Endowment Can't Cover Rising CostsBy Sabrina Kwon
Associate News Editor
Although MIT has the eighth largest endowment among U.S. universities, a tuition hike of either 6 or 8 percent remains probable, according to James J. Culliton, vice president for financial operations.
MIT's endowment, worth $1.4 billion as of June 30, ranked eighth in the National Association of College and University Business Officers' annual study of college and university endowments. The ranking put MIT ahead of the Texas A&M University System and after Washington University in St. Louis. Far ahead of the others was Harvard University, with an endowment worth $4.7 billion.
The Academic Council, which advises President Charles M. Vest on his upcoming tuition recommendation to the Corporation's Executive Committee, has already discussed increasing tuition by 6 to 8 percent three times this year.
Culliton said that undergraduate tuition, which increased by 8.3 percent last year, has increased every year since 1965. "Tuition increases are necessary to cover the increasing costs of education," he said.
The need to keep salaries competitive with other universities, the implementation of new programs, and the inflationary effects on existing programs are the main reasons for annual tuition increases, he said.
Endowment `not that big'
While MIT's endowment might appear large, Culliton said, it is actually "not all that big, considering that most schools have much smaller operating budgets." Funding from the endowment, one of the Institute's major sources of income, has already been considered in the tuition increases under discussion, he said.
"After serious deliberation, the investment committee of the Corporation decided in a judiciary manner that only so much of the endowment funding could be used ... I think they are spending as much of the endowment funding as they can while still protecting the long-term interests of MIT," Culliton said.
The average rate at which MIT spends its endowment funds is the same as last year's national average of 4.5 percent, said Glenn P. Strehle '58, vice president and treasurer. "The Institute was aiming for a spending rate closer to 5 percent, but the market value went up a little bit more than expected," Strehle said.