Analysis of U.’s 2013-14 budget shows increases in undergraduate fee package and financial aid
The University’s operating budget for the 2013-14 fiscal year will include a 3.8 percent increase in the undergraduate fee package and a 4.6 percent increase in the total amount allocated for financial aid, according to a report by the Priorities Committee.
The $1.58 billion set aside for the coming year, announced in a Jan. 28 statement from Nassau Hall, represents a 4 percent increase over the 2012-13 budget. The new budget will take effect in June 2013. The announcement followed a report prepared by the Priorities Committee, a subsidiary of the Council of the Princeton University Community that meets annually to recommend a budget for the following fiscal year.
The undergraduate fee package, which includes room, board and tuition fees, increased by 4.5 percent in the 2012-13 fiscal year and surpassed $50,000 for the first time in the University’s history.
This year’s 3.8 percent increase, which will take effect in the 2013-14 school year, consists of a 3.9 percent increase in room fees, a 3.2 percent increase in boarding fees and 3.9 percent increase in tuition.
The increases in this year’s budget outpace domestic inflation, which was 1.7 percent, as measured by the Consumer Price Index. The CPI, which measures the average increase of prices in consumer goods, is a common measure of inflation.
Nonetheless, the net price of attendance — total undergraduate fees minus the average financial aid grant per student — has risen more slowly than the CPI for the past two decades.
University Provost Christopher Eisgruber ’83 explained that the increased cost of a Princeton education in the coming year would be absorbed by an increase in financial aid.
The University pursues a “stay-even” financial aid policy, which stipulates that the increase in aid must at least match any increase in fees. The Committee on Undergraduate Admissions and Financial Aid estimated that parental contributions will rise 2.5 percent for the 2013-14 school year.
Eisgruber noted that the University subsidizes the tuition of all undergraduate students, not only those who receive financial aid. Even so, families who do not receive aid will inevitably bear some of the cost associated with an increased fee package, he said.
“The Trustees have made the judgment that we need to make sure a Princeton education is a good value for everyone, and that means we’re subsidizing everybody, including people in the top five percent of the income distribution,” Eisgruber said. “But we try to keep that subsidy constant. That means we need to pass along justified cost increases.”
The 2013-14 budget follows a fiscal year in which the University’s financial health returned to levels “more robust than at any point since the recession began,” according to the Committee report. Positive endowment returns in each of the last three years helped replenish the University’s coffers, and cost-cutting measures originally implemented in 2009 are currently saving $15 million annually. For the first time since the financial crisis, Nassau Hall balanced its budget in fiscal year 2012 without drawing on one-time reserves. One-time reserves operate as a savings account for the University, which can draw on them to fund new projects or address deficits.
Despite these signs of financial health, the Priorities Committee projected a budget deficit of $2 to $6 million for fiscal years 2015 through 2017. Nonetheless, Eisgruber said that the Priorities Committee did not predict that next year’s budget would differ drastically from the one just proposed.
“[The projections] do show a kind of stability in the financial environment, but that stability will require careful decision making,” he explained. “As a University, we are always looking for new opportunities and for ways to improve, and, when it’s appropriate, to grow. At times the University has been the beneficiary of market trends that generated surpluses in ways that created abundant choices for improvement. Now that we’re in a more stable environment, we may have to be more creative to find ways to improve and grow.”
The new budget also raises graduate tuition by 3.8 percent to match undergraduate fees and allocates $1.2 million for high-priority “programmatic initiatives.” These initiatives include the hiring of a librarian specializing in copyright policy in addition to the appointment of an executive director in the Office of Career Services.
President Tilghman presented the Committee’s proposed budget to the Board of Trustees on Jan. 26.
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