individually, these goals are admirable. Taken together, we submit, there’s an undeniable tension between them we have yet to reconcile.

Our experience as Arts and Letters students has convinced us the biggest deterrent for students considering the college is a paralyzing fear that without an “employable” degree, they will struggle to pay back loans or satisfy parents’ expectations of some financial return on their $240,000 investment. While we reject this line of thinking, we are acutely aware of and sympathetic to that fear. Using the University’s 2014 published figures, we estimated that those making between $80,000 and $160,000 can expect to shell out about 20 percent of their pre-tax income after financial aid.

Very high tuition might also run against our Catholic commitment. There is a certain ironic tension between the amount of excellent work Notre Dame does here and abroad to fight poverty and the fact our student body is overwhelmingly upper-class. This fact in part reflects underlying structural inequalities in American K-12 education. It is nonetheless foolish to proclaim the Catholic call to serve the poor and have a cost structure that scares lower-income students out of applying, squeezes students in the middle brackets and subsists on a the requisite number of wealthy, full-paying students.

In a non-Dreamworks du Lac, increasing tuition year after year makes some aspirations easier and compromises others. After several Excel books and three days of conversing, we admit we do not have an answer to this problem. However we believe it is worthwhile for our University and others like it to acknowledge publicly that it exists. Notre Dame is not the sole perpetrator, nor will it be the sole solver of ballooning expenses and intercollegiate arms-racing. But the social costs are real, and the moral ground is shaky. Don’t hold up the “applause” signs blindly.

The views expressed in this column are those of the author and not necessarily those of The Observer.

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About Alex Caton

Alex is a junior political science major living in the caves and ditches of St. Edward's Hall. He has written for the Viewpoint section since spring 2013

Contact Alex

About Andrew Weiler

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  • Tim

    In 2014, the admissions office received 17,901 applications and admitted 2011 students. Price theory anticipates that tuition costs will continue to rise until the equilibrium price is reached (namely, in 2014 terms, when only 2011 students apply for 2011 slots in the entering class, everyone else having been priced out of the market). What does that actually mean? It means that the university can charge whatever they bloody well want.

    • Matthew Greene

      “Can” is fine and well, but the question here is “should”. Notre Dame is a non-profit. Its institutional goal is not maximizing profit, so price theory doesn’t apply. A more robust analysis must be undertaken, given that the university is (read: should be) trying to maximize the Catholic mission on earth, not its financial well being.

  • C.

    I received my BA and JD degrees from ND. My debt from undergrad was $80,000, even though ND claims that it meets 100% of an undergraduate’s “demonstrated” financial need. By the time that I graduated from law school, my debt had ballooned to $300,000. Even though I received a first-rate education and grew tremendously as a person while at ND, I regret my decision to attend ND in light of my debt load. Granted, I was stupid to take out so many loans, but at the same time, ND is sitting on a massive endowment, has no trouble raising funds for expensive projects, and likes to boast about its institutional conscience. While it might make good business sense to blindly allow market forces to determine tuition, it is an act of moral cowardice for ND to embrace this approach. ND emphasizes the notion of a duty to serve others, but how is ND serving anyone other than itself by overcharging for tuition and churning out heavily indebted graduates? When will this madness stop? I expect ND to set a higher standard and not to sink to the lowest common denominator.

    ND must put its money where its mouth is, stop the insanity of these annual tuition hikes, and greatly improve its grant-based financial aid offerings.

  • Alex Caton

    Two Corrections:
    1) The last sentence of the second paragraph should read “Tuition, room and board will surpass $100,000 in 2029,” not 2032.
    2) The “262 million” in paragraph 13 should be “$288 million.”

  • Hawk Fan

    I have always wondered; is there any data on the change over time of the average tuition collected per student [excluding scholarship contributions]? I’d have to imagine that scholarship funds have increased, so that tuition collected from students/parents still increases, but the increase is slower than the yearly percent increase in sticker price.

  • Matthew Greene

    The numbers posted in this article are misleading at best, dishonest at worst. Inflation must be taken into account when comparing prices, especially as far away as 2032. While I agree with the premise of the article and many of Alex’s points, the 3.7% increase in dollar amount actually represents around a 1.5% real tuition increase. Other shocking numbers in this article are similarly dampened when “real” increases are taken into account, as opposed to simple dollar amounts.

    • Calhoun

      Real wages have fallen across all income deciles (except the very highest earners) an average of 2% a year since 2008, with no indication that this is turning around anytime soon. If you account for this, you’re back in 3.5% territory. No?

      • Matthew Greene

        Well sort of. What you described is a related problem, but fundamentally not involved in calculating percentage increases unless you are looking at tuition cost as a percentage of average real income for the bottom 80% of US income earners, which would actually be quite the interesting calculation.

        Unfortunately, the writers here threw economic logic to the wind. And of course wages are different from income which also needs to be looked at. I’m not trying to say that the tuition increase is or isn’t bad only that to be fair we need to make a more nuanced analysis.

        I like your consideration of wages; a nuanced analysis would certainly take that into account.

        • Calhoun

          I think the writers have laid out a thoughtful essay that touches on a number of important issues, and asks some pretty compelling questions. Their point, it seems to me, is that ND is routinely increasing tuition with little consideration for the impact it has on the indebtedness of its students or the financial burden it puts on their families. The fact that the routinely raise tuition at at rate that exceeds inflation is certainly something that should be challenged. Why can’t a university that houses the best business school in the country manage its own costs better than that?

        • Andrew Weiler

          Matthew, thank you for your comments and for your consideration of our article.

          It is worth noting that all the percentage increases in University expenses cited in our article are indeed real percentage increases, having taken into account inflation since 2000.

          We chose not to include inflation when citing the 3.7% tuition increase because 3.7% was the number touted by the University in its annual tuition announcement. This, we believe, was not at all misleading; it was rather an attempt to engage the University’s argument on the University’s terms.

          Moreover, we did not put 2029 tuition prices in terms of 2014 dollars because in 2029 people will care about the sticker price they’re paying; they won’t be thankful that the price is much lower if they think of it in terms of 2014 dollars. Certainly, they should keep in mind inflation when planning college savings for their children to college, but we trust that the economic reasoning of our readers (or their financial advisers) will remind them of this.

          Finally, I note that we did try to give some account for the relationship between wages and tuition by calculating the percentage of pre-tax income that families at certain income levels would spend. Taking into account wage increases over time would undoubtedly be interesting, but it seems clear that no matter how much wages have increased since 2000, $60,000 tuition is still burdensome for many Americans.

  • ND2LUC

    Anyone else catch the additional unique resemblance to ND: “Far Quad” and Du Lac” 😉

    • Erik Bootsma

      The makers of Shreck were Carroll Hall guys. Thus the Far Quad.

      • Matthew Greene
        • ND2LUC

          You beat me to it, Matthew ;-). I knew there was no ND influence on the movie, but I do think it quite humorous and appropriate that the authors of this viewpoint column chose this scene, as it gives the scene-as-metaphor even more credence.

          • Erik Bootsma

            Well there you go. Always heard the tall tales, but I guess not. Funny coincidences at the least.