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It Depends on What They Mean by “Small”

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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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