Remarks— Watertown Rotary Club
Daniel F. Sullivan—May 19, 2004

Many thanks to Tom Walker and the program committee for inviting me to be with you today. I understand that you’ve also heard recently, or will hear shortly, from my North Country colleague Joe Kennedy and from the new chancellor of Syracuse University . How you will manage to survive so much contact with university presidents is a puzzle. You must be very strong people, indeed!

I want to use my time today to talk about some myths of higher education in New York State , and especially some myths associated with private higher education. I suspect you’ll be surprised by some of what I’m going to say, and that is a good thing.

But first let me say that my university—St. Lawrence University—is thriving right now. We have record and near-record numbers of applications for admission; the percentage of accepted applicants who choose to enroll is high compared to our peers; the quality of our incoming students has been increasing every year, and this year is no exception; the percentage of our students who are American students of color has never been higher, a consequence of our strong commitment to increasing the diversity of St. Lawrence students; over 40% of our students study abroad in one of our 14 programs, including in our Kenya Program, the oldest continuously operating American college program in Africa; a successful $130 million fund raising campaign has supported our endowment and helped us do almost $100 million in new construction and renovation since I arrived 8 years ago; our students and their families are happier than they’ve been for a long time with the quality of the academic and student development experiences we provide. We’ve invested aggressively in people, programs and facilities in order to get better faster than our competitors in all of the ways that matter most for the education of our students, and it is paying off.

We’ve even beaten Clarkson in hockey roughly half of the time. As a St. Lawrence graduate, I hate to lose to Clarkson! At the same time, the partnership relationships between St. Lawrence and Clarkson to benefit our students and the North Country have never been more extensive or stronger. As universities, we complement each other nicely, to the benefit, I believe, of the North Country .

So if you haven’t been up to Canton recently, come see us. I think you’ll be impressed.

Myths and Challenges

But we function, of course, in a state and national context that is very challenging right now. One of the reasons it is challenging is that so few people understand what’s happening in our systems of higher education and how they are financed. Deeply held beliefs that are now seriously at odds with the higher education reality are keeping us from finding our way forward in a way that best serves students and their families, our state and nation. What are some of these beliefs, myths even? Here are some facts about the higher education terrain in New York :

• Headcount enrollment of students in four-year undergraduate programs in the independent sector—that is, enrollment in private colleges and universities like St. Lawrence—is more than double the enrollment in SUNY and CUNY institutions combined. Independent colleges and universities award 58% of the bachelor’s degrees awarded in New York , 73% of the master’s degrees, 71% of the doctorate degrees, and 85% of the first professional degrees. Independent college and university education is higher education in New York in many ways.
• Independent sector four-year enrollment has grown faster since 1991 than SUNY and CUNY enrollment, despite tuition increase patterns. Independent sector enrollment has grown 12% in that time, while SUNY enrollment has been flat and CUNY enrollment has increased 2.5%.
• And New York ’s independent colleges and universities are among the nation’s best institutions of higher education. In the 2004 edition of U. S. News and World Report’s “ America ’s Best Colleges,” 14 percent of the 100 “best” colleges and universities are located in New York state. St. Lawrence is one of those. Only one other state— California —has as many. In New York , all 14 “best” colleges and universities are independent colleges or universities.
• New York is now the top destination state for out-of-state first-time freshmen. No other state attracts as many out-of-state students into it to attend college. 83% of those out-of-state students attend independent colleges and universities in New York .
• Independent colleges and universities graduate the same number of U. S. minority students with bachelor’s degrees as SUNY and CUNY combined.
• Students attending four-year independent colleges and universities in New York are less likely than students attending SUNY institutions to be from families earning over $80,000: 46% of independent sector students are from families earning over $80,000, while 52% of SUNY students are from such families. 43% of CUNY students are from families earning over $80,000. Independent colleges and universities are not havens of the white and the wealthy.

How is this possible? How is it possible for tuitions at independent colleges and universities to be so high and yet these institutions enroll fewer high-income students and more low-income students than SUNY institutions, where the tuition is very low in comparison? The answer is that low-income students are heavily subsidized to attend independent colleges and universities so that the cost-difference is reduced or even eliminated, and students and their families believe that independent colleges and universities, in general, are of higher quality. The students who truly benefit from a state policy of low across-the-board public sector tuition are those from high-income families who would pay the higher independent sector tuitions. When the cost-difference is reduced for low-income students, they choose independent institutions because they believe they are better, while high-income students differentially choose public institutions to take advantage of the price difference.

The St. Lawrence Case

I have the most complete data for St. Lawrence, so let me illustrate with our case. In both current and constant dollars, St. Lawrence’s tuition and comprehensive fee have grown substantially since 1992-93. In current dollars, our tuition and fees have gone up at the average annual rate of 5.6% since 1992-93 and in constant dollars tuition and fees have increased at a 2.5% average annual rate. Our comprehensive fee (tuition, room, board, and fees) has increased at a 5.2% annual average rate in current dollars and at a 2.2% average annual rate in constant dollars.

But, of course, very few students at St. Lawrence actually pay the full comprehensive fee, or full tuition & fees. In fact, during my presidency (dating from summer of 1996) only roughly 15% of our students have paid the full comprehensive fee and received no grant support from the University. What one really needs to monitor is not our published tuition or comprehensive fee, but our average net tuition—that is, what a student and his or her family actually pay, including through student loans, after all grant aid is subtracted, grants provided by St. Lawrence, by federal programs such as Pell and SEOG, and state programs such as TAP.

The average net tuition our students paid St. Lawrence in 1996 was $10,313 while published tuition and fees were $20,560—that is, after all grant support from the University, private, and federal and state sources are accounted for, the average St. Lawrence student in 1996 paid just 50.2% of our “sticker price” tuition and fees. In addition, these students paid room and board of $6,110. In 1998 they paid an average of $8,799 in tuition & fees, or 39.8% of the published tuition & fee charge. It wasn’t until 2001 that net tuition was more than it was in 1996, in current dollars. During those years, when St. Lawrence and other private institutions were benefiting from extraordinary endowment growth and increasing fund raising success, our students were paying less in current dollars than they were before. Only when we began to enter the recession did net tuition begin to grow in current dollars.

Only a very small a share, on average, of the grant aid our students receive comes from federal and state sources—on the order of 15%. In my view, the failure of the federal government and New York State to maintain the purchasing power of Pell, SEOG, and New York State ’s TAP program has increased dramatically the load we carry in the form of institutional aid and the load students and families carry from student loans.

In constant dollars, St. Lawrence students paid less in average net tuition during 1998-2001 than they did in 1997. In the eight years I’ve been at St. Lawrence the average annualized change in net tuition was 1% in constant dollars.

Another way to look at these data is to realize that all St. Lawrence students with family incomes of $100,000 or less received some grant aid from St. Lawrence, and 81% of students with family incomes of $100,000 or more received some grant aid from St. Lawrence. Students from families with income less than $20,000 actually pay “negative tuition” at St. Lawrence. That is, we, using our financial aid funds and federal and state funds, not only fully subsidize their tuition, but we also provide an average of $3,421 toward their room and board costs. These students typically make up the difference by summer work, on-campus jobs, and student loans. There is rarely any real parental contribution for students in that family income category.

Yet another way to look at it is to note that this year 22% of incoming students at St. Lawrence were Pell Grant recipients. The Pell Grant program is for the very lowest income students nationally. St. Lawrence ranks fifth among selective national liberal arts colleges in the percentage of its students receiving Pell Grants. We have a very diverse student body with regard to family income.

We are able to do it because all students are subsidized. That is also where the perception of higher quality comes in also. This year we are spending, from all sources and for all purposes, about $60,000 per student. Full-pay students, of whom there about 15% of our student body, pay $35,500 in comprehensive fee. The average student pays roughly $20,000 in comprehensive fee. That subsidy comes from our endowment, from our fund-raising, and from the value of our existing plant and equipment, all of which are fully owned by the university.

This is a highly progressive way to have students and their families pay for college. The subsidies go differentially to those who need them most, and all are subsidized to some extent. That this works for the people in New York State is shown by the fact that independent sector enrollment has been increasing in New York while SUNY and CUNY four-year enrollments have been flat for almost 15 years.

There is much that I could say about how data like these should inform our public policy discussions, and maybe we can get to some of that in your questions. Let me just say here that, in my view, more of New York State’s subsidy of higher education should be provided according to students’ financial need. At the very least, increases in the state’s Tuition Assistance Program (TAP), and its higher education opportunity programs (HEOP and CSTEP), should receive very high priority in tight budget times. These programs work. They help us and our public sector partners to ensure that talented but needy New York students can afford to attend college.

I’m going to stop there and thank you for your attention. I look forward to your questions.

Statistics in this section taken from “Build on Strength”, Commission on Independent Colleges and Universities, 2004