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It Depends on What They Mean by “Small”

With yet another tuition increase far exceeding inflation, the cost of a Notre Dame education balloons to nearly $70,000 next school year.


NOTRE DAME, IN — In a February 17 press release, the university announced a tuition increase for next year:

Undergraduate tuition and fees at the University of Notre Dame will increase 3.7 percent for the 2017-18 academic year to $51,505. Average room and board rates of $14,890 will bring total student charges to $66,395. The percentage increase matches that of last year and is the lowest at Notre Dame in more than a half century.

In a letter to parents…the University’s president, Rev. John I. Jenkins, C.S.C., expressed his gratitude, adding: “We know well that paying for college involves significant sacrifices for families… We strive always to be worthy of the trust you have placed in us, and to provide your student with the best possible educational experience.

Sound familiar? It should. Almost identical press releases with the same tuition increases and phrases – “the lowest increase,” “significant sacrifice,” “the best possible educational experience,” “educational experience second to none” – issued last year, the year before that, the year before that, the year before that, the year before that, and the year before that. The only difference was that for 2011 through 2014 the increase was 3.8% while for 2015 through 2017 the 3.7% increase was an imperceptible 0.1% lower.

The result of applying the same percentage increase year after year to an ever larger base, of course, is to produce ever larger dollar increases year after year. So next year’s increase, billed by the university as “the lowest [percentage] in more than half a century” — even though it was matched in the preceding years — is certainly the highest dollar increase in recent years and probably the highest ever.

At any rate, the message year after year is that the university, recognizing the burden the cost of education imposes on parents and students, is doing the best it can to keep tuition low.

We will examine this claim in detail in later bulletins against the background of the national outcry over the cost of higher education and the increasingly pernicious social and moral effects of massive student debt. (For now, we refer you to a comprehensive three-part essay by former Sycamore Trust president Ed Adams published two years ago in the Irish Rover. More recent data do not materially affect Ed’s trenchant analysis.)

There is certainly good reason to investigate this subject. While Notre Dame is the nation’s tenth richest university, the price tag for students next year will be an eye-popping $66,375.00 for tuition, fees, room and board, and an even more stupefying $69,375  when books and transportation and the like are included. Nor is frugality evident on a campus that seems to be permanent home to fleets of cranes, backhoes, and excavators and is now crowned with the dizzyingly expensive $400 million Crossroads Project.

For now, we take a preliminary look at this matter by examining the new increase and its immediate predecessors and the implied message that, as the “lowest” percentage increase in “more than half a century,” it represents the best the university can do in its solicitude for the parents and students paying the bills.

Inflation and tuition

Perhaps the principal reason for the rising public clamor about the costs of higher education is the perception that universities are charging what the traffic will bear in order to fund a metastasizing bureaucracy, an ever more upscale physical plant, a cornucopia of student amenities in the arms race for high-scoring SAT students, and other excesses.

One of the factors cited as evidence of profligacy in the top ranks of academe is the radical disconnect between the rates of inflation and tuition. This is how that comparison looks for Notre Dame for the coming year and the last five:

  • In the five years from 2012, the consumer price index (CPI) rose 7% while Notre Dame’s tuition rose 20%, from $42,971 to $51,505, and total cost including room and board rose 21%, from $54,905 to $66,395 — three times the CPI increase.  (For the Notre Dame data,  see the press releases linked to the third paragraph above.)
  • The 3.7% increase for next year is over two and a half times the CPI increase of 1.4% that it follows.

This disjuncture has been going on for decades and for higher education in general, not just for Notre Dame.

We will examine some of the reasons for this phenomenon later, but for now it is sufficient – and telling – to identify one consideration that Notre Dame considers important and that in fact seems to set the parameters for what Notre Dame does.

Pricing education as a product in a non-competitive market.

In a surprisingly candid explanation of Notre Dame’s tuition policy, the university’s vice president for finance has said:

We don’t want [tuition] 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.

This is a profit-maximizing, not a consumer-friendly, policy. It is economics and marketing 101 at work. The demand for admission to the highest ranked universities, fueled in large measure by federal tuition assistance, is so great that that there is no active price competition. Rather, there is the sort of conscious parallelism characteristic of oligopolistic markets. Price cutting is avoided both because it is unnecessary and for fear that the “brand” will lose luster.

Notre Dame seems to be following this pricing policy almost perfectly. This year’s tuition and fees are neither “too high” nor “too low” in relation to the eighteen other high-ranking private universities in the top twenty. Notre Dame is somewhat more expensive than eight (including Harvard, Yale, and Princeton) and somewhat less expensive than ten (including Columbia, Chicago, and MIT). That is to say, Notre Dame is smack in the middle.

And next year will be the same.

Meanwhile, down the road in West Lafayette, Purdue president Mitch Daniels and his board plan no tuition increase in 2017 — for the fifth straight year! More, room and board charges have been reduced during this period, so that students at Purdue next year will pay less than did their predecessors in 2012-13.

Purdue’s endowment is $2.255 billion. Notre Dame’s is $ 10.4 billion. Purdue’s enrollment is over three times Notre Dame’s.

Conclusion

As the nation’s leading Catholic university, Notre Dame could manifest the Church’s solicitude for the less advantaged by joining Purdue in calling a time out on tuition increases. Instead, it is once again following its claimed peers, this time aboard the never-ending tuition escalator.


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17 Responses to “It Depends on What They Mean by “Small””

  1. David Sponseller, Class of 1953 May 13, 2017 at 5:48 pm

    Why does “Publius” hide behind a pen name?

  2. David Sponseller, Class of 1953. May 13, 2017 at 5:38 pm

    I believe the tuition, room, and board for my senior year (starting in Sept., 1952) was $1250. Today’s is 58 times as great. This astounding growth is 6.3 times the 9.19 times increase in the CPI during the same time frame. Had they raised charges at the same rate as inflation, the student would be paying just $11,500 per year!

    Though we were paying vastly less in those days, we certainly got a fine education. In my field of metallurgical engineering, few students anywhere in the country today get the equal of mine at ND, which I still use in my lab business, and which helped me develop an international reputation in my field. The school was operated in a frugal way. Remember that we had classes from 8 to 12 Saturday morning? This allowed them to have a double set of 3-credit-hour classes in each room. And there were no paper towels in the men’s rooms!

    Surely all the extra construction has raised the costs for students. I would guess that the classroom space has gone up far faster than the enrollment. Maybe they should require the big donors of buildings to pay for heating and maintaining the buildings for 25 years! Surely the insane Crossroads project is an extreme example of unnecessary construction. How thoughtless of Harvard, Yale, Stanford, etc. to overlook the need for bolting classroom buildings onto their stadia! And while I can’t match one Crossroads donor financially, his meager two children and four grandchildren will never come close to my 27!

    Just think how silly the Crossroads project will look when tiddly-winks becomes the main national sport and the “House that Rock Built” is a stranded nucleus of Crossroads!!!

    Universities will have their comeuppance before long, when online education takes many students away from overpriced campuses.

    All ND parents should deeply thank Sycamore Trust for addressing this tuition scandal!

  3. Posted at the request of Ralph Argen, M.D.

    Since the early 50s Notre Dame has changed dramatically and the major change has been money not really academic excellence or sustaining a Catholic image, it has been money. As I walk on campus as I have done for well over a half a century it reeks money, meaning it takes money to run it the way it is. Everything keeps going up at Notre Dame, buildings, tuition. Having served 10 years on the science advisory Council I know that it was desired that the graduate program be expanded and in an attempt to emulate the Ivy League. This obviously means less Catholic and more money and this is exactly what has happened. I never have been happy about that and is continuing that way unyielding. I have recently had a call personally and a survey and expressed this to them and the response was they’ve heard this before from those of my generation. I said to them and I’ll say it again, the university has moved away from me. It is money hungry and less Catholic in my estimation.

    Ralph J Argen MD

  4. I am drafting my “memories” of ND while a student, 1968-72, for circulation to my class for this year’s 45th year reunion. Among them is that I, like most students, could earn $3/hr in the summer, and some fellow students with highway construction jobs could earn $10/hr. Tuition, room and board were $1200 to $1500/semester during our time. So, with 4 summer jobs, you could earn 25% to 75% of the four years of list price expenses. Now, today: over $250,000 over four years in list price. To cover 25% of this ($63,000) in the summers would be at least $16,000 per summer, or about $1300/week. Who would pay a college kid the equivalent of $83,000 per year?

    There’s an economic reason why fewer kids work in the summers, but instead take unpaid internships–if they can still get through school. They weigh the benefit of earning so little to pay for college against the potential (I emphasize potential) benefit of an internship that might garner a good paying job upon graduation.

    Now turn to graduation. When I graduated, with summer and campus jobs, some scholarship, I had $2,500 in loans, about 25% of ND list price. Starting jobs in 1972 paid about $7500 up to about $10,000 (with no graduate degree). So, the ratio of debt to annual income was about 1:3. What’s todays ratio? $40K debt (minimum) to about $45K annual income?

    If ND wants to be the best Catholic university in the country, ah, indeed the world, then affordability must rank as high in its plans as accessibility and quality (and Catholic!).

    Here’s another angle: Most religious Orders will not allow candidates to enter if they have debt. So, the candidates have to work off their debts before they join. It can take years, and their vocation is at risk. My wife has worked with an organization for about 10 years that accepts donations and then makes grants to candidates to pay off the loans, freeing these individuals to join. How many ND grads have religious vocations that go unfulfilled because they have to pay off their debts to Notre Dame? How has this impacted the Holy Cross congregation?

    How many ND grads have vocations to married life and to parenthood that go unfulfilled because they have to pay off their debts to Notre Dame?

  5. Phillip Madonia May 7, 2017 at 9:14 pm

    Notre Dame will charge what the market will bear. At some point the return on an investment in a degree from Notre Dame will begin to diminish. Couple this with the cresting of the demographic wave of applicants and it will be a day of reckoning for the University. Sadder still is the abandonment of Catholic identity at the premier “Catholic” university in the world.

    We continually hear about keeping up with “peer” institutions when the fact of the matter, in the words of Ralph McInerny, Notre Dame has no peers. Who needs another Princeton, or Yale or Harvard. We have Our Lady and no one can compare. Lose this and we will not be able keep up with the well funded state institutions let alone the extremely rich private schools.

  6. This is a really bad article. As any admissions counselor will tell you, the sticker price of a private college bears very little relation to what you will actually pay. Every elite private institution (including ND) offers massive amounts of financial aid. A far better indicator is student debt statistics, so let’s use data from CollegeFactual.com to compare ND with Purdue (touted as being so wonderfully consumer-friendly):

    Projected debt at graduation based on average freshman loan
    Purdue — $30,156
    ND — $25,316

    Average starting salary:
    Purdue — $45,000
    ND — $50,000

    Debt default rate
    Purdue — 3.4%
    ND — 0.6%

    Of course, looking at actual data would detract from Sycamore Trust’s never-ending campaign to fill its own coffers….

    • This is a really bad comment. What the data on student debt and compensation suggest is that the student body at Notre Dame is on the whole wealthier than that at Purdue, which is a good deal more likely than any notion that it is cheaper to attend Notre Dame than Purdue. As to that, please! At Purdue, tuition and fees are $10,002 for in-state students and $28,804 for out-of-state. At Notre Dame, $51,505.

      And while the sticker price is of course discounted for many students, it is not for all by any means. In his 2014 address to faculty, Father Jenkins reported that 55% of the incoming class received scholarships or grants. That left 45% to pay, borrow, or beg for the full freight. And as to all students, with or without aid, the sticker prices determines how much they must borrow if they can. It is the middle income families whose income is too high for financial aid but not enough to bear a lot of debt that are priced out of Notre Dame, especially those with more than one child who don’t want to shortchange any of them.

      As to the relationship of the rising cost of education to inflation, there is no reason to suppose that the net price for those with grants has not risen at about the same pace as tuition and other costs. If it had not, one would expect the university to say so, since it is the relation of tuition to inflation to which the university points. It may mean something that when we last asked for the net price data over time, the university did not respond.

      I add that, as we said, we will explore all of this in more detail in a future bulletin or bulletins, including Notre Dame’s outreach to students from low income families. The last time we looked, the picture was not a happy one. Several years ago, Notre Dame was listed in a study of low-income student grants (Pell grants) as one of the nation’s “richest and stingiest” universities. We hope that the situation has improved markedly. Stay tuned.

      • No, actually, it isn’t a bad comment at all. The article *explicitly* compares sticker price as though this were a meaningful comparison. It simply isn’t.

        Of course the student body (or, rather, their parents) are much wealthier at ND than those at Purdue. This is true at virtually every elite private university. I agree that this disparity is a problem, and one that ought to be addressed. But it has complex roots — including the very real differentials in opportunities that correspond to those differentials in wealth.

        This article, however, is deeply misleading. The sticker price is *not* the core issue. You have presented no evidence that middle-class families are priced out of Notre Dame or that they do not receive significant financial. The debt-load is absolutely relevant, because *if* middle-class applicants were not getting substantial financial aid, then at least some of them would be attending but taking out major loans. (Note the “average debt” only includes students who file for financial aid, so it isn’t swamped by students who can pay full-freight and hence have no debt.)

        Take a look at the info from the Notre Dame Office of Financial Aid:
        http://financialaid.nd.edu/prospective-students/

        This shows that families below $100,000 income received anywhere from $42k at the low end to $61k at the high end in *scholarship* money. The median household income in the US was about $56k last year, so if we treat that as “middle class”, then middle-class families received around $50k in scholarship money from ND — leaving out other sources of scholarships. The remainder ($14k in 2016-2017) would have come from outside scholarships, ND financed student loans, federal student loans, work-study, and (possibly) a small amount of private loans.

        So, to recap, if you want to complain about ND not doing enough to recruit lower and middle-income families, that would be great. But talking about sticker price is a major red herring. Notre Dame has need-blind admissions, and its financial aid package easily puts it in the realm of Purdue for actual costs for low- to mid-income families. And it’s a better school, to boot.

        • Our point is that a Notre Dame education has become more and more expensive through a long series of cost increases greatly exceeding inflation. Publius does not really deny that proposition but says in effect that it is not as bad as it seems because for many students the “sticker price” is not the actual price. Of course that is true. But I’ll wager there is not a parent who will not say it’s quite bad enough, and it is the overwhelming view of commentators that the price of higher education and the attendant student debt of some $1.3 billion is a grave social and economic problem. Publius has a heavy burden to show that Notre Dame is not a contributor.

          As I’ve said, we’re returning to this subject later and will examine the issues at hand in detail. For now, consider this in relation to Publius’s contention that tuition is not a “meaningful” figure and it is a “red herring” to talk about it:

          The source Publius cites discloses that 1,003 students received some sort of scholarship assistance. There were 2,048 students in the class. This confirms Fr. Jenkins’s statement about the proportion of students receiving scholarship aid. For slightly over half the students, then, the sticker price is THE price, as I said earlier. Those students and their families have to come up with it, out of pocket or by borrowing. The prescribed tuition, fees, and board and room charges are certainly “meaningful” to them. As to those with scholarships, they are “meaningful” because they establish the additional amount that they must make up.

          Publius seems to claim that no middle class families are taking out major loans or being priced out of the market, but so far as I can tell without visible means of support. He says, “The debt-load is absolutely relevant, because *if* middle-class applicants were not getting substantial financial aid, then at least some of them would be attending but taking out major loans.” But why would they be attending if obliged to take out major loans? More, the average debt load for those receiving scholarship aid is just that, an average. There are surely many larger and many smaller.

          Finally, the “comparison” we make is between tuition over many years and inflation, a comparison that is standard in analyses of the cost of higher education. The differential is so gross that no reasonable estimate of the rate of increase in net cost would produce a different conclusion.

  7. Tom Marciniak, BSME '61, Ph.D. '68 May 7, 2017 at 8:26 pm

    TR&B my Senior year was $2,000. It included tickets for all sports, daily maid service and two milks at every meal. My starting annual salary was three times that. My oldest son graduated in 1986 (same major) and TR&B was $10,400 but maid service had all but disappeared and football tickets was additional. His Freshman year TR&B was $8,000. His starting salary was also three times his Senior TR&B. During his four years I would get a letter from Father Hesburgh letting us know about a new increase. He did not justify the increase as being due to increased costs but only that it was competitive with ND’s comparable schools. In his mind that was the Ivies – in my mind it was Illinois and Iowa where his three brothers were going at the same time for much less per year.

    Now ND’s TR&B is nearing $70,000 per year. There is nowhere a ND BSME will get a starting salary of $210,000 per year. As I understand it current U of Illinois cost is a more reasonable $35,000 per year. It’s also too high but what you going to do? Quite frankly you’d have to have a screw loose to send your son or daughter to ND at the stated MSRP. Even if it were a Catholic University.

  8. While I appreciate the spirit of your essay, you might want to update it with a new counter-example, given Purdue’s recent news about Kaplan U.

    • I’m not clear on why it is a “counter-example.” The stated purpose is to provide affordable quality education to a greatly expanded number of people. It may fail or succeed, but in any case the matter does not seem related to the subject at hand.

  9. DAVID A. MARTIN, '53 May 7, 2017 at 6:19 pm

    I AGREE.
    THERE WAS NO INPUT ON THE OUTLANDISH BUILDING PROGRAM, UNECESSARY FOR EDUCATION.
    AND, MORE IMPORTANTLY, THE CATHOLIC AURA HAS ALL BUT DISAPPEARED AND, IN FACT, GONE COUNTER TO ITS AND U.S. BISHOPS.
    LESS CATHOLIC AND HIGHER TUITION, ETC. ( NOT RELATED TO ACTUAL COSTS !! ).

    GOD VS. MAMMON – AT NOTRE DAME, MAMMON IS WAY AHEAD !!

    GOD HELP US, ONE AND ALL.

  10. When you have turned over the direction and control of a Catholic University, to a lay Board Of Trustees, many of whom have earned millions in salary, bonuses, and stock options, you get a group mentality that doesn’t have the same perception as the majority of parents, of a Notre Dame student. Unfortunately, that perception seems to have infiltrated the psyche of the various Holy Cross Administrators during the past 40 years. A conservative return on investment, of a $10.4 billion endowment, of only 2-4% produces an annual income of $200-400 million, which if used for student financial aid, rather than the next multi-million building project (e.g. Crossroads project), could significantly reduce the tuition, room, and board cost for the parents of students. But for the past 35-40 years it seems that the University’s Board of Trustees, along with the administration, believes that “more and bigger” buildings and structures make Notre Dame “better”! As a graduate in 1965, I have a totally different opinion.

  11. Ray mcdonald md May 7, 2017 at 4:51 pm

    Unmitigated Greed!!

  12. Chuck Johnson May 7, 2017 at 4:24 pm

    Keep up the excellent work on a Catholic Education. When do we conclude Notre Dame is no longer a Catholic Education?

  13. Chuck Johnson May 7, 2017 at 4:21 pm

    Keep up the excellent work. When do we say a Notre Dame Education is not a Catholic Education?

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