The cost of a Macalester education will rise by nearly $1,200 for the 2012-13 academic year from the current $52,296 to $53,419, an increase consistent with rising annual costs over the past 10 years. This increase is the school’s lowest percentage jump since 2002, but prices are still soaring faster than the rate of inflation.

Though not the most expensive college in the country, Macalester is one of many private schools whose costs have been rising two to three percent higher than the Consumer Price Index (CPI) since 2000. But according to Vice President for Administration and Finance David Wheaton, this measurement does not accurately account for the services unique to higher education spending. College life is largely separate from the outside world, and as such “the basket of things that someone buys when they come to college is just a different set of items,” Wheaton said.

Macalester’s most expensive item is tuition, which will rise from $41,800 in 2011-12 to $43,472 in 2012-13. This cost includes the quality of academic experiences, which are improved through what Wheaton called “people-related costs.”

“60 percent of our cost is related to people,” he said. “Of those costs the most significant are salaries and all of the benefits, including health benefits which tend to rise fairly rapidly. We want to be able to give our staff and faculty raises, we want to repay them and recognize their good performance.”

President Brian Rosenberg also emphasized that in order to maintain the school’s commitment to a high level of academic rigor, money must be spent on high-quality staff and faculty.

“College costs a lot because the cost of hiring college-educated people is so high,” Rosenberg told Kerri Miller in a November episode of MPR’s Midmorning. “Even though family incomes are very flat, the difference between cost of hiring college-educated workers and non-college educated workers has gotten wider.”

These costs show that the relationship between tuition and inflation is skewed because higher education rarely has productivity gains. So long as Macalester continues to pay for intimate student-to-faculty ratios and small class sizes, values intrinsic to the school’s mission, tuition will continue to rise.

“For about 20 years our student-to-faculty ratio has been 10 to 1, and with 1800 to 1900 students we need a faculty of a particular size,” Wheaton said. “There’s no obvious way to have a productivity increase…a lot of businesses in the wider world can earn more revenue without increasing the cost. In the case of higher ed, at some level productivity would translate to each professor serving more and more students. But that would imply a rising student-to-faculty ratio which we think is not really what we want, nor do we think it’s what students expect when they come to the college.”

This holds true on a national basis for colleges and universities that hope to ensure an education worth what they charge. Though schools across the country vary in their purposes and offered services, higher education depends on a cost structure that is, at its core, cut from a universal mold.

“American higher ed ranges through [multiple kinds of] institutions, and all of them have their own relationship with how much in the way of human resources is necessary for them to be able to deliver,” Wheaton said. “We have a particularly intensive, highly supported model that carries a particular kind of cost structure. Other versions of higher ed in America have their own version of this; part of the challenge is that each of them settles into their own model.”

Financial aid

Increasingly unaffordable costs mean a greater need for financial aid. With a national median wage of $26,364 in 2010, a 1.2 percent drop from 2009, and an average private, four-year college cost of roughly $29,850 per year in tuition, compared to $22,541 in 2002 according to the College Board, families who hope to send their children to colleges like Macalester have to depend on financial aid more and more every year.

As President Rosenberg said on MPR’s Midmorning, the cost of full tuition “makes you flinch a little bit” but should be considered with the understanding that most students don’t have to pay every dollar. According to Director of Financial Aid Brian Lindeman, Macalester has not struggled to keep this true despite moving to a need-aware model in the 2004-05 academic year.

“We do not calculate financial aid eligibility or construct financial aid packages differently now that Macalester has moved away from a need-blind admission policy,” Lindeman said. “A student’s financial aid eligibility is calculated the same way whether admitted under a need-blind or a need-aware admission policy.”

Statistics from the school’s Common Data Set (CDS) show that the percent of students receiving need-based aid has not been greatly impacted by the cost-inflation relationship in the past ten years. In the 2002-03 academic year 69.5 percent of the student body received need-based awards; in the current academic year 70.3 percent of students receive need-based aid. In both years 100 percent of demonstrated need was met.

Non-tuition cost increases

Cost increases also exist outside of tuition, oftentimes in new programs and buildings. Recent construction projects that cost millions of dollars, such as the Leonard Center and the Janet Wallace Fine Arts Center, fall into this category. Macalester funds these projects through a combination of gifts and borrowing, the latter of which is only heavily used when the project is deemed necessary.

“In the case of something like the Leonard Center, the old one was a 1923 gymnasium, a 1950s-era field house with no windows, a small track, tennis courts with lines that actually went onto the track because it didn’t fit and a pool that was built in 1983,” Wheaton said. “That facility was essentially worn out.”

Macalester raised $26 million for the Leonard Center through Step Forward, a capital campaign that just ended and raised over $156 million in five years. The remaining costs were borrowed and will be paid off over time so that those who benefit from the facility’s early days are the same people who will be paying off portions of its cost.

“When we build a building like that [the Leonard Center] we borrow and it gets paid over 25 years, and there are some debt costs associated with that,” Wheaton said. “But we also raised more than we borrowed for that. That was unusual – the college’s pattern up until that point tended to be to raise some and borrow the rest, and the borrowing tended to be a lot higher than the fundraising.”

Though this particular project showed a rare trend, Wheaton said that fundraising has been on the rise in the past eight years as the school has worked to eliminate borrowing. Both the Leonard Center and the Janet Wallace Fine Arts Center were successful in this purpose, he says, and future projects are now expected to follow suit with more donations and fewer project-generated costs for the college.