A quality college education requires a significant investment.
Annual tuition and fees at the nation's private, four-year colleges averaged $25,143 for the current school year, according to a report by College Board, a non-profit higher education organization. Tuition at the most expensive institutions runs more than $40,000 per year. At RIT, tuition for the current year is $27,624.
Why so much?
Because it costs a significant amount of money to provide a wide array of programs, attract and keep outstanding faculty, purchase and maintain equipment, and build and operate the facilities that define a top-tier technological university.
"The tuition dollar is the major source of funding to underwrite the expense of academic and recreational facilities and programs that define a well-rounded university," says James Watters, senior vice president, Finance and Administration. Tuition covers approximately half of RIT's operating budget, which totals $571 million for the current fiscal year.
This year, the financial picture is more complicated than ever. Universities - like businesses and individuals - have lost substantial portions of their wealth due to the global financial crisis. Public funds and private donations are increasingly uncertain as the crisis continues. And tuition income will be impacted if enrollment declines as families face loss of income due to unemployment and other factors.
"We have not been untouched by the current economic crisis," says President Bill Destler. While enrollment is at an all-time high and applications to RIT from prospective students remain strong, the value of the endowment has dropped by more than 20 percent and New York state is considering reductions in a number of programs that support RIT students and programs.
Destler has outlined a number of responses to the financial crisis, including:
- A tuition increase of 4.5 percent for the 2009-20010 academic year.
- A freeze on salaries for faculty, staff and administrators.
- Proposed spending reductions for each division for the rest of this year and into next year.
- Creation of a significant contingency fund in next year's budget to protect the institution from unforeseen fiscal circumstances.
Earlier, RIT implemented some changes that should bring significant savings, says Vice President Watters. Beginning this year, the university is self-insuring the medical plans of all employees and retirees.
RIT also stopped accepting credit cards for payment of tuition, room and board, eliminating more than $800,000 of credit card costs. Instead, an electronic option was created so payments can be made over time directly to RIT.
While plans for some construction projects will be placed on the back burner, RIT will move forward with projects already underway, including the Vignelli Design Center and the conversion of the former Student Alumni Union swimming pool into space for student organizations. The Student/Administrative Services Center and Innovation Center, a $15.6 million project, will open this spring.
"These projects are advancing the university's position in higher education and maintaining a leading-edge focus in many programs," says Watters. "They are investments in the future that you want to make even in tough times."
RIT also recognizes the importance of providing financial aid. More than $92 million was provided to students in the current year and that will increase to $102 million for 2009-10.
"It's essential to maintain financial aid at a significant level," Watters says. "The students that we recruit are highly mobile because they are high achievers. They have options. We need to provide the kind of financial packages that the competition is providing."
Universities with large endowments have greater interest earnings to fund student aid. RIT's endowment - now about $540 million - is low for a university of its size and global scope and far below peer universities including Rennsselaer Polytechic Institute ($800 million), Carnegie Mellon ($1.1 billion), University of Rochester ($1.3 billion), and Cornell ($5.4 billion). Endowments - funds that comprise an institution's wealth - typically take the form of an investment portfolio that, historically, generates income.
"When you look at the financial resources of the university's endowment, they're insufficient to truly meet the need that the collective families of our students have in terms of financial aid," says Watters. "So it puts great pressure on the operating budget to respond to those needs."
RIT's endowment saw regular growth over the years, reaching $671.5 million at mid-year 2008. It declined sharply in the past six months. RIT administrators are not expecting any quick turnaround.
"I've made an assumption in the planning of our models that through calendar year 2009, we are not expecting any significant recovery in the financial marketplace," says Watters. "We expect that the endowment will essentially be flat, that the earnings on working capital will be under pressure and that the interest rate environment will still be relatively low.
"So, it speaks to the fact that for a while, we've got to be very, very diligent about spending our money wisely, advancing the good things that we're doing and just not over-extending ourselves."