Facing

By John E. Gallagher

These days, acceptance letters from colleges are appearing in mailboxes all across the country. No sooner are the envelopes opened than many parents turn their attention from their child's good fortune to another kind of fortune: the small one the next four years will cost them. The price of a degree has been climbing throughout the '80s at a rate double that of inflation. The figures at elite universities, particularly, are enough to cause sticker shock, even though the current increases at many schools are the lowest in a decade. Dartmouth's tuition (not counting room and board) will be $12,474 next year, up from $8,190 five years ago; Stanford's will be $11,880, up from $8,220. Secretary of Education William Bennett charges that such increases result from mismanagement and greed. "Higher education is underaccountable and underproductive," he claims. "No one doubts that there is a lot of fat in some areas."

Perhaps no budget is without some fat, but university officials argue that their unique function requires special standards of evaluation. "One of the peculiarities of education is that our customer is also our product," says University of Pennsylvania President Sheldon Hackney. "That confuses most analogies between universities and profit-making enterprises." In universities, notes Northwestern President Arnold Weber, all the money is ploughed into the operation: "We don't declare dividends; we don't give stock options to our administrators." Tuition increases, say officials, are driven by the universities' costs, and even at that, tuition income typically covers less than 50% of college budgets. (Endowments and gifts make up the rest.)

Academic salaries are the largest budget item, generally accounting for around 60% of total expenses. During the '70s, professors' salaries grew at an overall rate of 73%, lagging far behind inflation at 112%. Universities have been playing catch-up in the '80s. This year's raises average 5.9%, which is 4% above inflation and the largest since 1972. Yet the typical tenured professor's salary of $43,500 still represents 10% less buying power than the equivalent salary in 1970.

The boom in technology has been an added burden, especially for research universities that have to keep up with the latest computer and scientific hardware, regardless of price. At the University of Chicago, the $225,000 allotment that covered equipment for physiology and biology research ten years ago has grown to $1.4 million. Moreover, universities must scramble to replace outdated facilities. Says Northwestern's Weber: "We have buildings here that cost $1 million to build 80 years ago, and cost $5 million just to repair." And books are not any cheaper. To maintain its library, Northwestern orders 29,000 periodicals a year at a cost approaching $2 million. Other uncontrollable costs include insurance and utilities. Emory University in Atlanta expects next year's electric bill to rise 30%.

The third major cost cited by universities is the higher proportion of student aid they have undertaken to provide, partly to offset their own tuition increases but especially to cover declining federal assistance. At Princeton, the Government's contribution to student aid has dropped from 26.7% of the total to 12.6% in six years. The additional expense to Princeton: $2.2 million. Secretary Bennett, however, maintains that more federal aid would only encourage universities to count on the Government to meet any increases they might impose.

Some observers note that relatively few students are affected by high price-tag tuitions. Only about 80 institutions charge more than $10,000. The average private-college tuition, by contrast, is $6,150. Public colleges, which account for 80% of the nation's enrollment, average out at $1,100. Terry Hartle of the American Enterprise Institute questions whether elite colleges even have any incentive to control their prices. These schools, he points out, consistently have "more qualified applicants than places for them."

Nonetheless, some colleges are making efforts to trim budgets and pass along the savings. Penn hopes to save $12 million next year by closer management of employee benefits. Cornell is reducing operating expenditures across the board by 2%, allowing it to post a 7% tuition increase, its smallest in 14 years. A few institutions are dropping secondary programs. Georgetown, for example, has eliminated one-third of its graduate programs in the past five years and recently decided to close its dental school. "We can't be all things to all students," says Treasurer George Houston.

Ultimately, colleges may be able to do only so much to rein in rising tuitions. With their commitment to speculative scientific research, large faculties and out-of-favor subjects like classics, they may be what University of Rochester President Dennis O'Brien calls "inefficient in principle." For students intent on a name-brand sheepskin, that principle is likely to remain an expensive one, at least for the foreseeable future.

With reporting by Mary Cronin/Princeton and David E. Thigpen/New York