Beloit College Magazine

Beloit College Magazine

Summer 2010 (July 21, 2010 at 12:00 am)

[Paying For] An Education


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July 21, 2010 at 12:00 am
By Doug McInnis
Tuition, financial aid, and the demand for a Beloit education in challenging times

ClassroomIn 1931, as the nation sank deeper into the Great Depression, some Beloit College students helped cover tuition with crops from family farms. Students wanted a liberal arts education so badly they went to extraordinary lengths to get one—and the college went to extraordinary lengths to accommodate them.

Nearly 80 years later, college costs are again an issue. While news reports abound of tuition spiraling upward, another economic crisis has claimed millions of jobs. Meanwhile, students are banging at Beloit’s doors, just as they did in 1931. The number of applicants for the fall 2010 class is dramatically higher than it was in 2000, before the economic roof caved in. “Even with the downturn in the economy, the demand for liberal arts colleges has stayed very high, and that’s encouraging,” says College President Scott Bierman.

Rising costs

To anyone who follows the news, both students and colleges would seem to be straining under the weight of rising costs. The mainstream media portray a nation of students awash in college loans they can’t repay. A Washington newspaper columnist compared college costs to the housing price bubble and suggested there were signs that the “education bubble” had begun to deflate. And a recent headline in the Los Angeles Times asked, “Is a college degree still worth it?”

There are reasons for all this handwringing. First, the economy has tanked—families have lost jobs and seen the assets that they planned to use for tuition plummet in value as the housing and stock markets sank. Second, college tuition—at both public and private institutions—has gotten more expensive. Last fall, when The New York Times analyzed college costs for the 2008-09 school year, it found that prices were up 4.4 percent at private colleges and 6.5 percent at four-year public colleges. These hikes occurred despite a 2.1 percent decline in the Consumer Price Index between July 2008 and July 2009. Tuition prices increased again last year, and will be up again this fall. For families paying the full price for tuition, room, and board, a year at Beloit College now costs $42,202.

But that’s only part of the picture, says President Bierman. The advertised price may indeed induce sticker shock. But in fact, most people don’t pay it. “If you aren’t at the very highest levels of income, you’re going to be eligible for financial aid,” says Bierman.

In Bierman’s letter to readers in this issue, he debunks the notion that Beloit’s tuition is rising out of control by looking at the real increases in tuition and financial aid when both are adjusted for inflation (see page 7).

Filling the gap

In fact, financial aid at Beloit has grown faster than the sticker-price increases in tuition. Next year, for example, Beloit’s full-price tuition will rise by just under 4.9 percent, but at the same time, financial aid will increase by nearly 10 percent. “Families have about the same ability that they’ve always had to afford a Beloit education,” Bierman says. “The situation is nowhere near as draconian as it has often been portrayed. At Beloit, fewer than 10 percent of our students pay the sticker price.”

Providing large amounts of financial aid, however, stretches colleges like Beloit, which don’t boast huge endowments. Beloit’s budget for the year just ended was about $54 million—of that, $17 million went toward financial aid, says John Nicholas, vice-president for administration and treasurer. “In effect, we rebate about a third of our money back to the students.”

The strain to fill the gap has been heightened by broader economic problems. At Beloit, the sinking stock market slammed the college’s endowment, which plunged from its high of nearly $132 million to $80 million before recovering much of the loss. This cost Beloit income at a time when students needed more aid than ever—many families were squeezed, with a few perched on the edge of disaster.

“Two of the families I spoke with were about to file for bankruptcy,” says Nancy Benedict, vice-president for enrollment services, which includes admissions and financial aid. “I can think of another instance where the mother’s job might have been on the line.

“Perhaps 10 percent of our current student population have come back and said, ‘We’ve had a change in circumstances.’ We go back and reevaluate their eligibility for aid. We do everything we can to fill that financial gap if there is one.”

“People who were in dire straits are in even more dire straits,” says Jon Urish’96, senior associate director of admissions and financial aid. “And people who were comfortably middle class may be going from two incomes to one. If you overlay their need over our costs, it puts tremendous pressure on the college. There is not enough money to do everything.”

Changed circumstances

Matters started coming to a boil everywhere in the fall of 2008, as the banking crisis struck. The contagion spread to the stock market and then into the general economy. At Beloit, late-night and weekend meetings were held to come to grips with what it all meant to the college. “We cut 10 percent of our staff,” Benedict recalls. “There was a wage freeze. We reduced our administrative operating budgets.”

Similar retrenchments took place around the country, as school administrators recognized that there were limits to what higher education could do. “Those conversations about limits are being held on a lot of campuses, including Beloit,” says Urish. “And those who aren’t having those conversations are burying their heads in the sand.”

Beloit’s pain ultimately proved milder than that of many name-brand schools, which had fueled major expansions on the strength of once rapidly growing endowments. By contrast, more than $51 million of Beloit’s $54 million budget for 2009-2010 came from tuition, room, and board, while $2.3 million came from gifts to the annual fund and $900,000 from miscellaneous sources. By design, Beloit’s 2009-10 operating budget did not draw any revenue from the endowment so that those funds could continue to recover value.

“As a tuition-driven school, we’re better able to deal with some of these problems because we were never depending on our endowment,” says Urish.

Competition

As the recession brought matters to a head, it also spawned an examination of many costs—college costs among them. One reason costs are high is the competition for students. In higher education, that competition has produced what’s been called an “arms race” in which institutions have been offering more and more courses, facilities, and services. While some of these improvements can directly impact educational quality—Beloit’s new science center, for instance—others, like state-of-the-art recreation centers, complete with movie theatres, are at least partly in response to heated competition for students.

Beloit could forego projects such as residence hall renovations or expansions that offer larger and better living spaces, but by doing so, it would also risk losing students. “Just yesterday, I received a letter from a parent whose child had been accepted,” says Bierman. “She loved everything about Beloit, except that the other school has somewhat better residence halls. These are the kind of stories that are fueling the arms race.”

Bricks and mortar may be one way colleges compete for students, but producing results is another, and Beloit has done very well in that area. For instance, former New York Times education writer Loren Pope featured Beloit in his groundbreaking book Colleges That Change Lives: 40 Schools That Will Change The Way You Think About Colleges. “Since record keeping was started in 1920,” he wrote, “Beloit has consistently been one of the fifty colleges producing the highest percentages of the nation’s future scientists and scholars … It has been doing this for nearly a century with an inclusive mix of academic abilities, whereas some, such as Amherst, Wesleyan, and Williams, skim the academic cream.”

Beloit’s value

The recession has also brought about a reexamination of the value of a college education. In the 1930s, when farm kids traded potatoes, eggs, and vegetables for tuition, a college education was a rare achievement and a meal ticket to a better life. Now, more than 16 million Americans are enrolled in college, and many of them aren’t finding jobs when they get out. In addition, seven of the 10 job categories that are expected to produce the most jobs in the near future “won’t require much more than some on-the-job training,” the Los Angeles Times reported recently. Even so, the newspaper noted that the unemployment rate for college graduates was less than half that of workers who had only graduated from high school.

In this environment, a liberal arts education may have its own particular value.

“What do you get out of a liberal arts education?” asks Bierman, a graduate of Bates College. “You get the preparation to live a purposeful life of consequence. Beyond that, the world around us is changing at an accelerating pace. Having an education that prepares you for new things puts you in a particularly good position. The last thing you want is to be prepared to do only one specific thing.

“On a daily basis, I’m cutting across between 20 and 30 disciplines,” says Bierman, an economist by training. “I can at least converse across disciplinary boundaries because of my Bates education, and that allows me to make better decisions.”

Nobel laureate Thomas Cech, a graduate of Grinnell, has also publicly championed the liberal arts. “Learning about the great books and the humanities can stimulate the sort of brain waves that serve a scientist pretty darn well,” Cech remarked in an earlier interview with Wabash College’s alumni magazine. “The more types of thinking you do, the more skills you can bring to a scientific problem. You grow the most when you’re hit from something in a different direction,” said Cech, who won the Nobel Prize in chemistry for his work in genetics. “You could study chemistry, chemistry, and chemistry. But there’s a point of diminishing returns.”

The demand for the liberal arts has remained high throughout the recession, even though students and Beloit’s financial aid office may sometimes have to scramble to come up with the money to make it possible. One of those students is incoming first-year Bailey Davis’14 (Mineral Point, Wis.). She began working when she was 13 to save money specifically for a liberal arts education.

To prepare for college, she bypassed the latter part of her high school education in favor of online courses from the University of Nebraska, where she studied the philosophy of science fiction films and wrote a paper on the hit movie “The Matrix.” At the same time, she upped the number of hours she was working to pay for college, putting in 68 hours a week as a quality control inspector in a clothing factory.

Davis was accepted at all four schools she applied to, though Beloit was her first choice. “I received about the same aid package from all four, and I couldn’t afford to go to any of them,” she recalls. “I was really afraid I was not going to be able to attend a liberal arts school, something I had wanted to do since I was a little girl.

“My stepdad and I decided we weren’t going to give up. We went back to all of them and said we needed more help. Three of them said that was the best they could do.”

But Beloit came through.

“The liberal arts education appealed to me because it seemed more broadening,” she says. “I didn’t want to be a number in an auditorium. I wanted the professors to really care about me. I felt like Beloit would give me all of that and much, much more.”

Tuition per Beloit Freshman Graph 

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