Higher tuition, more loans, steeper rent

Financial pressures beset students from all sides.Officials are upbeat about the University’s financial future.

F For Ashley Cvichray, a University education wasn’t worth the price.

She attended school here for the 2002-2003 school year until rising tuition costs and the learning environment caused her to transfer to a community college.

“I think I’m getting more individual attention and not paying as much,” she said.

But even though the school she now attends is less expensive, Cvichray works 38 hours every week at Big Mike’s Super Subs to earn tuition and rent money.

Cvichray’s experience represents a stark new reality for University students – one complete with higher tuition, steeper housing costs and more loans. And this new reality might be making it more difficult for poor students to attend school at the University.

For undergraduate University students, tuition has increased 43 percent since 1999. The cost of on- and off-campus housing increased more than 30 percent over the same period. Meanwhile, undergraduate students took out 27 percent more federal loan money in 2003 than in 2000, according to the Office of Student Finance.

And despite an official push to increase the scholarships available to low-income students, fewer are attending the University.

Rising rent

Tuition hikes aside, students face rising housing costs on and off campus.

The average semester’s rent for an on-campus two-bedroom apartment rose from $1,350 in 1999 to $1,793 in 2003.

Mannix Clark, associate department director of Central Housing at the University, said a large factor contributing to the rising cost of housing on campus is the cost of new buildings such as Riverbend Commons and additions to buildings such as Territorial Hall.

The University receives no tax dollars for new buildings, Clark said. All the revenue comes from students living on campus. To pay for new construction, the cost of living has to go up.

For off-campus housing, factors such as increased property values, low vacancy rates and the inability of supply to keep with demand have contributed to the increased costs for apartments in the Minneapolis-St. Paul metro area, said Chip Halbach, executive director of the Minnesota Housing Partnership.

Climbing loans

Students are also taking out more in private loans.

Aside from federal loans, University private loan dispersals have increased $1.5 million since fall 2002, said M.E.G. Paez, an administrator in the University’s Office of Student Finance.

But despite students’ increased use of federal and private loans, one University official suggests working less and borrowing more.

Student loans can be helpful if they are used appropriately, said Craig Swan, University economics professor and provost. It might make sense for some students to work less and borrow more money.

The University encourages families to support students both morally and financially, Swan said.

“If a student is careful, that sort of debt is manageable,” Swan said. “I don’t think students have to end up there, but if they do end up there it may be a personal choice.”

Not all families can help

For some students, parents can help with tuition. But for others, ever-increasing debt is the only choice.

By year’s end, Erin Gomach said she will have accumulated $8,000 to $9,000 in student-loan debt. Gomach, an art and elementary education sophomore, said her parents have also taken out loans for her, but she does not know how much.

And although mechanical engineering sophomore Scott Kassekert’s father pays his tuition bill, he said he works 27 hours a week to pay rent. Kassekert, a Coffman Union custodian, is a full-time student and plans to graduate in four years despite working long hours.

“It’s an inconvenience, but it’s still manageable,” he said.

For students without parents who can contribute to the costs of a University education, though, life might not be so manageable, and the reality of debt becomes less avoidable.

Amanda Pleskovitch, a junior studying Spanish, said she needs to work 28 hours per week to pay rent and save for her tuition bill. She said she is at least $40,000 in debt and receives no help from her parents.

“It is absolutely difficult,” she said. “Just the fact that I haven’t had any help means I probably owe a lot more than some students.”

Fewer poor students

The increasing cost of education in Minnesota might take its highest toll on students from low-income families, according to a 2003 Pell Institute study.

The study shows that while Minnesota has traditionally attracted a high number of low-income students, from 1998-2001 the percentage of low-income students attending college in Minnesota dropped 9 percentage points.

Another cause of students’ fiscal woes might be that a good share of the Minnesota population is not saving enough for college, said Phil Lewenstein, director of communications and legislative services for the Higher Education Services Office. Despite this, more families are investing in the two-year-old Minnesota College Savings Plan. The plan allows families to invest money free from federal and state income tax.

The number of families investing in the plan rose from 12,050 in 2002 to 23,904 in 2003.

Assistance for ‘U’The University has tried to alleviate the burden for low-income students by increasing available financial aid.

For example, the University increased funding for the need-based University Partnership Grant by $1.6 million this year.

The grant is generally given to students whose families make less than $40,000 per year.

“The central administration has been very favorable in giving us more money to provide to the students,” said Regina Moran, senior accountant at the Office of Student Finance.

So far, the Office of Student Finance has given $10 million to students this year, Moran said. That does not include scholarships given by specific colleges.

Moran said hundreds of scholarships are available to University students.

Worth the cost?

University President Bob Bruininks said he is concerned about the cost of education for students, but he said it is still affordable. There are many ways to fund college and still graduate on time, including federal and state grants, scholarships and campus-based work opportunities, he said.

“My message to students and to families is to keep on track,” he said. “We want our students to make progress and graduate on time.”

Bruininks said the return on students’ college investment is high and pays “rich dividends throughout their lifetime.”

Those dividends include higher employment rates, higher salaries and more promotions, according to a 2002 Occupational Outlook Quarterly study.

While students with a high school diploma had a 3.5 percent unemployment rate in 2000, 1.8 percent of students with bachelor’s degrees were unemployed.

Similarly, students with bachelor’s degrees made $327 more per week than those with a high school diploma. The salary for those with a doctorate was $707 per week more than people with a high school diploma.

A University vice president said he knows firsthand about the effect of the school’s historic budget cuts.

“Since I started out here in 1992, they’ve combined three different positions Ö into one job, namely me,” said Richard Pfutzenreuter, associate vice president for the Office of Budget and Finance.

“If this strike happens, I may have to take on a fourth job picking up trash or serving food,” he said.

But Pfutzenreuter’s quip is no laughing matter for those at the University who face the largest state-mandated higher education funding cut in the nation.

And while the cuts have certain University workers considering a strike, some University finance officials paint a much rosier picture of the school’s long-term fiscal future.

For instance, the University of Minnesota Foundation’s recent Campaign Minnesota fund-raising drive increased its coffers by $1.66 billion, said Martha Douglas, the foundation’s communications director.

But Marvin Marshak, who presented the University’s funding requests to the governor as vice president for academic affairs from 1996-1997, said the University’s financial future remains bleak.

“They’ve had to raise tuition, freeze wages, raise the cost of benefits for employees, reorganized the extension services, and that helped with the shortfall,” said Marshak, a physics professor and member of the University Senate’s Faculty Consultative Committee. “The state made up the rest with the tobacco endowment, but we can’t do that again.”

Despite the unprecedented $195 million setback for the Twin Cities campus, the University’s overall state appropriations for 2002 were up 2.1 percent from 2001, with a total of $643.7 million allocated.

“Some cuts are going to eventually become recurrent or permanent, so we’re using reserves and hoping things look better in the future,” Marshak said.

Finding out the true state of the University’s pocketbook, it turns out, depends on who one asks.

Moody’s Investor Service and Standard & Poor’s, two highly respected financial analyst firms, both gave the University high marks for its credit ratings in reports issued in May.

Gifts and donations

Although all University gifts and endowments go through the foundation, Douglas describes its role in the University’s budget as “a very small segment of the pie overall.”

Douglas estimated that 98 percent of the donations it receives are tied to specific projects and cannot pay for “basic day-to-day things like the light bill or insurance.”

Harvey Berneking gave $5 million to the University this February and Laurence Pilgeram donated $1.9 million in August, but both of those contributions were tied to specific areas: the music school and biology departments, respectively.

“Private giving is not the solution to the University’s budget problems,” Douglas said.

One billion dollars of the $1.66 billion was acquired in the last three years, during what some experts consider to be the absolute worst stock market conditions since the Great Depression.

Stuart Mason, associate vice president for the University’s Office of Asset Management, handles the school’s investment portfolio, which typically runs more than $1 billion at any given time.

Mason said his nine-person office handles four separate pools of money: $550 million for the endowments, a cash reserve of $500 million, $25 million for the insurance plan and $45 million in long-term reserves that belong to various departments.

“Overall, we are still very healthy,” Mason said.

Gerald Fischer, president and CEO of the University of Minnesota Foundation, said the foundation’s financial strategies now focus more heavily on what he termed “alternative” investments – everything from real estate to venture capital to the timber industry.

Peter Zetterberg, director of the University’s Institutional Research and Reporting, is responsible for helping draft the undergraduate tuition plans.

“I’m not sure percentage-wise if the hit we took was worse than larger schools like California, New York or Wisconsin,” Zetterberg said. “This isn’t really all that abnormal, as it’s been like this consistently other places as well.”

Marshak said, “There has to be more bad news and more pain-sharing coming unless a miracle happens, and I’d find that rather hard to believe at this point.”

“Everyone resists change and is an optimist, but my own feeling is that things won’t turn around so fast,” Marshak said.

Pfutzenreuter disagreed.

“The ‘U’ is, in general, in great financial shape,” Pfutzenreuter said. “We want to hold on to as many of our employees as we possibly can Ö none of us want to see any one else laid off.”

The University has made minimal strides in increasing the number of female faculty in the last 10 years, according to a 2003 report by the Office of Institutional Research and Reporting.

The report showed 28 percent of University faculty were women in the 2002-2003 school year – up 4 percent from 1992.

In addition, the 30 highest-paid University faculty members are also men, according to data from University archives.

Some female professors said the problem might be more a matter of society’s attitudes than a problem with the University’s hiring practices.

“It’s hard to increase the numbers of women faculty because of culture,” said Karlyn Campbell, a communication studies professor.

Because women are still considered primary caretakers for children, they often have difficulty balancing career and family, she said.

“Success in academia means lots of time devoted to research and writing,” Campbell said, adding that many women are unable to make the commitment.

She said resistance to women in high-paid leadership positions and stereotypes of men as better leaders might also play a role in keeping women out of high-ranking jobs.

But the University overall, Campbell said, is dedicated to improving opportunities for female faculty members.

However, Tina Jackson, coordinator for multicultural and academic affairs at the University, said women in the workforce still face real challenges.

“The glass ceiling does still exist, especially for women of color and, of course, for women in general,” Jackson said.

Many women also underestimate the importance of networking, which can hurt their career options, Jackson said.

“Some of the main obstacles are really just building the right connections within the community of faculty,” Jackson said.

She said female faculty members often get burned out because they are expected to be board members on councils dealing with women’s issues.

Robert Jones, vice president for faculty and academic programs, said the pay gap might exist because many male faculty members have been at the University longer.

“You get into comparing apples and oranges when you look at who’s in the top 10 percent,” Jones said.

He said salaries for men and women – as well as blacks and whites – are even when compared by positions and length of time at the University.

Despite the current numbers, Jackson said she is optimistic about women’s chances in the University.

“We know that at least 50 percent of students at the University are women, and that has led to more opportunities for women at this campus,” she said.

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