Forbes.com, January 19, 2007, Friday

Forbes.com

Education
America's Most Expensive Colleges
Tom Van Riper, 01.19.07, 12:45 PM ET
http://www.forbes.com/business/2007/01/19/most-expensive-colleges-biz-cx_tvr_0119college.html


While the business world is filled with innovations that make products better and cheaper, higher education just keeps getting more expensive--vastly outpacing all increases in the cost of living.

According to data from The Chronicle of Higher Education, which tracks college costs, the 10 most expensive schools in the country, led by George Washington University in Washington, D.C., averaged a tuition rise of 52% from 1999 to 2006--nearly triple the 21% rise in the U.S. cost of living during the same period. George Washington's $37,820 tuition is 82% of the entire median annual family income of $46,326.
In Pictures: Most Expensive Colleges In America

Experts cite strong competition for faculty, student demand for state-of-the-art classrooms and facilities, and a decline in federal support for research facilities as the big cost drivers. Basically, classrooms are nicer, registration no longer means standing in line and professors make more money. But there's no real evidence that students are learning more, even as their parents fork over more money.

At the same time tuition has been soaring, technology-driven product improvements have made things not only better, but cheaper. Take Apple's iPod, which lets today's teenagers download any song for 99 cents--one-quarter of the price (in constant dollars) that kids in 1975 paid for a 45 rpm vinyl record. And that's without factoring in the huge quality improvements that have removed the snap, crackle and pop noise featured as regular background fare on vinyl records.

But in the academic world, rules of efficiency don't generally apply. The idea is to lure the best professors and build the best stadiums and science labs, costs be damned. College tuition costs have greatly outpaced inflation for years.

Nationwide, the median tuition at a four-year school was $7,490 for the 2006-07 academic year, a 2.3% increase over a year ago, according to The Chronicle of Higher Education. But that includes many state-run universities, where in-state residents are charged a pittance. The median tuition at private schools was more than twice that amount, weighing in at $15,900, up 3.4% over a year ago. And that figure doesn't come close to the nation's most expensive colleges--121 of them charged more than $30,000 this past year. Add room and board and other assorted fees, and the bill climbs beyond $40,000.

Comprising the bulk of the top 10 list are small liberal arts schools like Sarah Lawrence College in New York, Kenyon College in Ohio and Bennington College in Vermont--all high on prestige and low on student-teacher ratios.

"So much of it has to do with the personal attention students get," says Tony Pals, a spokesman for the National Association of Independent Colleges and Universities.

But costs have also marched a lot higher at larger schools. With colleges providing more campus goodies and paying professors more money, while student enrollment levels remain largely unchanged, the cost to educate each student rises dramatically. The scenario is a bit different at public universities, where tuition increases are usually the result of demographic shifts spurring more student demand, or because a sudden state budget crunch compels politicians to raise tuition.

"It's an important distinction to draw. When private-school tuition goes up, it's because the cost per student has gone up. When public-school costs go up, it usually means enrollment has gone up," says Ronald Ehrenberg, a professor of industrial and labor relations at Cornell University, who has also sat on his school's budget committee.

Public schools, of course, charge a lot less to state residents than to those coming from out of state--$5,196 versus $13,150, according to the Chronicle's national median numbers.

The most expensive public school for in-state residents is Miami University in Ohio, which charged local residents $22,997 apiece this past year. The heftiest bill for out-of-staters comes from the University of Michigan, which hits up non-Wolverines for $29,131 to come to Ann Arbor.

Unlike the private sector, management of the not-for-profit education industry isn't beholden to shareholders, who typically demand maximum efficiency that calls for cost cuts wherever possible. The objective of a college, Ehrenberg points out, is simply to be the best school it can be regardless of cost.

Improving facilities, teaching quality and research takes money, and while schools theoretically could "aggressively try to increase their efficiency, reduce costs and get better by substitution rather than by growing expenditures, they don't do this," Ehrenberg says. He also notes the increased sway that faculties now hold over university administrators, which often cause big capital projects to run over budget to satisfy professors' stated requirements.

The cheapest four-year school in America? That distinction goes to Northern New Mexico College, which charges only $1,030 a year to in-state residents (outsiders pay $2,206). Still, even that rate is up from $771 at the beginning of the decade, a 34% increase. Even haute Southwestern cuisine, dry air and brilliant sunsets can come only so cheap.