LAST WEEK, George Washington University became the first school in the country to charge undergraduates more than $50,000 a year.
The university, which is in Washington, will charge about $39,000 in tuition plus another $11,000 in mandatory fees (including housing), making it the most expensive in the country -- but not by much and not for long. About a year ago, several other private schools pushed their costs above the U.S. median household income, now $46,326. With fee increases consistently exceeding inflation, many more schools can be expected to join the $50,000 club long before this year's freshman class graduates.
Overall, tuition and fees at four-year institutions increased 35% over five years (and that's after being adjusted for inflation), according to the College Board.
What's more, many prestigious schools are raising prices at a time when they have more money than ever. The same day George Washington announced its tuition hikes, for instance, the school also boasted that its endowment for the first time had surpassed $1 billion.
So why are they doing it? Don't expect an easy answer from those whose presumptive mission is to tackle society's toughest problems.
University officials claim they need every penny they have just to get by. Tuition and fees, they'll tell you, cover only about two-thirds of what it costs one of our leading private institutions to educate a student. The rest of that cost is covered by the university's endowment, annual gifts and other outside sources.
Schools contend that their expenses mandate steep tuition hikes. Not only do they face typical expenses such as rising employee healthcare and benefits costs, but they must invest heavily in state-of-the-art facilities (gyms, libraries, museums and the like) to lure and retain first-rate faculty and students and to support their ambitious academic pursuits.
The rising fees are misleading. In fact, the pricing scheme at the nation's most elite schools actually resembles that of a car dealership: Most people don't pay the sticker price, discounts abound and more and more customers borrow heavily to make their payments.
At George Washington, for instance, fewer than half of undergraduates pay full price. About 40% of students there receive need-based aid. They are from the vast majority of American families that simply cannot afford to pay close to $50,000 a year.
