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Private College Tuitions Rise While Revenues Fall

By Yaffa Klugerman
November 4, 2009

Although tuition, fees, room and board at many private colleges now exceeds $50,000, a significant number of institutions predict that tuition revenue will actually decrease in the 2010 fiscal year.

The Chronicle of Higher Education reports that 58 private colleges now charge over $50,000 per year, while last year only five colleges did. Although the Chronicle notes that many students in these schools receive generous financial aid, some do pay the full price.

"We are heading for a precipice and likely to get there sooner rather than later," said Bill Conley, dean of enrollment and academic services at Johns Hopkins University in Maryland, which charges $51,690 for tuition, fees, room and board. "It's not far away."

The report was based on data provided by the College Board, which indicated that based on recent figures, higher education prices are likely to continue to rise: Six years ago, only two colleges charged over $40,000 for tuition, fees, room and board, while 224 do this year.

Included among the most expensive colleges listed were Sarah Lawrence College ($55,788), Landmark College ($53,900), Georgetown University ($52,161), New York University ($51,993) and George Washington University ($51,775).

But others pointed out that the sticker price of private colleges doesn't tell the entire story. Sarah Lawrence College, for example, increased financial aid this year by awarding an average of $27,500 to 52 percent of its students. In addition, the college raised tuition 3.5 percent, its lowest increase in many years.

Sandy Baum, an economist at the College Board, pointed out that despite the rising costs, private college tuition is actually increasing at a slower rate on the average than at public institutions. "It's clear private colleges are making a very big effort to hold tuition increases down," she said, but added that schools will have to consider significant structural changes to curtail rising expenses.

A survey released by Moody's Investors Service yesterday also painted a different picture about rising tuition at private colleges: Although private institutions increased financial aid and decreased selectivity this year to help maintain enrollment, about 30 percent of the 100 private colleges surveyed expect tuition and fee revenues to decline in the 2010 fiscal year. In recent years, an average of less than 10 percent of institutions predicted decreases.

The data is surprising, considering that 73 percent of those surveyed said that enrollment had grown. But Roger Goodman, vice president and senior analyst at Moody's, told Inside Higher Ed that the figures suggest that some institutions increased financial aid more than was necessary to sustain enrollment levels.

"It's not a science," he said, "and if you give additional financial aid to a certain set of applicants you're admitting you can't possibly know whether that last dollar you gave is the one that is convincing the student to come there."

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