(2 of 10)
On behalf of baby boomers everywhere, many of whom are just now filling out financial-aid forms for children accepted under early admission, I set out to track the tuition dollar by focusing on a single institution. I chose Penn, much to the chagrin of its director of communications, because it had the misfortune of having accepted me, because I wouldn't mind sending my own daughters there and because the forces that drove up Penn's costs are fundamentally the same as those at every other major university. My journey--taken at a time of great tumult in higher education, with many schools at last responding to pressure to slow tuition growth--led me to a discovery: real-cost increases do explain some of the run-up in tuition over the past 20 years.
But there's no good reason for the rest.
Tuition began its climb in the '70s, when universities suddenly found themselves confronting a fiscal landscape more hostile than any they had faced in the previous quarter-century. Although I did not know it at the time, in my freshman year, 1972, Penn was emerging from a fiscal crisis. The stage was set in the '50s, when, awash in the ever rising tsunami of federal spending triggered by Sputnik's assault on the nation's pride, Penn and its peers went on a building-and-hiring binge. A surge of Great Society financial-aid money helped them expand even further. New faculty could be supported with minimal strain because the salaries were largely covered by federal grants. From 1960 to 1970, operating expenditures at Penn quadrupled, a rate of increase 10 times that of inflation. More buildings were constructed, including three high-rise dormitories, and more faculty and administrators were hired. Martin Meyerson, president from 1970 to 1981 and now president emeritus, agrees that his predecessors "probably overextended themselves."
Then, in the mid-'70s, federal funding abruptly slowed and had to be spread among the swollen ranks of professors bearing Ph.D.s earned at Penn and other schools during the boom years. The government, moreover, began distributing its money among a wider range of schools and insisting that institutions pick up more of the costs of research. And inflation began to accelerate. Even before the oil crisis of the late '70s, energy costs began climbing. From 1969 to 1975, Penn's heat and electricity costs rose nearly 300% while its income from investments declined and the growth of funding from the state of Pennsylvania began to slow.