On average, Washington University spends approximately twice the price of tuition on each student, according to Chancellor Mark Wrighton.

“It is very clear that WU invests more than our ‘sticker price’ [tuition] in the education of our students,” said Wrighton, who later added, “For us and other well-endowed universities, the additional investment is a significant fraction of the current tuition and may well exceed it.”

The university’s spendable income from its endowment is over $100 million annually, and gifts also exceed the same amount, bringing the combined income from the both to at least $200 million, according to Wrighton.

“Endowment pay-out and gifts make up a huge portion of our budget,” said Chief Financial Officer Barbara Feiner. “We would not be able to do a lot of the things that we do if we did not have those sources of revenue, so we definitely spend more on the education of students than we receive in tuition.”

The tuition of each of WU’s 11,000 undergraduate, graduate and professional students averages to roughly $25,000, which would bring their contributed income to approximately $275 million. But, as Wrighton noted, the university spends over $50 million on financial aid, so actual income from tuition is closer to $225 million-meaning that the university annually spends nearly as much from the endowment and gifts as it does from tuition.

“We can provide better faculty, facilities, staff support and programs because we have a strong endowment and gift stream,” said Wrighton. “In rough terms, then, every tuition dollar is, at least, matched by a dollar of university funds from one source or another.”

However, finding out exactly how much of the other income directly goes to students is difficult because most university resources are funded through a variety of means. Libraries, for example, are funded through the endowment, gifts, research and unrestricted revenue, including some from tuition. Wrighton pointed to faculty salaries and facilities as being two other elements funded through several means.

Feiner noted that even determining how much is going to undergraduate studies and how much goes to graduate work is just as difficult. Because graduate programs such as those in the schools of arts and sciences and engineering share faculty and facilities with the undergraduate programs, separating the two can be difficult.

Additionally, the amount the university spends on a particular student will vary based on what that student does at the university. Research grants and contracts often pay for projects involving students, but those students are the only ones with access to the resources provided. For example, students at the School of Medicine have access to more resources paid for through non-tuition sources than undergraduates.

Despite the recent economic slowdown, the university is confident that the endowment will continue to play a large role in the total amount WU spends annually.

“We have an endowment pay-out rule, whereby the pay-out from the endowment will go up every year, unless there is some really severe-much more severe than there is right now-downturn,” said Feiner. “The endowment pay-out is in pretty good shape right now.”

According to a study released by the National Association of College and University Business Officers (NACUBO), this trend of spending more than the cost of tuition on students is typical among private secondary-education institutions. The report from its three-year Cost of College Project found that most schools, from community colleges to Ivy League universities, spend several thousand dollars more per student than tuition.

“Concern about college costs and prices has a long history,” read the report’s executive summary. “Opinion polls taken over the past several decades show that most Americans doubt the affordability of college. At the same time, the public overestimates tuition prices and is ill-informed about the governance, control and financing of higher education.”

NACUBO’s report hoped to provide a simple, uniform method that colleges could use to explain the costs they incur while providing one year of undergraduate education.

The study found that, of the 150 institutions from which complete information was obtained, only two, both small independent colleges, had tuition prices above the cost of education-and both discrepancies were a result of temporary circumstances.

Among independent institutions, some well-endowed schools spent over $20,000 per student after tuition. The study found that, on average, about 70 percent of those total costs went to instruction and student services, 20 percent to financial aid costs and roughly 10 percent to institutional and community costs.

“A significant amount of time was spent defining institutional and community costs. Beyond instruction and student support, institutions incur substantial expenses that contribute in tangible, and intangible, ways to ‘education’ in the broader sense,” read the report. “Providing cultural opportunities and fostering the campus community are important components of the undergraduate experience in American colleges and universities.”

The study noted that some private institutions are almost entirely tuition-dependent, spending very little beyond what it makes through tuition. It also found that public four-year institutions spend roughly $4,000 to $11,000 more per student on average, and for community colleges, the figure averages from $3,000 to $7,000.

Wrighton did a similar analysis of tuition while serving as provost at the Massachusetts Institute of Technology. He noted that WU and MIT both have similar patterns, but that MIT might be contributing even more because of its larger endowment.

Contact Bernell at [email protected]

Where the money goes: distribution of the Washington University budget*

 Compensation and benefits for faculty, staff 42 percent
 Financial aid 20 percent
 “Controllable costs” (travel, faculty recruiting,
training, supplies, mail, computers, etc.) 15 percent
 Facilities 7 percent
 Libraries 5 percent
 Central administrative overhead
(student services, admissions, legal, finances, etc.) 11 percent

Budget reflects both graduate and undergraduate programs in the Schools of Architecture, Art, Arts and Sciences, Business and Engineering.
Source: Barbara Feiner, WU chief financial officer.

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