What should you make of MIT’s voluminous response to the Senate Finance Committee, which asked it to explain exorbitant tuition costs in light of a sixth-in-the-nation endowment?
MIT’s response makes three things very clear: first, the endowment has tripled in the past ten years; second, tuition has increased by nearly 50 percent; and finally, the average student pays less to attend MIT than he did ten years ago.
Over the past ten years, tuition has increased by an average of just over four percent each year. Tuition for the 1998–9 term cost $24,050; for 2008–9, it will be $36,390.
Even though tuition has increased by each year, in recent years, students have paid less to attend MIT. The average amount paid has decreased by 15 percent over ten years when adjusted for inflation, according to the report, which is available online at http://tech.mit.edu/V128/N12/senate/.
But tuition does not completely cover the cost of MIT: Daniel Barkowitz, director of student financial aid, said that educating an undergraduate costs about twice as much as tuition.
“The true cost of providing an MIT education to our students - 85% of whom study science or engineering - significantly exceeds the tuition revenue we receive,” says the report to the Senate. For example, science and engineering educations require expensive laboratory space.
According to the report, 90 percent of students received some form of financial aid, either from MIT or from other sources, in 2006–7. Barkowitz said that 42 percent of students did not receive grants from MIT last year.
The Institute’s endowment, which totaled nearly $10 billion in the past fiscal year, is ranked sixth in the country, behind Harvard, Yale, Stanford, the University of Texas system, and Princeton. The endowment’s value has nearly tripled in ten years; it was just under $3.7 billion in 1998.
Some of the rapid increase in the endowment comes from donations — over the past ten years, MIT has received about $650 million in donations to the endowment, according to the report. The rest comes from investment returns and other sources.
Senator Charles E. Grassley, R-Iowa, the ranking member of the Senate Finance Committee, suggested in January that the Senate might require universities to spend a minimum amount of their endowments each year in order to reduce students’ financial burdens. MIT has spent about five percent of its endowment each year since 1998.
The Senate’s request
In January, the Senate Finance Committee sent terse letters to America’s 136 richest colleges asking eleven questions about the rising costs of tuition and the rising value of university endowments.
The Senate request placed a heavy emphasis on tuition costs, and MIT’s response to the Senate came about a week before its announcement that students whose families make less than $75,000 will pay no tuition. But Kirk D. Kolenbrander, secretary of the MIT Corporation, said the timing was coincidental. The Corporation usually announces the next year’s tuition in March, and the Senate’s letter came with a similarly timed response deadline.
Kolenbrander says he doesn’t know how or when the Senate will react to MIT’s responses.
Senator John F. Kerry, D-Mass., who serves on the Finance Committee, said in January that the request was meant to help his committee decide what to do next.
“In an era of soaring tuition costs and shrinking middle class incomes, we need more and more efforts to expand tuition assistance programs for families and students and help open the doors of college to a new generation. This initiative will help us better understand how endowments work and the role they play in making college education more affordable for everyone,” said Kerry spokeswoman Brigid O’Rourke in an e-mail on Jan. 29.
Kolenbrander said he thinks the Senate will respond to the sum of the reports from all the universities who have responded. He said that the inquiry will help educate the public about how universities manage their endowments.
“It’s great being able to share with the public and articulate how these complex institutions work,” he said.