---------- Forwarded message ---------From: John H Beckman Date: Sat, Sep 12, 2015 at 11:46 AM Subject: Re: ProPublica Inquiry To: Annie Waldman Cc: "nagel@nyu.edu" Ms. Waldman, The issues of cost, price, and debt are interwoven and complex, so let me give you a short answer followed by a somewhat lengthy, fuller explanation. All of it is on the record. Here's the shorter answer -We think it is important that students and families have good information in order to make an informed choice about college. The decision really comes down to a calculus about which school represents a good fit for the student and a sound investment for the family. NYU is deeply concerned about the issues of cost and debt, and we want families to take account of financial considerations as they make their college choice and select the college that is right for their son or daughter. We are confident that NYU is a good investment, based both on what we offer to students -- superb academics in a wide variety of disciplines (the liberal arts, business, the performing arts, nursing, engineering, teaching, etc...), unparalleled locations for education and global study, outstanding internship opportunities, and a very strong track record for placement and starting salaries for our graduates -- and by our ongiong efforts to increase student financial aid, reduce debt, and maintain a commitment to low-income and first-generation college-goers. It is source of pride to us that so many students and families -- to judge by the more than 60,000 applications for admission we received last year -seem to agree. NYU has made tremendous strides in improving financial aid, but our per studentendowment is far below our peers' and will remain a constraint and a disadvantage for the University. We have nearly tripled our financial aid budget since 2002, and we provide some $270 million to undergraduates yearly in scholarship aid (gift aid from NYU that doesn't have to be paid back). Since 2002, our average financial aid grant has increased from covering 34% of tuition to 54% of tuition, and this year's freshman class will receive the largest average scholarship grants in NYU's history. We are accomplishing this even though we educate more students with high financial need than many peer schools -- 22% of this fall's freshman class is Pell-eligible, and overall we have over 5,300 Pell students. And all our efforts having a real and positive effect -- since 2009, the average debt of NYU's graduates has declined by $13,000 at a time when average student debt rose significantly nationally; NYU's average debt on graduation is well below the national average. And our foremost fundraising priority is financial aid: we announced a$1 billion fundraising campaign dedicated solely to financial aid, and we are already nearly halfway to our goal. Yet while from the standpoint of academic reputation we look similar to the other top private universities in the country, we differ in one very important regard: perstudentendowment. Whereas a Harvard or Princeton have $1.5 – $2.0+ million in endowment-per-student, NYU has about $75,000, or about 1/25 – 1/30 as much; even Columbia'sper student endowment is about five times as large as ours. In fact, NYU ranks about 170th nationally in terms of per student endowment -- far behind its peers. And that means we have fewer financial resources and less financial flexibility in terms of financial aid. We will continue to work hard to improve our financial aid -- as we have done so successfully over the last decade -- to keep costs down, and to keep affordability and the impact of college costs on families at the forefront of our thoughts, and to uphold the value and quality of the education we offer our students. Now, the longer explanation... I don’t know an administrator or leader in higher education – certainly not at NYU – who doesn’t worry about the cost of attendance, the accompanying issue of debt, and its impact on students and families. But the reality is that the cost of high quality college or university education is expensive, whether at NYU or elsewhere; the variations in price tend to result from individual college's circumstances, like their perstudent endowment (NYU's is low; the school's you've mentioned have much higher per student endowments), or the costs associated with their location (NYC is the greatest city in the world, but it's expensive, particularly when it comes to space). So, if one looks at tuition alone, NYU is not particularly high on the list among top universities (less than Columbia or Vassar), but when one looks at cost-of-attendance, it’s a different story). This topic is not as simple as it’s made out to be, so let me give you some background, if I may, please. If you look at tuition among top research universities, you will see that they tend to fall in a relatively narrow band. That’s because universities face similar costly expenses: • We are personnel intensive enterprise: the quality of faculty scholarship is indispensable to academic excellence, and our key employees are virtually all people with doctoral degrees. This is the competitive environment in which top universities must recruit (competing not only among themselves but with the private sector) for distinguished faculty who are at the top of their fields. • Productivity is harder to achieve in education: productivity – which has yielded savings in other sectors of the economy -- is harder to achieve in higher education than it has been in other sectors because it is personnel intensive (unless one chooses a course with adverse consequences, like raising the faculty/student ratio). It is sometimes likened to the difficulties of achieving more productivity from a string quartet: you cannot eliminate one of the musicians, or it is no longer a quartet; you cannot simply have the four musicians play faster, or the music won’t be correct; etc… You get the point. And, because higher education is personnel intensive, it is particularly prone to something many Americans are confronting – the high cost of health care. Similarly, in many sectors, investments are made in technology in order to achieve productivity; at universities, reinvestment in new, cutting-edge technology is constant, but doesn’t yield the same productivity savings (a better supercomputer replaces a less powerful one to advance research; it doesn’t replace the researcher. Adding wireless connectivity to the entire campus or teaching technologies to classrooms significantly enhances or improves the educational experience, but doesn’t yield productivity). • Over time, colleges have been asked to do more: on top of the expectations we have for universities to do research and educate young people have been added over time a new set of expectations: extensive mental health services (the rate of students with mental health issues has climbed enormously as pharmaceuticals enable intelligent students whose mental illness once might have kept them from college to, instead, attend), extensive public safety services (think of the impact of events like the tragedy at Virginia Tech or the recent public discourse about reducing sexual violence), and extensive career placement/assistance services, to name but a few. And there are sometimes costs that are specific to individual universities. As I noted, among NYU’s greatest assets is being in New York – it is a huge part of what draws top faculty and students to our institution. But, as I mentioned earlier, it is a costly city, particularly for housing. That’s cost. Price -- which is what you're really asking about -- is somewhat different; price is what a student and his or her family can expect to pay. First, it is worth noting that, as a society, we seem to have moved away from thinking of education as a public good – an effort worthy of wide, social support that would keep up with its true costs – and instead begun to think of it as a private good (meaning its costs must be borne by those who make use of it). This seems particularly ironic, perhaps, in a time when there is a greater demand for a workforce prepared for the “knowledge century,” but there you have it…This has an effect on price. To really understand the interplay between cost and price, one needs to recognize that there are – broadly and economically speaking – three models of universities: endowment-dependent (universities with large perstudent endowments that derive a lot of their financial resources from those endowments), taxpayer-dependent (public universities that make use of subsidies from state legislatures for a lot of their financial resources), and tuitiondependent (universities with small per-student endowments – like NYU – that depend on tuition to a great degree for financial resources). Schools with high per-student endowments have financial resources that allow them not only to be need-blind in their admissions -- as NYU is (meaning the institution makes its admissions decisions irrespective of a family’s ability to pay) -- but they can also be generous (in some cases extremely generous) with financial aid. Such schools are a relatively small number out of the many institutions of higher education. The schools you contrasted NYU with are, for the most part, in that category. Taxpayer-dependent schools -- think here the major public universities -- hold down price by getting funds from their state legislatures (the actual cost of the education is not much different from other major colleges or universities, as can be seen by the tuition they charge out-of-state students). As the economic downturn that began in 2008 has caused budget gaps for governments at all levels, we have seen these schools' tuitions rise, steeply in some cases. NYU is the third type of institution: a tuition-dependent university. We’re frank about this, and its implications: roughly 2/3 of every dollar in our budget comes from tuition. NYU is also uniquely situated: from the standpoint of scholarly excellence and reputation, we look similar to the other top private universities in the country; however, from the standpoint ofper-student endowment, we look dissimilar. Where Harvard or Princeton have $1.5 – $2.0+ million in endowmentper-student, NYU has about $75,000, or about 1/25 – 1/30 as much. That means we have fewer financial resources and less financial flexibility (if one uses the relatively common expectation of five percent annual income from endowment, Princeton’sendowment yields $100,000 per student per year; NYU’s endowment yields about $3,500 perstudent per year). The schools you mentioned may not have per student endowments as large as Harvard's or Princeton's, but their per student endowments are nonetheless several times as large as NYU's (Columbia's is about five times as large). And though we rank far below peer institutions when it comes to perstudent endowment, NYU admissions policy – like those of high endowment schools -- is need-blind (meaning that we admit students regardless of financial means). Yet NYU serves significantly more students with high financial need than many of these peer schools. NYU supports the largest HEOP program in New York State. This fall's freshman class is approximately 22% Pell-eligible (indicating a high level of financial need for those students and their families); that's significantly higher than most of the schools you have cited. We are educating over 5,300 Pell students -- a number I am certain is far larger than most if not all of the schools you mentioned. And that did not just start recently at NYU, unlike some competitor schools with far larger financial resources and far larger per student endowments -- our proportion of Pell-eligible students has been roughly 1-in-5 for years. We are proud to have these students. But that higher percentage of Pell-eligible students comes with the greater financial aid costs for the University. You should be aware 1) that NYU spends a great deal on financial aid – roughly $270 millionper year on undergraduate grant and scholarship aid (that is, gift aid -- NYU’s own funds that do not have to be repaid by students); 2) that we increased the financial aid budget by over 180% between 2002 and now; 3) that the average grant over that period increased from 34% of tuition to 54% of tuition; 4) that we have embarked on a $1 billion fundraising campaign –the Momentum campaign – specifically to increase resources for scholarship aid; and 5) that our increases in financial aid have resulted in a lowering of student debt: in the last five years or so, average debt for NYU students has declined by $13,000 -- a period when average student has continued to climb nationally. NYU's average student debt is well below the national average, as you saw in the figures we have previously sent. Yet, in spite of the sum we spend on scholarship aid, in spite of how much we have increased the financial aid budget, in spite of the fact that we typically increase financial aid each year by a greater percentage than we do tuition, and in spite of the fundraising we are doing for financial aid, we are not able to meet full need (meaning, we cannot provide enough financial aid to fill the gap between what the federal government expects a family to pay and our cost-ofattendance). At NYU, that gap is typically addressed through borrowing. To be sure, we wish NYU’s financial circumstances were otherwise, that our financial resources -- most especially our per student endowment -- allowed us to match the generous financial aid of some peer institutions. But, because they are not, our admissions and financial aid officers are very candid as they speak with candidates for admission about the fact that college is an investment, and it is a four-year investment – it is not a matter of simply cobbling together financing to make the first year work. Our financial aid advisors are not financial planners, but they provide families with information to help them understand the financial implications of attendance. Still, this conversation has to be undertaken respectfully and thoughtfully: one cannot simply put up a barrier to students and their families because they have to borrow to attend school. Indeed, we need to be mindful about substituting our judgment for a family’s as they make these decisions, or implying that someone cannot or should not attend school at NYU because they have to take on debt. The fact is, borrowing has been part of going to college or graduate school for a long time, and for a very straightforward reason -- an investment in higher education is a very strong one (see here and here, as examples). NYU will continue to work hard to improve financial aid, as we have so successfully done over the last decade -- we recognize its importance to students and families. NYU is confident about the value and quality of the education we offer our students: recognized high academic standards, a faculty composed of leading scholars, access to an unparalleled global academic opportunities, a location in the world’s capital, unequalled opportunities for internships and preprofessional opportunities, and a very strong track record for placement and starting salaries for our graduates. We believe NYU is a good and sound investment for students and their families to make, and we are honored that so many students and families – to judge by the more 60,000 applications for admission we received last year – seem to agree. I hope this helps. --John Beckman, vice president for public affairs, NYU