TEXT OF STORY
Kai Ryssdal: We’ve been looking at higher education this week — how the recession is influencing the decisions a lot of prospective students are making about where to go to school.
Those decisions are, in turn, influencing a lot of colleges. Not the ones with the big endowments. Yes, they’re hurting with the stock market crash. But most private schools don’t have those endowments to fall back on. They depend on tuition to pay the bills, and on students who’re about to pay that tuition. Emily Hanford of American RadioWorks reports.
EMILY HANFORD: Albright is a private, liberal arts college in Reading, Pennsylvania. Big trees, brick buildings, about 1,600 students. Kyle Bredbenner’s a senior. He grew up nearby, came to camp here as a kid.
Kyle BREDBENNER: And so when I first thought college, this is the first thing that came to mind, I was like, oh Albright, of course.
Bredbenner’s walking to his marketing class.
Professor: The topic today is, of course, product strategy and ah…
This class has 25 students; most are even smaller. That’s one reason the education is so expensive. The sticker price is about $40,000, but almost no one pays all that. Like most private colleges, Albright gives out a lot of financial aid. It has to, to get students like Bredbenner to come. More than half of his tuition and fees have been covered, but he’s still graduating with a hefty debt.
BREDBENNER: Probably close to, I think it’s close to $50,000 in debt now.
Officials at Albright would like to do more to help students like Bredbenner. Several wealthier, more elite colleges have dramatically increased financial aid so students have little or no debt. But Albright can’t compete. There’s no big endowment to help foot the bill. Eighty-five percent of Albright’s operating budget comes directly from money students pay.
GREG Eichhorn: If we’re not filling the classrooms and filling the beds, we’re not then able to do all the other aspects that we want to do, including fund your financial aid.
Greg Eichhorn is vice president of enrollment management. He says Albright’s in a tight spot. About a quarter of students come from low-income families. To give them enough aid, Albright must attract families that can pay. But now those families are asking for help too.
Eichhorn: It’s kind of daunting. You know, historically you thought those families were solid and that you could count on them to pay a little bit more and fund families that were needy. You can’t anymore.
Eichhorn says a few things are happening at once. Tuition has increased so much that even high-income families have to stretch. And now they’re watching investments tank and home values plummet. Plus, high-income families are beginning to feel entitled to aid. It’s OK to ask for help. And they’re not just asking. They’re calling him up to wheel and deal.
Eichhorn: XYZ offered me this merit scholarship or this amount of financial assistance, how come you’re not?
Eichhorn says Albright is trying to meet demand by offering more financial aid based on merit rather than need. This allows them to give upper-income families a bigger discount. But Albright doesn’t want to lose lower-income students, so they’re increasing financial aid overall — by more than a million dollars. They’re freezing salaries to do it.
Lex McMillan: We run very close to the mast all the time.
Lex McMillan is the president of Albright.
McMillan: Our margins are very close. Our business model, if you will, is financially very challenging.
They worry the sticker price could scare families away. So tuition next year will not go up as much as it has recently. And officials are planning for a smaller school. Maybe 60 fewer students, a loss of about 1.3 million dollars in revenue. McMillan says it’s sobering. But he’s optimistic about the long run. He points out that unemployment among college graduates remains low, even in this harsh economy. And more and more, people want to go to college.
MCMILLAN: And they don’t regard it as a luxury, they regard it as a necessity to achieve their piece of the American dream.
McMillan says students ask him why Albright costs so much. He tells them he could make it cheaper by doubling class sizes or cutting back on student services like tutoring and career counseling. Senior Kyle Bredbenner says, don’t do that. He thinks his Albright education has been worth it, though he’s anxious about graduating in this economy. No one’s getting job offers. He says his friends have started thinking about plan B.
BREDBENNER: You know what, the job market sucks right now, maybe I’ll just go back to school.
In Reading, Pennsylvania, I’m Emily Hanford for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.