On College Cost & Value
On College Cost & Value
December 15, 2011
Dear Wooster Parents,
I write to you now not, as I typically do, to share news of campus, but to address a matter of great public concern, and comment on it in the context of The College of Wooster. American higher education is under increasing scrutiny by the media, elected officials, and others, and a vigorous debate is underway concerning the cost, effectiveness, and value of a college degree. Student indebtedness has become a focal point for Occupy Wall Street protestors, as the amount of student loans outstanding has surpassed total U.S. credit card debt for the first time. With unemployment hovering near nine percent nationally, and even higher in places like California, Nevada, and Michigan, students and families worry that a college degree is no longer the ticket to a good job.
Because I believe so strongly in the deep, enduring value of Wooster’s approach to liberal education, I would like to share my perspective on these issues with you, and make the case that it is important not to draw broad conclusions about the whole system of higher education when we strive so hard at Wooster, to demonstrably good effect, to control costs, provide access, and achieve value for each of our students, one at a time.
Why do costs (and tuition) keep going up?
We are driven by high standards of excellence and a historic unwillingness to compromise the quality of any aspect of your children’s education. A college like Wooster is only as good as its people: the professors, coaches, and staff who teach, mentor, and provide the environment in which your sons and daughters can learn and thrive. Almost two-thirds of our annual operating budget—some $47 million—pays the salaries and benefits necessary to attract and retain good people. Another $5 million keeps the lights and heat turned on, and our facilities and infrastructure in good repair, costs that are largely out of our control and rise from year to year. Colleges like Wooster also provide a range of services today—from technology to a 24-hour health center—that drive up costs, but were not part of the mix a generation ago.
Other costs that we do control represent new investments in the quality of a Wooster education, whether it’s offering new academic programs like neuroscience and environmental studies, assuring the diversity of the student body, providing more opportunities to study abroad, or creating an integrated program for student academic and career planning and advising, as we are doing this year.
One thing the operating budget does not pay for is construction of new facilities such as the Scot Center. No tuition dollars were used in that $30 million project, which has been financed almost entirely by the generous contributions of the College’s alumni and friends, and especially the members of our board of trustees. Because Wooster has historically raised nearly the full cost of any new facility before breaking ground, the College carries very little debt, and debt service accounts for just $1.7 million in an operating budget of $73 million.
Turning to the other side of the ledger, 75 percent of the College’s revenue comes from tuition, room, and board. Significant as that is, note that a quarter of the cost of providing a Wooster education is borne by other means, chiefly income generated by the endowment, annual gifts from our alumni and friends, and revenue from auxiliary enterprises like the bookstore. What this means is that all students enjoy the benefit of an education that costs more than they are paying. An education of Wooster’s quality, with its intense focus on the intellectual and personal development of each student, is a costly investment, shared by students, their families, and the College itself.
What is Wooster doing to contain costs?
The short answer is: many things. During the worst of the recession, we froze faculty and staff salaries for a year. We are increasing the energy efficiency of campus buildings, which will generate savings of $5.6 million over 10 years, while also reducing our carbon footprint by 36 percent. We anticipate that the Scot Center will win LEED Gold certification, while the solar array on its roof will generate enough clean, cheap energy to power an entire residence hall for the next 30 years. This year, we switched to a new employee health plan that has enabled us both to reduce costs and increase benefits. New purchasing practices and consortia with other colleges have also helped reduce expenses. Each year we craft our operating budgets on the tightest margins we can manage; we spend our revenue so as to maximize the quality of education and nothing else.
What about student debt?
While the media is filled with horror stories about graduates with six-figure student loan debt, the reality at Wooster is quite different. To begin with, almost 40 percent of our graduates last year had no Federal student loans at all. Those who did take out loans owed, on average, $19,718 (compared to a national average of $25,250). And for every dollar of debt they took on, the Wooster graduates received almost $4.50 in scholarship grants. Is there evidence that this debt is not manageable? To the contrary, the default rate of Wooster graduates is close to one percent, far below the national norm of nine percent.
Is a college education still worth the investment?
By any rational standard, the answer is a resounding yes. According to the Bureau of Labor Statistics, someone with a bachelor’s degree earns a median annual salary of $54,000, compared to $32,000 for a high school graduate. Over the course of a lifetime, the difference in earnings can add up to well over $1 million. Even in tough economic times, a college degree offers an advantage. While the unemployment rate in November was 8.8 percent for high school graduates, it was half that for those with at least a bachelor’s degree. At Wooster, 90 percent of our graduates are employed or in graduate school one year after graduation.
In a survey conducted last year, employers told the Association of American Colleges and Universities that the qualities they sought in new hires straight out of college include written and oral communication skills; critical thinking and analytic reasoning; the ability to apply knowledge and skills in real-world settings; ethical decision making; and teamwork. A.G. Lafley, retired chairman of Procter & Gamble put it this way in a recent opinion piece, “The formula for businesses trying to compete in today’s economy is simple: hire employees with the mental agility, leadership, and passion to navigate constant change—in other words, hire those who are liberally educated.”
My colleagues and I all share that same belief in the power of a liberal education, and in the young women and men who leave a place like this with such enormous potential to transform their world. Our alumni, generations of leaders of character and influence, are a prosperous and fiercely loyal group, demonstrated by their financial support of our current mission and your children. What I hear from these alumni as I travel are stories of profound gratitude for their Wooster education, and for the value they find in their degree every day whether they have been out for five years or fifty.
Please know that I do understand that each of you is stretching your own resources to invest in the development of your child, even as we are stretching ours. I hope the value of our combined efforts is demonstrated each time you talk with your son or daughter, hear of their hard work, and witness their intellectual and personal development. You have my promise to deliver the highest value education we can at the most disciplined cost we can manage.
I hope that you and those you love are renewed by the time you spend together this holiday season, and that your students return to campus in January ready to begin anew our common endeavor.
Sincerely,
Grant H. Cornwell