President's Office

DISPELLING THE MYTH OF COLLEGE AFFORDABILITY

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Introduction
Private vs. Public
Net Cost for Cornell vs. Typical Midwestern Public University
Reality: Tuition gap
Value Added
Explaining Financial Assistance
The Knowledge Business
Keeping Cornell Affordable

Lawrence D. Dorr’63
Orthopedic surgeon
La Canada, California

There are many bright students who qualify for scholarships at Cornell College but will never apply because of “sticker shock.” They and their parents, like the majority of the public, tend to overestimate the cost of a college education and underestimate available financial aid.

The reality is that Cornell comes close to meeting the demonstrated financial needs of most of its 1,000 students. This is Cornell’s legacy. For 149 years Cornell has provided scholarship support as well as need-based funding to talented students regardless of family income or resources. We awarded scholarships long before federal and state grants were available. The majority of Cornell students currently receive financial assistance.

The cost of tuition, fees, room, and board at Cornell this year is $25,850. This means that the cost of a four-year education exceeds $100,000, a significant investment by any measure. Fortunately, financial aid is available to help most families finance this investment. Cornell administered $15.6 million in financial aid this year, both institutional funds and funds from outside sources, including federal and state governments. A Cornell education is within reach for most families.

Still the myth persists that Cornell, and all private colleges, are unaffordable. A report released by the Lumina Foundation in January only reinforced mistaken assumptions. It labeled Cornell as “unaffordable” in all but one category. While the report was later amended to show Cornell as affordable with loans, the fact remains that many outside the college still see us as costly.

Private vs. Public

The cost of a private vs. a public education is not what it may appear. Ninety-two percent of the graduates in the Class of 2001 finished in four years or less. If they had attended a public university, where the average time to graduation is more than five years, chances are they would still be in college. While Cornell graduates are making salaries or entering graduate study, many of their peers at state universities continue to pay tuition, room, and board while foregoing salaries. We compared the costs of attending Cornell vs. a typical Midwestern public university, using readily available figures for the academic year 2000-2001. The following chart shows that the typical out-of-state public university student pays more for four years of college than a typical Cornell student. After the fifth year, even an in-state student will have paid more ($42,982 for five years at the university, compared with $30,289 for a Cornell graduate who finished in four years); this figure includes the opportunity cost of foregone salary in the fifth year. The average starting salary for a college graduate is currently projected to be around $30,000. Moreover, the average debt for Cornell graduates is within $1,000 of that of the typical public university graduate.

Net Cost for Cornell vs. Typical Midwestern Public University

*All projected costs are adjusted for inflation at 3% per annum.

The key factor here is graduating in four years, and Cornell does an excellent job of this. Unfortunately, the sticker price is the first, and sometimes the only, information prospective students receive about cost.

Reality: Tuition gap

The reality is that the full price of tuition, fees, room, and board does not cover the cost of educating a student. Endowment income and gifts make up the difference. Providing an education of high quality with small classes taught by full-time faculty members is expensive. According to the Association of Governing Boards of Universities and Colleges, higher education is “labor intensive,” which means salaries and benefits take up a greater percentage of expenditures than is the case outside of academe. It is simple to illustrate how this is the case at Cornell, where we have historically offered a 13:1 student-faculty ratio. We believe this is the best possible kind of education, replete with personalized advising and attention, faculty-student research opportunities, and an engaged on-campus community where every student makes a difference. But, it is expensive to provide.

Value Added

If college is an investment, then an investment in a Cornell education offers added value. In addition to the advantages of a personalized education with small classes taught by dedicated, full-time faculty, Cornell’s One-Course-At-A-Time calendar offers unprecedented advantages including the ease of graduating with a double major and coordinating off-campus study. Sixty-six percent of the Class of 2001 had a double major or a major and a minor. Nearly 20 percent, or 171 students, took advantage of the flexibility of One-Course-At-A-Time to study off-campus last school year. The vast majority of them studied internationally with a Cornell faculty member. Internships also are encouraged and fit well with the OCAAT academic schedule; a recent survey showed that 62 percent of students graduate with that valuable work experience.

Further indication of the value of a Cornell education is the “outcome” of a Cornell education evidenced by a highly successful alumni base. I recently heard about the value of our education from one of our distinguished alumni, Lawrence Dorr ’63, an orthopedic surgeon in La Canada, Calif. “I have an immense appreciation for Cornell because it did provide great value for me socially, athletically, and academically,” he told me. I am impressed by the accomplishments of Cornellians and am pleased that we are now documenting these achievements more thoroughly. In my next White Paper I will talk specifically about outcomes as I share the encouraging results of the first phase of our Class of 1999 study, which is tracking the careers of that class.

Explaining Financial Assistance

In addition to salary and benefits, financial assistance is a significant budget item for private colleges. We have a longstanding commitment to making the Cornell education accessible to qualified students. Financial assistance usually takes the form of gift aid (grants and/or scholarships) and self-help (loans and/or work programs).

Scholarships are awarded on the basis of academic merit and demonstrated skills, for example in leadership or the fine arts. In our situation, our premier award is the William Fletcher King Scholarship, which is given to our very best entering students each year. Grants are awarded on the basis of demonstrated financial need. We administer several federal programs, including Pell Grants, which are need-based. Low-interest loans are available for both students and parents. Part-time on-campus employment is also available. Iowa students can receive up to $4,000 annually through the Iowa Tuition Grant program, which is need-based.

This chart shows the awards made to the fall 2001 entering class, by family income. Financial assistance ranges take into account individual family circumstances such as number of family members, amount of assets, or large academic scholarships that can affect students’ eligibility.

Loans are part of the financial aid package for many students. The average debt load for today’s Cornell graduate is $17,260, which is the mean for our peer institutions. We monitor the average debt figure because we do not want to overload our graduates with loans. At present, our average debt is about equal to the debt incurred to buy a new car. Unlike the car, the value of a college education does not depreciate. In fact, it leads to higher expected income and quality of life. Census Bureau statistics indicate a wage increase for every year of education, so that the average salary of someone with a bachelor’s degree is $43,782 per year, nearly double the annual salary of $23,594 for someone with a high school diploma.

The Knowledge Business

We are in the knowledge business, and the volume of knowledge is growing rapidly. To keep up with the knowledge explosion, to stay current with technology, and to keep our campus in top working condition requires constant investment on our part. Cornell College has raised $58.5 million in gifts and pledges since 1996 as part of a comprehensive campaign that will culminate in Cornell’s sesquicentennial celebration in 2003. The money has been put to use on a high-speed Internet connection in classrooms and all dorm rooms, along with new or improved facilities for the fine arts, athletics, and housing. We’re a historic campus, but we need to be up-to-date to accommodate the educational programs that prepare students for the contemporary world and also look to the future. Renovations to facilities for the arts, athletics, and technology go beyond bricks and mortar improvements. They enrich the cultural breadth of perspective and provide an experience that educates the whole person.

In responding to rapidly rising costs, the college has made tough choices. We have endeavored to keep our tuition increases modest, and our recent increases have been well below the national average for private colleges. Our current tuition and fees are below the average for the Associated Colleges of the Midwest. We continuously review our administrative operations and look for efficiencies and cost savings. I believe it is important that we keep the college affordable. This means expanding sources for financial aid, including endowed scholarships, and continuing to monitor our costs.

Keeping Cornell Affordable

Despite the public perceptions and the “sticker shock,” students applied to Cornell this year in record numbers. According to the Association of Governing Boards of Universities and Colleges, half of all high school graduates attended colleges 25 years ago. Today about two-thirds do.

I think Cornell is a good buy. Compare the price we charge vs. the real cost of what we actually spend per student. Then consider what an investment in a value-added Cornell education can do for its graduates—including increased income, opportunities, and quality of life. Finally, consider that our financial assistance policies provide for any talented student to study here. We really are affordable and accessible.

As you consider the issues raised in this White Paper, please send me your questions and comments. One of the best ways we can begin correcting perceptions regarding the costs of higher education is by educating our own alumni on just how affordable Cornell really is. After all, the financial support and leadership of alumni and friends are largely what keeps Cornell affordable. I look forward to hearing from you.

Leslie H. Garner Jr.
President