The Price of Excellence
We must hold tuition and costs in delicate balance.
Dartmouth and other institutions with healthy endowments are increasingly asked why we continue to raise tuition in an era of double-digit endowment growth, Especially in light of Williams College's recent decision to hold its tuition steady, let me share with you some observations on Dartmouth's underlying cost structure and why the Dartmouth board of trustees approved a 3.5 percent increase for undergraduate tuition, bringing it to $25,497 for the 2000-01 year. (Tuition plus room and board will increase 3.8 percent to $33,210.)
As you may know, even at that sum, tuition does not cover the full cost of a Dartmouth education. And our costs are increasing more quickly than our price. We face expenses for financial aid, compensation, facilities and the ever-pressing need to update academic programs in an increasingly competitive environment—a competition that focuses on faculty, programs and facilities. Nearly all of our Ivy competitors have recently announced major investments in programs and infrastructure. For example, in January Princeton unveiled yet another enrichment of its financial-aid program, along with a 10 percent increase in the size of its undergraduate student body.
Dartmouth's annual revenue is more dependent upon tuition than some of our peer institutions. While Dartmouth's endowment has increased dramatically over the past 10 years, our endowment per student is far below that of Harvard, Yale, Princeton—or Williams. Dartmouth ranks 16th among private institutions in size of endowment, but drops to 25th when we consider endowment per student. According to the "1999 National Association of College and University Business Officers Endowment Study" by Cambridge Associates, Princeton's endowment per student is $1,007,978, Harvard's $795,092, Yale's $661,572, Williams' $451,906 and Dartmouth's $327,950. The budgetary implications of these differences are enormous. For example, Princeton's restricted endowment for financial aid bears the cost of more than 95 percent of its financial aid, whereas our endowment covers approximately 37 percent of our financial aid. We are working on becoming less dependent on tuition. Between 1990 and 1999, for example, endowment support of the College's operating budget grew from 17.8 percent of revenues to 22.4 percent. Giftsincluding the Alumni Fund—have grown to 12.2 percent of the operating budget, and sponsored support to 8.5 percent, while departmental revenues amount to 6.5 percent. Tuition accounts for 50.4 percent of the operating budget and thus remains a vital and necessary source of revenue.
We are well aware, however, that tuition represents a significant burden for many families. Our financial-aid program ensures that Dartmouth remains accessible to the best students in the country. We are one of only a handful of institutions with need-blind admissions and a commitment to meet 100 percent of a student's need. Approximately 50 percent of Dartmouth undergraduates receive some form of assistance. Last year we adjusted our aid program to add $2.2 million to the scholarship assistance available to families. This coming year the College will award close to $30 million in financial aid, a 6.4 percent increase in the scholarship budget over the past year. The rate of increase for financial aid is growing more quickly than the tuition increase.
The education provided by Dartmouth is labor intensive, resting upon small classes and a low faculty/student ratio. Even though our faculty/student ratio is not as low as I would like, compensation accounts for more than 60 percent of the College's budget. Dartmouth has competed very successfully in recruiting and retaining faculty, but it is becoming more expensive to do so—and our competition is not standing still. Our faculty salaries lag behind those of our peer institutions. Furthermore, when other schools attempt to recruit our faculty, we need to meet these offers in order to hold onto the faculty we have. We also face the significant costs involved in new hires—especially in the sciences, where new faculty usually need major laboratory renovations and specialized equipment to do their work.
Upgrading facilities and programs-necessary if we are to remain a leader in higher education—also exerts budgetary pressures. In the past few years, we have, upgraded our facilities for the physical sciences and psychological and brain science, we have transformed Webster Hall into the Rauner Special Collections Library, and we started construction of Berry Library. We have also renovated and expanded the residential and athletics facilities. But our task is not finished. We need to build new facilities for math, computer science, life sciences and the arts. We have launched a new genetics program, a humanities center and the student life initiative. We also need to constantly upgrade the computing infrastructure and the level of technical support we provide to faculty and students.
We cannot afford to lower our aspirations. Our special niche within higher education derives from our desire to be the very best of a liberal arts college, a residential teaching college with the strength of a research university. Our task, complicated but certainly not impossible, is to maintain Dartmouth's competitive strength while making the special opportunity of this College accessible to students from all income levels. The board of trustees is committed to restraining tuition increases while at the same time expanding available resources to fund programs and initiatives that will keep Dartmouth in its leadership position. This is more than a delicate balance. It is the future of Dartmouth College.
Ivy League Tuition Hikes Cornell 4.2 % Brown 4.0 % Dartmouth 3.5 % Princeton 3.3 % Harvard 2.9 % Yale 2.9% Columbia Decision pending Peon Decision pending
