“CPI + 1”

It has been a while since I posted, but my silence was not because there was little about which to communicate; just the opposite.  Much has gone on since my last post, including another great Winter Term (highlights to come), the start of the “spring” semester, the trustees’ annual February meeting, Winter Carnival, which coincided with the Vancouver Olympics, where Middlebury alumni excelled and garnered silver, and great athletics performances by our winter sports teams.

Though I hope to write on a number of these happenings over the next few weeks, the one issue that has generated more e-mail and telephone traffic to my desk was my proposal to limit comprehensive fee increases at the College to “CPI + 1,” which means increases of up to 1 percentage point above the consumer price index as reported each December prior to the next academic year (so that next year’s comprehensive fee would be based on the December 2009 CPI).  The proposal was part of an address I gave on campus on February 12.

Quite frankly, I am surprised this proposal has generated such publicity; I have received many, many e-mails and interview requests, and both Inside Higher Education and the New York Times’ “The Choice education blog have covered the proposal.  For those not familiar with the issue, or the trend in comprehensive fee increases during the past few decades, here is the context: last year our comprehensive fee increase was 3.2 percent above the previous year.  That increase represented the lowest increase in 37 years.  The increase came following a year (as measured in December of 2008) in which the consumer price index increased +0.1%, or was almost flat.  Thus, our comprehensive fee increase was 3.1 percentage points, or 310 “basis points” above the CPI.  What I am proposing is that we set our comprehensive fee increase to be within 100 basis points of the most recent CPI, which, given the CPI of 2.7% measured this past December, would mean our comprehensive fee for next year would have a ceiling of 3.7%.  Or, had we decided to do “CPI + 1” last year, the comprehensive fee would have increased up to 1.1% and not the 3.2% it did.

How much of a change would CPI + 1 be for us going forward?  During the past 18 years, Middlebury raised its comprehensive by more than 100 basis points (or greater than 1 percentage point above the CPI) 14 times, and the mean annual increase over the 18-year period was 2.36 percentage points, or 236 basis points, above the CPI.

The purpose of restricting our fee increases relative to the CPI beginning this year is in recognition that the price to attend Middlebury has grown far faster than inflation, and such increases cannot continue without a negative impact on the institution.  Although the demand for a Middlebury education is stronger than ever (we received a record number of applications this past year—just shy of 8,000), one has to wonder how much families will be willing to pay for a four-year education, and how many excellent would-be applicants have already decided, or will soon decide, not to apply due to the escalating price.

Critics of this “CPI + 1” approach argue that the demand for an elite, private liberal arts education is less elastic, or more inelastic, than I may think.  They also note that all students already receive a $30,000 scholarship to attend colleges like Middlebury (since the true “cost” of educating each student is closer to $80,000/year with the endowment and annual gifts funding the difference), and that many families are willing to accept the high annual increases that have been the norm for a better part of 35 years.  Finally, some also argue that we will put ourselves (unnecessarily) in a disadvantageous position vis-à-vis peer institutions because they will charge more and therefore have greater annual resources with which to enrich their students’ experiences.  I believe it is time to limit our fee increases and force ourselves to make more thoughtful and consequential decisions regarding the resources available to us.  I am curious to hear your thoughts.


I’ve been very surprised at the lack of comments in response to this post. So, under the theory that seems to operate at gas stations – once one appears, others arrive, I offer the following.

In brief, I think it’s a great idea.

If I were a parent/guardian of an enrolled or prospective student, I would take comfort knowing there is a very reasonable limit on how much the comprehensive fee might increase over the years that my student is (or could be) enrolled and that the administration would be expending the funds I am (or could be) funneling in their direction with restraint and, we hope, wisdom.

In contrast to those who think we could be at a disadvantage with respect to our peer/rival colleges, I think it’s far more likely that others will choose to, or be forced to, undertake similar measures.

Thank you for posting about this and asking for our thoughts.


Pres. Liebowitz,

Purely out of curiosity, I was wondering to what degree federal financial aid policy played into this “CPI + 1” policy decision. I read the following (in a particularly acerbic) Wall Street Journal op-ed:

“Both the House-passed bill and the President’s budget increase Pell Grants and also create automatic future increases, so individual grants will grow faster than inflation every year. Colleges will pocket the money by raising tuition, so we have yet another federal program ensuring that higher education costs continue to rise even faster than health-care spending.”


I suppose this could mean that our inflation-adjusted financial aid needs would stay flat, as federal policy has built-in reimbursement increases, but perhaps I’m missing something. At any rate, I applaud the willingness to curb higher ed inflation. I’m slightly concerned about competitive disadvantages of unilaterally defecting from what has become the standard financing model for higher ed, but I think that if Middlebury focuses on our truly core missions–our liberal arts teaching quality–and trims the fat elsewhere, the growing pains could be minimal.

Ronald Liebowitz

Ronald Liebowitz’s avatar

Excellent question and point, Jeff.

First, federal fin aid policy, while important to all the changes we are seeing and will see over time regarding tuition increases, access, and affordability to higher ed institutions, it was not central to my thinking. What has driven our move–and yes, we may be, right now, alone in doing things with regard to minimizing increases in comp fees — was more simple: we have been, and I believe will be, dangerously pricing too many good prospective students who are neither very needy or very wealthy from applying to Middlebury. One can always claim that fin aid will go up more than CPI + 1 to “cover” the high increases and therefore say “everyone is covered by the increases” since the percentage of students on aid is about 45% of our student body, but one has not addressed the very high increases in comp fee for more than half the student body. That is, what about the other 55% of the student body and their families who do not receive aid, plus what about future students? More and more potential applicants will turn away from places like Middlebury, despite the record applications, and despite the prestige of attending a NESCAC (or even Ivy) institution.

If we plan right, focusing on our core mission and programs, if endowment and gift performances each year better our new conservative projections in our financial model (5% on endowment return, more realistic gift projections), and if we are smart about taking advantage of our leadership in particular areas of the curriculum (languages and culture, environmental sciences/studies, and international studies) to provide additional resources to the College, we can lower comp fees to CPI + 1% point, and not place us at a disadvantage or lose a cohort of applicants (middle class) who have so much to offer places like Middlebury.

I may be wrong, but I believe other private schools will follow our lead, but even if they do not, I still believe we are doing the right thing by at least starting to address a major issue that needed to be addressed in higher ed for some time.

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