Downloads
Why Cornell Can't Meet All Financial Need With Grants
The Chronicle of Higher Education
April 27, 2007
by Carolyn "Biddy" Martin
Every year a new generation of students experiences the thrill of admission to college. For many, particularly traditional-age students, going to college brings independence and represents an important rite of passage. It is also, for more and more young Americans, their first encounter with the stark reality of making economic ends meet. Increasingly students are having to help shoulder what their parents cannot carry alone namely, the cost of tuition, room, and board. Colleges and universities, concerned with equity and diversity in admissions, are also doing more of the heavy lifting themselves, and rightly so.
The economics of the issue are well known to insiders in higher education: The public focuses, understandably, on rising college tuition rates, but the actual cost of higher education is not covered by tuition. At Cornell University, for example, the cost of education per student is approximately double the price of tuition, and that holds for many other institutions of higher education as well. In effect, tuition is subsidized for all students, whether they qualify for aid or not. The remainder of the revenue required to pay for education comes from university endowments, gifts, and government support. In addition, Cornell and many other colleges provide aid for students who demonstrate need. For those institutions that remain committed to need-blind admissions, that subsidy is substantial. And it benefits the entire student body by ensuring that all our students reap the advantages of studying and living with the most qualified and diverse community possible.
Over the past couple of years, Harvard University, the University of Pennsylvania, Davidson College, and a few others have made laudable efforts to increase the economic diversity of their undergraduate student bodies by modifying their financial-aid practices. They reduced or eliminated the debt burden and parental contributions for low-income and middle-income students, using institutional resources to substitute grants for loans. Unfortunately, very few institutions can match their offers.
Cornell is one of the wealthiest institutions of higher education in the country, and we have increased grants and reduced loans for low-income students. We cannot, however, provide the complete substitution of grants for loans that some even wealthier institutions have begun to offer low-income and middle-income students. Cornell has the 18th-largest college endowment nationwide, but it faces its own economic challenges with the lowest per-student endowment among its Ivy League peers and a relatively high proportion of students receiving aid. Meanwhile, educational costs for colleges, across the board, are rising faster than revenue. Indeed, inflation rates for some components of college budgets such as faculty compensation, library collections, and equipment exceed the rate of inflation in the Consumer Price Index.
The public deserves to understand the factors that drive up our costs. Higher education is labor intensive, with approximately 60 percent of Cornell's budget, for instance, made up of employee-related costs. That is exacerbated by the competition for top faculty members, as the large numbers hired in the 1960s begin to retire, and the wealthiest institutions offer higher salaries and better infrastructure than many colleges can afford. At major research universities, technology and infrastructure to support faculty and student research further drive up institutional costs, as does compliance with a growing number of government regulations. Student expectations for enhanced services and amenities in housing, dining, fitness facilities, and technology drive up costs; competition for students leads to an arms race in meeting those expectations. Provision of mental-health services has become more expensive.
At Cornell, which is the land-grant institution of New York State, outreach — in the form of programs such as the statewide Cornell Cooperative Extension network — require structures and support to translate the university's research into usable forms for the public. Moreover, the nation's land-grant universities are making sometimes-costly changes in their outreach services to meet the needs of the 21st century by promptly making available the benefits of recent research, for example on disease-resistant crops that contribute to local economic development in the growing wine industry in New York State. Institutions such as Cornell face enormous challenges broadening access, meeting the financial need of deserving students, competing with peers, and preserving academic excellence in a time of rapidly rising costs.
Even though costs are difficult to control, Cornell and other universities have instituted a continuing process of administrative review that enables them to improve efforts at cost containment. The public needs evidence that institutions of higher education are as innovative in our approach to cost as we are in our commitment to research and teaching. Despite our best efforts, however, costs are climbing, and government and other outside support is not, which requires institutions to rely more and more on generous gifts from alumni and friends.
Consider that local and state spending per student on higher education was at a 25-year low in 2004-5, putting pressure on philanthropy and on students and their families. In the long run, of course, even for many elite institutions — many of which, like Cornell, have initiated large-scale fund-raising campaigns — that trend is not sustainable, and more government support will be essential. There is some cause for optimism in recent activity in Washington that suggests lawmakers and the president are seeking ways to make higher education more accessible and affordable, such as by increasing federal Pell Grants to needy students. But a great deal more is required, not only for student aid, but also for research that makes higher education so valuable to students and the larger public.
At Cornell, following the policy established by our Board of Trustees in 1998 and in keeping with a historic commitment to access and diversity, undergraduate-admissions decisions are made without regard to the ability of students or parents to pay educational costs. That need-blind approach characterizes fewer and fewer colleges and universities. Retaining it is expensive. Cornell's student aid is a package of subsidized loans, grants, and work-study opportunities. In the 2006-7 academic year, 44.6 percent of Cornell undergraduates, or some 6,181 students, demonstrated financial need, and 40.7 percent qualified for grant aid (which does not have to be repaid).
Cornell's need-blind admissions and financial-aid policies are a modern interpretation of ideas and ideals espoused by the university's founders. Ezra Cornell's famous motto — "I would found an institution where any person can find instruction in any study" — is best understood as a bold declaration that higher education should be open to all, which was a radical notion in 1865, in an era when most colleges were loosely affiliated with Christian denominations, and only a handful admitted female or minority students or provided student aid of any consequence. The Morrill Land-Grant Act of 1862 and the university's state charter (written by Cornell and co-founder Andrew D. White in their roles as state legislators) also committed the university to promoting open access, in the beginning particularly to advance socioeconomic diversity. While it would be several years after its founding before the university enrolled women and minority students in any noticeable measure, the precedents had been established to open higher education to the nontraditional students of the day.
Cornell set up its first student-loan fund in 1883, assigning gifts that had been pledged in 1872 by Ezra Cornell and other trustees to help the university weather financial crisis. The 1872 gift agreement called for assets to be converted to student aid once the university achieved a measure of solvency.
Today we continue to adapt to new conditions and adopt new ways to fulfill our legacy. The U.S. Supreme Court's 2003 decisions in the cases of Gratz v. Bollinger and Grutter v. Bollinger affirmed higher education's compelling interest in promoting racial diversity on the campus and allowed institutions to use a limited consideration of race, among other factors, in admissions decisions. Cornell continues to consider race and ethnicity as two of many important factors in its undergraduate-admissions process.
The effect of acting affirmatively has been to increase the number of underrepresented minority students from fewer than 25 in 1964-65 to almost 1,500 today. Despite that long-term progress, the number of undergraduates from underrepresented minority groups enrolled at Cornell in the fall of 2004 (1,458) was not substantively different from the number enrolled in the fall of 1997 (1,456), and the percentage of underrepresented minorities in the overall undergraduate student body has fluctuated between 10 percent and 11 percent since 1991-92. Cornell is not the only institution experiencing slow growth in diversity, and the reasons go beyond factors that colleges can control. Cornell is using a combination of strategies to increase the diversity of its student body, including new ways of communicating with students from different backgrounds, and special preparation and support programs for prospects and applicants whose families have not previously participated in higher education.
We are also providing enhanced financial-aid packages with more grant aid and less self-help for low-income students. The number and percentage of undergraduates who receive low-income Pell Grant awards at Cornell are relatively high among the university's peer selective institutions, and the distribution of Pell Grant recipients across Cornell's seven undergraduate colleges is fairly uniform. Even so, Cornell and most of its peers are below the national average in enrolling Pell Grant recipients. Clearly there is room for progress at all selective institutions.
Cornell recently changed the treatment of student and family assets (such as a family residence) to be more favorable than before to middle-income families. The university remains sensitive to the fact that middle-income families face significant challenges, often borrowing substantially for higher education.
As noted, the university has provided students with financial-aid grants since its inception. Over the past two decades, we have significantly increased that support. Since 1987-88, Cornell's unrestricted grant funds (derived largely from tuition revenues) have increased 177 percent in inflation-adjusted terms, while restricted grant funds (from operating gifts and endowment payout) have grown 181 percent. During the same period, government grants have declined 10 percent in inflation-adjusted terms. To increase unrestricted grant aid is tantamount to raising tuition (as the major source of such aid), while restricted grant aid can grow only if additional gifts are received or endowment payout is increased.
In the future, higher education will continue to redefine its approach to student aid. And Cornell will continue to seek new ways to ensure the ability of Ezra Cornell's "any student" to gain access to our institution. The ideal of being open to all is a core institutional value at Cornell, set out by audacious design in 1865 and affirmed by the university's conviction in 2007 as the only right and fair course. But we cannot, at least at present, afford to emulate those few colleges and universities that have promised to meet all financial need with grant aid. Nor can most institutions of higher education. To meet the challenges all of us face will take cooperation among all the players involved in supporting higher education.