Beloit College Pricing 101Posted by admin on 7/21/10 • Categorized as Summer 2010
Let me start with a poorly understood fact. The cost of a Beloit College education since the 2001-02 academic year has risen by $335. Surprised? If you get nothing more out of this magazine than an appreciation of this statistic, you will have spent your time well. The cost of a Beloit education since 2001-02 has risen by $335.
With all the media attention focused on the “spiraling costs” of higher education, how can Beloit College appear to, so dramatically, defy conventional wisdom? Where does this number—$335—come from?
Let’s start with an average first-year student in 2009-10, the academic year that just ended. That student was asked to pay a tuition bill of $15,396 for the year. Of course, the price that captures all the attention is the $33,188 tuition “sticker price.” But far fewer than 10 percent of Beloit College students actually pay that price. For the average student, the college offers a $17,792 grant of financial aid. This brings the true tuition bill for the average student to $15,396 for the year. The $17,792 is truly a grant, not a loan. The student is likely to finance a portion of the $15,396 balance with loans.
Compare this with the situation in 2001-02. While the “sticker price” in 2001-02 was $22,184, a full $11,004 less than the $33,188 “sticker price” last year, this difference is hugely misleading on two counts. Most importantly, it ignores the fact that a very small fraction of Beloit College students pay that price, but it also ignores the underlying economy-wide inflation over time. If we convert the 2001-02 “sticker price” of $22,184 forward to 2009-10 inflation-corrected dollars, the adjusted “sticker price” becomes $27,144. Also, in 2001-02, the average financial aid grant was $9,875, which becomes $12,083 when adjusted to 2009-10 prices. Therefore, the actual inflation-adjusted tuition bill for the average first-year student in 2001-02 was $15,061.
In 2009-10, the average first-year student received a tuition bill of $15,396. In 2001-02 he or she received a tuition bill (inflation adjusted) of $15,061. How much has the average tuition bill grown since 2001-02? $335.
The college spends vast amounts of time and energy keeping costs as low as possible. We are a better school to the extent that our price impedes as few potential students as possible from seeing Beloit as a viable option. An average tuition bill of $15,396 is still a serious challenge for families to pay. A Beloit College education is expensive. But, it is simply not the case that a Beloit education has gotten significantly more expensive since 2001-02 for the average student.
Since you have made it this far into Beloit College Pricing 101, let me take one more step. The reason I compare 2009-10 with 2001-02 is because I want to mention the Higher Education Price Index (HEPI). Commonfund, a firm that offers fund management and investment advice to non-profits, has been producing this cost index for higher education since 2001-02. (A different methodology was used before 2001-02, making earlier comparisons problematic). The HEPI measures the change in key cost drivers in higher education. Heavily weighted items include faculty salaries, wages for non-faculty personnel, and library and technology costs. The list is long, but the essential point is that HEPI is widely regarded as the most accurate index for changes in the costs of producing an education. Since 2001-02, the HEPI index has grown by 32 percent. At Beloit College, the average actual tuition bill has gone up over the same period by 25 percent. The difference between the 32 percent increase in the cost of production and the 25 percent increase in the price we charge the average first-year student is a measure of how much Beloit College is committed to keeping its education accessible. I think it is a glorious measure of the degree to which we have remained focused on one of the college’s core principles.
The next time you read or hear about the unsustainable cost increases of a liberal arts education, just remember $335. It is a number for which we can be proud.
President Scott Bierman