FinAid - Financial Aid Advice The SmartStudent Guide to Financial Aid
Site MapAbout FinAid
 
Loans
Scholarships
Saving for College
Military Aid
Other Types of Aid
Financial Aid Applications
Answering Your Questions
Calculators
Beyond Financial Aid




Advertisement


 
Tuition Model - Private Colleges

Advertisement

Ever wonder how private colleges and universities determine next year's tuition increase? This is your chance to find out.

This tool incorporates a model of the revenue streams and expenditures at a typical private college. The models assume that this year's budget was balanced, and asks you to specify how each budget area will change in the upcoming year. For example, instruction expense will likely increase because of faculty raises. It then calculates the impact of these changes on tuition.


Percentage of Students Receiving Aid

This is the percentage of the student population that receives financial aid from the school's institutional funds. In 1992-93 the figure at private colleges was 44.6% and in 1995-96 it was 56.9%.

Percent Aided:

Average Aid Percentage

This is the average percentage tuition discount received among students receiving financial aid. It is the average ratio of aid received to tuition and required fees, for students receiving the school's institutional aid. In 1992-93 the figure at private colleges was 55.7% and in 1995-96 it was 44.5%.

Aid Ratio:

FTE Fall Enrollment

This is the full-time equivalent (FTE) number of students enrolled at the start of the fall semester. Private college enrollments do not change much from year to year. In 1992-93 the change was 1.1%. In 1995-96 the change was 0.8%. The average change from 1990 through 1997 was 1.3%.

Annual Change:


Revenues

Federal Government

This is revenue received from the federal government, in the form of appropriations, restricted and unrestricted grants and contracts, and federally-funded research and development centers. The annual change is typically 3.9%, with a low of 2.1% and a high of 6.8%. Recent changes have tended toward the lower end of the scale.

About 14% of private university revenues come from the federal government, although this percentage has been declining recently.

Annual Change:

State Government

This is revenue received from the state government, in the form of appropriations, unrestricted grants and contracts, and restricted grants and contracts. The annual change is typically -0.5%, with a low of -5.8% and a high of +8.3%. About 1.9% of private college revenues come from state governments. This percentage has been steadily declining.

State support for higher education has been declining steadily for decades and is one of the first budget items to be cut during a recession. Private colleges, however, are less dependent on state governments than public colleges, so the declines have a negligible impact on changes in tuition.

Annual Change:

Local Government

This is revenue received from the local government, in the form of appropriations, unrestricted grants and contracts, and restricted grants and contracts. The annual change is highly volatile, averaging 7.3%, with a low of -16.5% and a high of 30.4%. This volatility does not have a significant impact on tuition, because only 0.7% of private college revenues come from local governments. This percentage has been fairly steady.

Annual Change:

Private Gifts and Grants

This is revenue received from private gifts, grants and contracts, including donations from alumni, other individuals, corporations, foundations, religious and other organizations. The annual change is typically 7.7%, with a low of 4.8% and a high of 11.2%. Gifts tend to increase when the economy is doing well and to decrease during and immediately after a recession. About 8.8% of private university revenues come from private gifts and grants.

Annual Change:

Endowment Income

This is revenue received from the college's endowment, and includes income from restricted and unrestricted funds. The annual change varies considerably, depending on the performance of investments and the growth of the endowment. It averages around 6.4%, with a low of 0.4% and a high of 16.6%. About 5% of private university revenues come from endowment income.

Annual Change:

Sales and Services - Educational Activities

This is revenue received from sales and services relating to educational activities. The annual change varies considerably from year to year. It averages around 8%, with a low of 0.8% and a high of 15.4%. It has tended to be much closer to 1% recently. About 2.7% of private university revenues come from sales and services relating to educational activities.

Annual Change:

Sales and Services - Auxiliary Enterprises

This is revenue received from sales and services relating to auxiliary enterprises. The annual change is fairly volatile. It averages around 4.5%, with a low of 3.6% and a high of 4.9%. About 10% of private university revenues come from sales and services relating to auxiliary enterprises.

Annual Change:

Sales and Services - Hospitals

This is revenue received from sales and services relating to university-affiliated hospitals. The annual change is fairly volatile. It averages around 3.6%, with a low of -3.6% and a high of 14.1%. It has been near the low end of the range recently. About 9.7% of private university revenues come from sales and services relating to hospitals.

Annual Change:

Other Sources

This is revenue received from other sources. The annual change is fairly volatile. It averages around 10%, with a low of 2.9% and a high of 19.3%. About 4.6% of private university revenues come from other sources.

Annual Change:


Expenditures

Instruction

This is expenditures relating to instruction, such as faculty and instructor salaries. The annual change is fairly steady, averaging around 6.3% with a low of 5.7% and a high of 7.5%. This is a major cost center for private universities, with approximately 27% of private university expenditures coming from instruction.

Annual Change:

Research

This is expenditures relating to research. The annual change is fairly steady, averaging around 5.9% with a low of 3.1% and a high of 8.7%. Although the private often blames research costs for the increase in tuition, research expenses represent only about 7.7% of a private university's expenditures.

Annual Change:

Public Service

This is expenditures relating to public service. The annual change is fairly steady, averaging around 9.3% with a low of 1.8% and a high of 13.9%. Public service expenses represent about 2.3% of a private university's expenditures.

Annual Change:

Academic Support

This is expenditures relating to academic support, including the university library. The annual change is fairly steady, averaging around 6.7% with a low of 4.7% and a high of 12.5%. Academic support expenses represent about 5.8% of a private university's expenditures.

Annual Change:

Student Services

This is expenditures relating to student services. The annual change is slightly volatile, averaging around 7.8% with a low of 6.1% and a high of 10.9%. Recent increases have been toward the high end of the scale, as students demand more services from colleges. Student services expenses represent about 5.1% of a private university's expenditures.

Annual Change:

Institutional Support

This is expenditures relating to institutional support. The annual change is fairly steady, averaging around 5.8% with a low of 2.4% and a high of 9.1%. Institutional support expenses represent about 10.4% of a private university's expenditures.

Annual Change:

Operation and Maintenance of Plant

This is expenditures relating to operation and maintenance of the university's physical plant. The annual change is fairly steady, averaging around 4.9% with a low of 3.6% and a high of 6.2%. Operation and maintenance of plant expenses represent about 6.2% of a private university's expenditures.

Annual Change:

Financial Aid

This is expenditures relating to financial aid. It is the cost of grants given to students from institutional funds. The average growth in financial aid is 11%, but it has been declining recently, with 8.7% more reflective of recent trends. The change ranges from a low of 6.4% and a high of 19.4%. Financial aid represents about 11% of a private university's expenditures. This percentage has been growing.

Rather than ask you to specify the growth in the financial aid budget, this model calculates it based on the percent aided and aid ratio figures provided above.

Mandatory Transfers

Expenditures relating to mandatory transfers are being held at 1.4% of other expenditures (not including retained revenues) in this model.

Auxiliary Enterprises

This is expenditures relating to auxiliary enterprises. The annual change is somewhat volatile, averaging around 3.8% with a low of 2.2% and a high of 5.4%. Auxiliary enterprises expenses represent about 9% of a private university's expenditures, and have been declining slightly.

Annual Change:

Hospitals

This is expenditures relating to hospitals. The annual change is somewhat volatile, averaging around 4.0% with a low of -3.3% and a high of 13.2%. Hospital expenses represent about 9.4% of a private university's expenditures.

Annual Change:

Independent Operations

Expenditures relating to independent operations (federally funded research and development centers) are being held at 4.5% of other expenditures (not including retained revenues) in this model.


Retained Revenues

Private universities typically retain 1/4 to 1/3 of private gifts and endowment income to increase the size of the endowment. This is intended to act as a hedge against inflation eroding the value of the endowment. Retained revenues typically represent about 3.3% of the rest of a private university's total expenditures, and the annual increase averages 7.4%, from a low of 3.9% to a high of 9.6%.

Rather than ask you to supply the annual change, however, in this case the model asks you to specify the retention percentage.

Retention Percentage:


 

 
Home | Loans | Scholarships | Savings | Military Aid | Other Types of Aid | Financial Aid Applications
Answering Your Questions | Calculators | Beyond Financial Aid | Site Map | About FinAid®
Copyright © 2014 FinAid Page, LLC. All rights reserved.
Mark Kantrowitz, Founder
www.FinAid.org