Even ivy-covered walls can”™t keep out economic worry. A college campus seems a world apart in many respects, especially on campuses of three elite private colleges in Dutchess County, at Vassar and Marist colleges in Poughkeepsie, and at Bard in Annandale-on-Hudson. But the economic woes of the world at large loom especially close to home at institutions that charge tens of thousands of dollars in tuition and costs.
The question is: Will such tuition costs become essentially unaffordable?
“The economic situation affects us in a number of ways, obviously” said Paul Mutone, chief financial officer at Marist College. “But we are most worried whether, as families feel the cost of the economy, are they going to be able to afford the cost of higher education?”
“I”™m very concerned,” said David English, the director of budget and planning at Vassar College. “Over half our students are on financial aid, and if the economy gets worse that number can increase dramatically.”
There is good reason for concern. Financial aid is a major part of a private college”™s operating budget. At Vassar for example, it amounts to nearly a quarter of annual operating costs. The college projects spending of $34.5 million in Vassar scholarship grant funds for students for the 2008-09 academic year, more than a 50 percent increase over the amount spent for financial aid five years ago and more than double the amount spent a decade ago. This current commitment to financial aid represents more than 23 percent of the college”™s annual operating expenses.
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Vassar charges $49, 500 for tuition room and board. Marist charges $34,000 for tuition room and board. Figures from Bard were not available, although costs are clearly substantial. The college”™s Web site noted that about 65 percent of the incoming class received financial assistance with an average aid package totaling $23,704.
Information about Bard in general was difficult to find. Repeated e-mails and phone calls to the college, including a call to the office of the college president Leon Botstein were unsuccessful in finding a person to discuss the college and its financial situation. Bard usually ranks among the nation”™s most expensive schools with tuition, fees, room and board in the $47,000 range this year, according to the annual U.S. News & World Report survey.
Private colleges are not only a source of information and culture, they are large businesses, as evidenced by the basic financial data from Marist and Vassar. The annual budget at Marist is $127 million, of which, about 93 percent comes from tuition costs, according to Mutone. The college has 800 full-time employees and an annual payroll of about $50 million of whom 220 are full time faculty.
Vassar College has an annual operating budget of $150 million, of which $91.6 million is paid for by tuition, room and board charges. Vassar employs about 1,000 people, of whom 280 are faculty members, accounting for $93.1 million in payroll expenses, or 62 percent of the operating budget.
Costs are rising in all areas and a college has many cost centers besides staff salary. “The cost of utilities is very high, the cost of oil and natural gas is very high,” said Mutone. “So we are dealing with the rapid rise of utilities, where prices are going up at a much more rapid rate than we could increase tuition by. And similarly the cost of food, that is also rapidly rising,” he said, noting that part of a college”™s obligation is the thrice-daily feeding of thousands of young and hungry students.
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An endowment is a useful trump card for any business to have in hand, but Marist, a relatively young institution at 60 years old, has a relatively modest endowment of $21 million. While that sounds like plenty, it pales behind the $869 million endowment enjoyed by Vassar, which was founded in 1861. On average, Vassar spends about 5.5 percent of its endowment each year, currently about $38 million.
And endowments cannot make up for a staggering economy and concerned consumers worrying about how to pay costs for their children”™s higher education. Mutone said that a traditional route to paying for college has always been a home equity loan or second mortgage, a route he said is now being noticeably less traveled.
Not long ago, the cost of home heating fuel was $1.25, versus $4 per gallon now. “So as disposable income becomes less abundant for families paying the cost of higher education become more difficult,” said Mutone. “Home equity loans was a the most common way families go about paying cost of higher education ,but with the subprime mortgage problem, a lot of institutions are getting out of the student loan industry. So those sources of funds to pay for education are drying up. All of these factors could come to affect us.”
He said Marist is exploring cost control options such as joint ventures in bulk purchase of utilities, but he said no arrangements for such a program could be put in place before next year.
English, of Vassar, said the college is already making bulk purchases of heating oil but said officials are open to any feasible methods of cost sharing, such as joint utility purchases. Both colleges are developing enhanced conservation programs and planning on incorporation of energy-saving technology in new buildings or renovations.
“Anything we can do as we build new buildings, even if it may cost money now, but has a payback, we are going to do that, and continue to look for ways to be more efficient in our consumption of utilities, because those costs are out of control,” said Mutone.
But he said even the most efficient college still has concerns about the economy. “The biggest piece is the financial aid piece,” Mutone said. “How are parents are going to come up with their share?”
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