Editor’s note: This is the second of several installments dealing with the increasingly burdensome cost of higher education in America.  Read the first in the series here.

Last week, we looked at student loan debt in the US.  Today, we are discussing where Notre Dame stands on the issue of the affordability of higher education, specifically, the Notre Dame financial situation; financial aid and student loan debt at Notre Dame; tuition at Notre Dame; and the effect of student loan debt and tuition increases on the demographics of the Notre Dame student body.

The Notre Dame Financial Situation

“We don’t want [our tuitions] to be too high, and we don’t want to be too low versus our peer groups.  So we’re always watching what our peers are doing and where we’re at.”  – John Sejdinaj, Notre Dame Vice President for Finance, Observer, Feb. 27, 2014.

From a materialistic standpoint, Notre Dame is healthy, wealthy, and wise.  Let’s look at some key statistics straight out of its 2013 Annual Report:

  • Notre Dame had Total Assets of $10.3 billion at its fiscal year end on June 30, 2013, up a colossal $1 billion from the end of FY 2012 (Annual Report, 23).
  • It had Total Net Assets (after liabilities) of $8.3 billion, up $800 million over the end of FY 2012 (23).
  • Its Increase in Unrestricted Net Assets for 2013 (basically, excess of revenues over expenses and charges) was $382.1 million (24).
  • Its Total Gifts received increased by a phenomenal 71 percent in 2013 over 2012, reaching a record $387.3 million (6).
  • The market value of its endowment at fiscal year end 2013 stood at $8.32 billion, up $900 million from the end of FY 2012, continuing to make it one of the richest universities in America (8).  The Endowment Pool returned a very healthy 11.8 percent net of investment management fees, for FY 2013 (8).  ND’s endowment in 2013 was the 13th highest among US universities (Temple, Much More Than School, Notre Dame Magazine, Summer 2013, 28).  As if fiscal 2013 was not successful enough, the market value of the endowment rose a phenomenal 19.7 percent for the year ending June 30, 2014, growing by $1.5 billion to $9.8 billion.  That moved Notre Dame up to 12th among all American universities in endowment value (Irish Rover, Oct. 9, 2014).
  • The Notre Dame student population of 12,126 in 2013 has increased by only 400 since 2009.  The undergraduate student body has slightly decreased, while the graduate and professional cohort has slightly increased (Annual Report, 3).

Financial Aid and Student Loan Debt at Notre Dame

“We have made progress, but affordability will remain a concern for us.”  President John Jenkins, President’s Annual Address to the Faculty, Sept. 16, 2014.

ND anticipated funding $115 million in need-based financial aid in 2013, reflecting a trend of increases since 1999 (Annual Report, 6).  Nearly 32 percent of the amount distributed from the Endowment Pool in 2013 was directed to scholarships and fellowships (Annual Report, 11).  Fifty-five percent of incoming Notre Dame students this fall received scholarships or grants in aid totaling over $37 million (President’s Annual Address to the Faculty, Sept. 16, 2014).  In the fall of 2012 the average amount awarded to freshmen who demonstrated financial aid need was $28,600.  About three-fourths of undergraduates receive financial aid, in the form of scholarships, loans, ROTC awards or athletic grants-in-aid.  Financial need is determined by formulae that measure a family’s financial situation and will invariably include loans (Temple, 28).  Notre Dame has grown undergraduate financial aid at a compound annual rate of 6.6 percent.  According to Fr. Jenkins, “We have made progress, but affordability will remain a concern for us” (President’s Annual Address to the Faculty, Sept. 16, 2014).

More than 60 percent of Notre Dame’s student financial aid comes from the endowment, which is close to $1.5 billion.  ND would like to get that percentage up to 80 percent (Observer, Feb. 27, 2014).

Notwithstanding all of that financial aid, Notre Dame’s graduates left campus in 2013 with an average debt of about $30,200, compared to $28,000 at other four-year private schools (Temple, 28).  A Notre Dame goal is to have no one graduate with more than 10 percent of the cost of four years in need-based loans (Observer, Feb. 27, 2014).  The average debt of Notre Dame’s 2011 Law School grads was $94,000, placing it 27th out of 28 Catholic law schools.  Catholic University was the highest at $142,000 (Mirror of Justice, June 8, 2012).  Supreme Court Justice Antonin Scalia thinks that the “vast majority” of law schools will have to cut tuition.  That should lead, he opines, to higher teaching loads and lower professorial salaries (Law Schools Are Charging Students and Paying Professors Too Much, Wall Street Journal, May 16, 2014).

In fact, a number of law schools already have cut tuitions.  The University of Arizona has slashed tuitions for non-resident law students for the second year in a row, this year from $38,841 to $29,000.  The $29,000 level is 30 percent cheaper than the average cost of peer institutions and about half of California’s most expensive law schools.  Other law schools that have cut tuitions in the last year are Penn State Law, Brooklyn Law School, University of Iowa Law School and LaVerne College of Law (Gershman, University of Arizona Law School Woos Bargain Hunters with Tuition Drop, Law Blog, May 27, 2014).

Tuition at Notre Dame

Even with its financial successes and the relatively level student population, Notre Dame has raised the sticker price of its tuition every year since 2009.  The annual increases have ranged from 3.8 percent to 4.8 percent (Annual Report, 3).  That’s an average of just over 4.0 percent per year for a total of 24.5 percent in five years.  Notre Dame has announced another increase for 2014-15, this time of 3.8 percent (Observer, Feb. 27, 2014).

As noted in part one of this series, ND’s sticker price tuition has risen from $13,505 in 1991 to $46,237 in 2014-15, an increase of 342 percent, while the CPI has risen 71 percent.  After room and board, the total sticker price is $59,461 (Observer, Feb. 27, 2014).

The 2013-14 ND budget set undergraduate tuition at $44,604.  “Notre Dame,” they said, “is squarely in line with peer institutions in terms of costs.”  That evidently was not accidental.  According to John Sejdinaj, Vice President for Finance, “We don’t want to be too high, and we don’t want to be too low versus our peer groups.  So we’re always watching what our peers are doing and where we’re at.”  (Temple, 28).  All of which affirms that there is relatively little price competition among top flight universities.  Colleges frequently raise their costs to give the impression that their product is of higher value than the next school’s (Bennett and Wilezol, 47).

We have requested from Notre Dame the university’s net tuition for the school years 2008-09 through 2013-14 but the university has declined to provide it (net tuition defined as sticker price less grants and scholarships but not loans).

The Effect of Increases in Tuitions and Student Loan Debt on the Demographics of the Notre Dame Student Body

“Student loans today are ‘affirmative action for the rich.’”  – Stephen Burd, Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind.

What, if any, effect have the steady increases in tuitions and the burden of student loan debt had on the demographics of the Notre Dame student population?

The 2013 Annual Report states that the last two classes at ND, at 30 percent, are more culturally diverse than ever but “cultural diversity” is not defined (6).  In his Annual President’s Address to the Faculty on September 16, Fr. Jenkins stated that 30 percent of the class of 2018 are US citizens of color or internationals.

Admission to Notre Dame is “need blind.”  Students are admitted on the basis of their academic and personal merits, not their financial circumstances (Temple, 28).  Among the 50 most selective private colleges, about 80 percent have “need blind” admissions policies (Perez-Pena, Effect to Recruit Poor Students Lag at Some Elite Colleges, New York Times, July 30, 2013).  The “need blind” policy leaves room for inadequate attention to applicants from lower socio-economic groups.

On the other hand, in somewhat of a contradiction to its “need blind” policy, Notre Dame did announce in 2013 that it will accept qualified undocumented students for undergraduate admission.  They are US residents granted a stay of deportation who were brought to the US as children, have continuously resided in the US since June, 2007, and have not been convicted of a felony (Jones, Notre Dame to Welcome, Help Fund Undocumented Students, Catholic News Agency, Aug. 27, 2013).  About this move, Notre Dame spokesman Dennis Brown is quoted in that article as saying:

In many ways, Notre Dame is itself a university of immigrants.  While the legal circumstances are certainly different, we have a long and proud history of educating the marginalized and least among us.  This is a central component of Church teaching and our mission as a Catholic university … Since most of our aid packages also include a federal Pell Grant and federal work study, both of which would be unavailable to an undocumented student, the university would make up the difference.

That difference comes to about $8,200 annually (Jones, Aug. 27, 2013).

Several commentators on Catholic higher education have asked recently whether Catholic universities are still committed to working class families.  Among the commentators is The Cardinal Newman Society, which cites Burd, Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind.  Says the Newman Society:

Catholic colleges have long been known for their generous financial aid, which for many decades helped students from Catholic immigrant and working-class families climb the economic ladder of the United States … But a new study [Burd] accuses many of America’s wealthiest colleges of using aid to recruit middle-class students instead of serving the educational needs of low-income families (The Cardinal Newman Society, Are Catholic Universities Still Committed to Working-Class Families?)

Burd’s methodology was to use two tests on a per-university basis: (a) the percent of students receiving federal Pell Grants and (b) the average cost of attendance (net price) for each low income student in the 2010-11 academic year.

With respect to the percent of students receiving Pell Grants, for the 2008-09 academic year Notre Dame had only 8.4 percent, which ranked it 44th on a list of major universities.  And, its percentage had dropped one percent in the period from 2004 to 2008 (National Association of College and University Business Officers, US Department of Education, Chronicle Reporting).

With respect to the second test, the net price for low income students, the Newman Society broke out of Burd’s data the numbers for the six wealthiest Catholic universities, which of course, includes Notre Dame.  The Newman Society observed that, notwithstanding a contribution of $110 million in need-based scholarships to students in 2012-13, Notre Dame charged $11,939 to low-income students in FY 2010, about 40 percent or more of their families’ annual income.

According to the Newman Society:

Burd blames the wealthiest universities for putting their resources increasingly toward attracting students who help boost ratings like those in US News and World Report.  That means building country club-quality campus facilities, boasting faculty salaries and recruiting students who are most certain to complete a degree.  While these are not bad priorities, Burd suggests that they may be squeezing out opportunity for the most needy students … declining charity may be yet another consequence of their quest for secular prestige over Christian principles.

The most recent data for Notre Dame shows that the poorest students, those coming from families with annual incomes below $30,000, paid an average net price of just over $15,000 per year.  Students with higher family incomes paid more.  Over the four years for which the data was collected, however, the net price for ND’s poorest freshmen more than doubled, from about $7,300 in 2008-09 to $15,100 in 2011-12, while it declined slightly for higher-income groups (Marcus and Hacker, Poorer Families Are Bearing the Brunt of College Price Hikes, Data Show, Hechinger Report, March 2014).

Donald Bishop, Notre Dame’s Associate Vice President of Undergraduate Enrollment, is quoted as acknowledging the shift away from lower-income to higher-income students.  In his own analysis, Bishop reportedly found that Notre Dame students whose families make under $48,000 a year collectively received $241,000 in outside scholarships, while about the same number of students from families that make more than $110,000 a year together reaped scholarships worth $1.7 million.  “Kids from lower incomes are not as active or skilled in finding those outside awards,” Bishop is reported to have said (Marcus and Hacker).

In summary, therefore, on the two tests for determining the extent to which universities are using financial aid to recruit low-income students, as opposed to middle class students, Notre Dame is very low on the percent of students receiving Pell Grants and has experienced a significant increase in the net price for its poorest freshman while it declined slightly for higher-income groups.

Bishop has remarked that “His office … has increased efforts to reach out to low-income, first generation students – 9 percent are the first in their families to attend college” (Having lunch with … Don Bishop, Notre Dame Magazine, Autumn, 2014).

In not having good marks, according to Burd and Marcus and Hacker, for recruiting low-income students, Notre Dame has plenty of company among elite universities (Perez-Pena, July 30, 2013).  America’s colleges and universities are quietly shifting the burden of their big tuition increases onto low-income students, which further widens the gap between the nation’s rich and poor as college degrees drift beyond the reach of a growing number of students.  That fosters income inequality and educational achievement gaps.  Lower-income and working-class students at private colleges and universities have seen the amount they pay, after grants and scholarships, increase faster than the amount their middle- and upper-income classmates pay.  At private universities between the 2008-09 and the 2011-12 academic years, students in the lowest income group saw their costs go up by around $1,700, while higher-income students saw costs rise by $850 to $1,200 (Rising Tuition Costs Disproportionately Hit Poorest Students, here & now, Mar. 10, 2014; Marcus and Hacker).  At private universities between the 2008-09 and the 2011-12 academic years, students in the lowest income groups saw their costs go up by around $1,700, while higher-income students saw costs rise by $850 to $1,200 (Rising Tuition Costs Disproportionately Hit Poorest Students, here & now, March 10, 2014; Marcus and Hacker).  Burd calls it “affirmative action for the rich.”

The universities do this because dividing even a little money among several higher-income students fills more seats and because their families will pay the rest, rather than giving all of it to a single low-income student.  A second reason is that the colleges look better in annual rankings because better-off students tend to come from better-funded high schools and have better test scores and GPAs (Marcus and Hacker).

On the question whether Catholic colleges are still truly committed to the education of working class families, some have been singled out for that commitment.  Institutions that have successfully increased their share of low-income students have cited improvements in their financial aid packages and serious outreach efforts.  The packages may eliminate loans entirely for families under a specified income level (Supiano and Fuller, Elite Colleges Fail to Gain More Students on Pell Grants, The Chronicle of Higher Education, March 27, 2011).  The College of Holy Cross has offered free tuition to students from its home base, Worcester, Massachusetts, who were accepted at Holy Cross, if their family income was under $50,000.  Nor are loans a part of financial aid packages of Holy Cross students from elsewhere, because they can’t afford loans (Smietana, How Can I Ever Repay You?  Catholic Colleges and the Student Loan Crisis, uscatholic.org, 2014).

To conclude, while Notre Dame’s wealth continues to rise, its undergraduate student loan debt runs higher than average for private universities, the sticker price of its tuition continues to rise year after year and its marks for the percentage of its students on Pell Grants and the net price paid by its poorest freshmen in comparison to the net price to higher-income groups reportedly show room for improvement, indicating an admissions tilt in favor of higher-income groups.

Edmund Adams is a 1963 Notre Dame Law School graduate, who formerly was the Managing Partner, and currently is a Retired Partner of the law firm of Frost Brown Todd in Cincinnati.  He is a Fellow of the American College of Bankruptcy.  He served 9 years as a member of the Ohio Board of Regents, the coordinating organization for higher education in Ohio, including two years as Chairman.  He also is the President and a Director of the Sycamore Trust, but this series of articles is not written in those capacities or as a representative of the Sycamore Trust.