Here Come $60,000-A-Year Colleges
Many elite colleges are about to break the $60,000 price barrier
Outraged by $50,000 sticker prices for college? That's so 2009. At least one college has broken the $60,000 barrier this year. And if colleges keep raising tuition the way they have in recent years, several more colleges will cross that psychologically important price line soon.
Sarah Lawrence College , in Bronxville, NY, tells parents that its total cost of attendance for the 2010-11 academic year is $58,332. But that price includes only tuition, fees, room, board, books and personal expenses, not travel to and from campus, or extra health insurance, which students from families covered by out-of-state plans often have to buy. So the total cost of attendance for many Sarah Lawrence undergraduates from distant states or countries exceeds $60,000.
Three other New York area colleges, Columbia University , Bard College and New York University , report total costs of attendance in excess of $57,000 this year. If their 2011 prices jump again by the average amount private colleges raised their prices this year--4.5 percent --they could approach the $60,000 threshold next fall.
Many of the Ivies, Vanderbilt University , the University of Chicago , George Washington University , and several other elite colleges with sticker prices in the $55,000 to $57,000 range would break the $60,000 barrier in 2012 if prices continue rising at the current pace.
Officials at high-priced colleges say students and parents shouldn't be scared off by sticker prices. Many students receive big scholarships, bringing their actual costs down. Half of Sarah Lawrence undergraduates, for example, receive college scholarships averaging $30,000, notes Thomas Blum, the college's vice president of administration.
And some wealthier colleges are increasingly charging on a sliding scale. Harvard University promises to cap annual expenses at 10 percent of a family's income for all students whose parents earn a total of $180,000 or less. Only 40 percent of Harvard students pay the full cost of attendance of $54,000 to $57,000, depending on a student's travel bills. The vast majority of Harvard students receive college scholarships that bring their average annual expenses down to about $15,000, which is less than many public university students pay.
Officials at expensive colleges also insist that students who pay full fare get value for their money. "Sarah Lawrence requires one-on-one student-faculty meetings as part of every seminar, accounting for 94 percent of classes," Blum says. "Our average class size is 11-12, and our student-faculty ratio is 9:1, one of the lowest in the country," Blum adds.
While private colleges are free to charge whatever the market will bear, some economists say college prices could finally be reaching their limits as the recession and changing demographics shrink the pool of American 18-year-olds from wealthy families willing and able to spend almost a quarter of a million dollars per undergraduate degree.
Surveys of parents by Noel-Levitz, a consulting company that helps colleges improve their enrollment, find that parents' perceptions of college priciness "cluster" at round numbers. Sixty percent of parents say tuition above $30,000 is "too expensive," says Scott E. Bodfish, Noel-Levitz' vice president for market research. Fully 95% object to price tags above $50,000, he adds.
While inflation is likely to slowly acclimate parents to higher college prices, Noel-Levitz found a comparatively short supply of students who can afford the highest sticker prices. In 2009, only about 147,000 of the more than 2 million college freshmen came from families earning more than $250,000 a year, Noel-Levitz estimates. Some of those were indifferent students, of course. And many, if not most, went to public colleges. But most of the approximately 1,500 private, non-profit colleges need several hundred full-paying freshmen each year to fund their operations. That means hundreds of private colleges are chasing after the same few thousand applicants who have good grades and rich parents.
Many colleges are trying to make up for the shrinking number of Americans willing to pay their rising prices by recruiting wealthy students in Asia, the Middle East and South America. But the globalization of the education market cuts both ways. American students could put additional downward pricing pressure on American colleges by voting with their feet and studying at well-regarded, lower cost universities in Canada, Europe or Asia, says Ohio University economist Richard Vedder.
While the Ivies and other exclusive colleges will likely always be in high demand, Vedder predicts parents will increasingly balk at expensive price tags from colleges that lack elite reputations or rankings. He adds: "It is going to be harder to fill seats in those schools."
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