By MLC Vice President for Administration Steven Thiesfeldt
There is growing anxiety in America over the cost of higher education. According to the National Center for Education Statistics, the cost of tuition, room and board at not-for-profit private institutions rose 31 percent after adjustment for inflation during the decade of 2000-01 to 2010-11; for public institutions, the number was 42 percent. That’s a faster increase than the cost of medical care or gasoline for the same time period. With the cost of tuition, room and board at not-for-profit private institutions reaching an average of $36,300 per year by the end of the same period, it is no wonder that two-thirds of graduates now take out loans. Those who earned bachelor’s degrees in 2011 graduated with an average of $26,000 in debt, according to the Project on Student Debt, a non-profit group.
Why the rapid increase?
Anyone who has followed higher education in recent years knows that economic challenges have had a huge impact, especially since the Great Recession of 2007. Public institutions have been hit hard by reductions in state subsidies. Private institutions, generally less dependent on subsidies, were impacted by a downward spiral in investment earnings. Both of these situations have placed more financial responsibility for funding the cost of a college education on students and their families.
Expenses for operating a college or university have also trended upward. According to the Davis Educational Foundation (“An Inquiry into the Rising Cost of Higher Education: Summary of Responses from Seventy College and University Presidents”), there are several key factors for this trend.
- Faculty and staff compensation typically accounts for more than half of an institution’s operating expense, especially with the cost of providing health care benefits rising at double-digit inflation rates.
- Maintenance of infrastructure became an issue with a backlog of classrooms, dormitories, laboratories, studios, and athletic facilities to repair and update.
- Keeping pace with technology has added to the infrastructure burden with a need for constant upgrades to hardware and software and the addition of specialized staff to train and support campus users.
- The competitive environment of higher education also contributed to cost escalation. The perception that higher price equals higher quality pervades today’s society. An amenities war has led to luxury student housing, massive athletic facilities, high-tech student centers, and other non-academic cost centers. Consumers—students and their parents—expect more and have a multitude of options from which to choose.
What about MLC?
As a small private college with a focused mission and narrow target audience, Martin Luther College is not immune to the economic trends of the past decade. In fact, it has been subjected to a “double whammy”—both subsidies and investment earnings have seen a general decline.
- Declining subsidies: At the turn of century, MLC enjoyed a synodical subsidy equal to approximately 40 percent of its operating budget. The first few years of the new millennium saw it drop to less than 5 percent. While recent years have seen subsidy levels stabilize in the 20 percent range, it is unlikely that students will enjoy a significant increase any time soon.
- Declining endowment income: While MLC does not have the significant endowments upon which many private schools depend, it does receive modest support from both synodical and institutional endowments applied primarily to the area of student financial assistance. The recent recession and accompanying downturn in the stock market all but eliminated distributions from those sources for a period of time.
The economic downturn combined with a drop in synodical subsidy over the past decade has had a pronounced impact on the cost of education at MLC. Students have seen tuition, room and board rates increase from $7,751 in 2000-01 to $15,250 in 2010-11. The bulk of those increases came in 2002 through 2004 when double-digit increases were the norm throughout higher education. Fortunately, the last seven years have seen more modest increases hovering around five percent or less.
It’s important to note, though, that in spite of those accumulated increases, the $15,250 cost of education per year at MLC was still less than half of the not-for-profit private school average of $36,300 in 2010-11.
A matter of transparency
The recent cost escalation has attracted attention not only from consumers but also from the federal government. Part of the attention has resulted from confusion over the actual cost of higher education. Many institutions, particularly in the private not-for-profit sector, use a high tuition/high aid model. The idea is that schools charge an inflated tuition rate, but give it back to qualified students as financial aid. This practice has led to confusion between the “sticker price” and the “net price” of a college education. The Higher Education Opportunity Act now requires that all colleges and universities provide uniform information on college costs. This information is posted on the College Affordability and Transparency Center (CATC) athttp://collegecost.ed.gov/.
The CATC was “designed by the U.S. Department of Education to meet requirements in the Higher Education Opportunity Act and to provide better information to student and parent consumers about college costs. It serves as a central point to several tools that allow users to compare colleges’ tuition and fees, net price, and other characteristics.” The key feature of this program requires all college websites to provide a net price calculator that helps consumers estimate how much colleges cost after scholarships and grants. Various other features identify how much it costs students to attend different colleges, how fast costs are rising, and why costs are going up.
MLC’s net price calculator can be found here.
A matter of strategy
In addition to transparency, the need to keep student costs at a manageable level is a high priority for our WELS College of Ministry. In February 2013 the Martin Luther College Governing Board approved Compelled to Speak: A Strategic Plan for Martin Luther College (2011-2017). This strategic plan is driven by the college’s mission “to train a corps of Christian witnesses who are qualified to meet the ministry needs of the Wisconsin Evangelical Lutheran Synod.” The scriptural foundation for the plan is the Apostle Paul’s exhortation in his second letter to the Corinthians, “Christ’s love compels us . . . that those who live should no longer live for themselves but for him who died for them and was raised again” (chapter 5, verses 14-15). The plan includes an initiative designed to keep student costs low and student debt manageable. This initiative is not new; rather, it is an extension of a strategic goal adopted by the board in 2006, directing the college administration to “hold tuition increases to an average of 5% over the next 10 years.”
How does MLC strive to “keep student costs low and student debt manageable”? Several strategies are already in place.
- Reducing student cost through synod subsidy: The first and most important strategy focuses on God’s amazing providence and a demonstration of joyful trust that he provides through his generous people. Our synodical constituency continues to provide a generous operating subsidy that reduces the cost of attendance for each student preparing for service in the public ministry by one-fifth its actual cost.
- Reducing student cost through financial assistance: For some students, the cost is further reduced by applicable need-based and merit-based financial assistance. The source of these grants and scholarships is two-fold: synodical scholarship funds and institutional scholarship funds. In both cases, it is God’s people that provide the gifts. Our synod’s Ministry of Christian Giving works together with the MLC Mission Advancement Office to encourage and facilitate these gifts. In a recent year, institutional grants reduced the cost of attendance by an average of $3,400 per student.
- Generating more auxiliary enterprise income: Another way of generating revenue and keeping student costs low is to expand auxiliary enterprise operations. Examples include making our campus bookstore products available and marketing its products not just to our students, but to all campus visitors. Our print shop, cafeteria, and Events Management Office also provide services beyond the immediate campus family and enhance the revenue stream in support of the overall mission of the college.
- Keeping student fees low while providing a comfortable environment: In setting its fees for 2014-15, the college administration reviewed its operating budget projections for the current biennium. While many factors enter into the budget development process, the consideration of student amenities has become an increasing priority. Our goal is not to make MLC a luxury spa, but we need to remain competitive in the college market, and students expect at least some of the amenities they are used to at home. For instance, the Student Life Office has implemented a plan to provide cable television to all dormitory residents. There had been frequent requests for this amenity in recent years, and a Student Senate survey had demonstrated support for the service among the members of the student body. Beginning last August, all dormitory residents have enjoyed access to cable television as a part of their room fee. Another amenity frequently requested is air conditioning in the dormitories. We are exploring this, not only to enhance our students’ comfort, but also to encourage groups to use our campus in the summer, thus generating more income. The resulting budget also provides $150,000 in much needed dormitory upgrades over the two-year period.
The budget-review process demonstrated a need to increase tuition, room and board rates five percent each year in order to achieve a balanced budget by the second year. To partially offset this increase, the available need-based financial aid also was increased by five percent ($100,000). The board subsequently approved the following rates for 2014-15 at its September 2013 meeting:
| Cost per semester | Cost per year | |
|---|---|---|
| Tuition | $6,450 | $12,920 |
| Room and Board | $2,550 | $5,100 |
| Totals | $9,010 | $18,020 |
A matter of trust
The last decade has seen unprecedented increases in the cost of a college education. The trend is not likely to reverse itself any time soon. While Martin Luther College is not immune to the factors that have driven this cost escalation, your College of Ministry will continue its quest to provide an affordable, high-quality education. The determination to keep student costs low and student debt manageable is not just a matter of strategy; it is also a matter of trust in a God who places the future of his church in the hands of your sons and daughters as they prepare for fulltime ministry. Grateful to the Lord of the Church for safeguarding his Word in our midst and entrusted with preparing and nurturing confessional Lutheran ministers of the gospel, MLC prayerfully looks forward and is Compelled to Speak the good news of free salvation in Christ (Vision statement from Compelled to Speak: A Strategic Plan for Martin Luther College).
