NYU is a national leader in terms of attracting and graduating low-income students through our “need blind” admissions policy. In academic year 2015-16, nearly one in four (23 percent) of incoming freshman was eligible for a federal Pell Grant and 41 percent were eligible for the NYS Tuition Assistance Program (TAP). NYU has the highest percentage of incoming freshman that are eligible for a Pell Grant among independent college members of the prestigious Association of American Universities (AAU). This success in providing access to those with significant financial aids reflect NYU policies, including waiving application fees for low-income applicants, tasking staff members to identify and assist low-income families in navigating the admissions process, and improvements to financial aid (over the past five years , the average NYU grant to Pell students has gone from covering 55 percent of tuition and fees to 82 percent of tuition and fees). NYU is also committed to providing access to underrepresented groups; for example, in partnership with New York State, the University hosts the largest Higher Education Opportunity Program (HEOP) in the State, as well as one of the largest Collegiate Science and Technology Entry Programs (CSTEP).
Even with NYU’s recent success in allocating increasing amounts of funds for student aid, given our modest per-student endowment compared to peer institutions, we are not able to fully meet the financial needs of many of our students. That is why scholarship aid is our foremost fundraising priority : we are currently embarked on the NYU Momentum Campaign, dedicated to raising $1 billion by 2017 for scholarship aid. To date, the campaign has raised $550 million, and we are well on our way to reaching the goal.
These efforts are important not only to making NYU a reality for many students but to helping them succeed. At NYU, 77 percent of students graduate within four years, 84 percent within five years and 85 percent within six years. Beyond graduation rates, the value of an NYU degree in terms of future employment, income levels and the ability to prepare students for advanced study is exceedingly strong. NYU graduates are doing exceptionally well with 95.4 percent of the Class of 2015 reported being employed full-time or enrolled in graduate/professional school within six months of graduation.
Endowment’s True Impact
While NYU’s endowment, currently valued at approximately $3.5 billion (as of June 2016) may seem robust, the impact of a university’s endowment should be viewed principally not in terms of their overall value but instead in terms of the number of full-time equivalent (FTE) students attending an institution – that is, the per student endowment. Just as the economic well being of a nation is often best understood through the lens of per capita income, so, too, should universities’ endowments be evaluated in this manner. It is the most meaningful way to measure the ability of an institution to use endowment funds for aid purposes. Ranking institutions by the aggregated value of the endowment dollar levels without regard to the number of students being served (FTEs) does not provide a meaningful picture of the financial resources a university’s can bring to bear to offer aid to low and middle income students.
According to the recent endowment study conducted by the National Association of College and University Business Officers (NACUBO), the NYU’s endowment size ranks 24th out of the 761 institutions surveyed in terms of total value. The endowment per FTE student (at, $83,182), places NYU 189th out of the 761 institutions surveyed. Of the 28 independent institutions that have a total endowment valued at more than $2 billion, NYU’s endowment ranks the lowest in terms of FTE per student by a significant margin. If you exclude the three lowest ranking institutions, all of the other 25 institutions have endowments of at least $200,000 per FTE. In short, the size of the student body is critical ly relevant in determining the wealth and ability of an institution to use endowment funds for student aid purposes.
A common misconception is that an endowment is a checking account that can be used by a university however and whenever it chooses. In fact, major university endowments are not a single fund; they are actually a collection of numerous – sometimes thousands – of individual funds, oftentimes donated for a specific and restricted purpose. Donors frequently require that the purchasing power of their gift be preserved through careful management so future generations, as well as today’s students, can benefit from the original gift. In terms of NYU’s endowment, approximately 63 percent of the funds are restricted in some form.
A fundamental reason most universities, like NYU, seek to build their endowment is to enable them to expand their public service mission of educating and increasing accessibility for students regardless of family income. The data makes the point: universities with larger endowments per student are able to offer larger institutional scholarship packages to students and families. Universities with large per student endowments are able to offer generous aid not just to those with low incomes, but also to those in middle and high-income brackets, too.
Administrative and Operating Costs, Factors that Drive Tuition Increases and Efforts to Make College More Affordable
NYU is far more tuition dependent than its peer institutions – over 60 percent of the $3 billion annual expenses at our Washington Square Campus comes from tuition income, while approximately four percent comes from endowment income. In addition, it is estimated that NYU spends approximately $30,327 to educate students on a full-time equivalent basis (what is known as “instructional FTE”). This figure does not include a number of important elements of an NYU education, including academic resources (e.g. libraries, the academic support center, study abroad operations), student support services (e.g. student health center, career and internship services, community service programs) and University operations (e.g. public safety, maintenance of university buildings and facilities).
The single largest expense for NYU and other top tier research institutions is attracting and compensating talented faculty and researchers. Whereas in the business sector, savings can often be achieved through reductions in labor or through new technology, replicating such productivity savings is much more difficult in higher education. These types of savings often conflict with what universities are trying to achieve academically: smaller classes, improved faculty-to-student ratios, and the resulting educational excellence.
Another primary cost driver for NYU is being located in New York City where real estate is expensive and construction costs are high, as well as higher prices for goods and services. In addition, the city’s comparatively older building stock -- and many of NYU’s own buildings date back to the early 20th century – bring added costs for renovation and maintenance as well as mandates for regular, intensive façade inspections. All of these factors drive costs not faced by other universities. Because it is a personnel- intensive sector, institutions of higher learning also face cost drivers from increased health care and other employee benefits. Increased federal, state and municipal regulatory and reporting requirements contribute directly to increased staff and administrative costs.
NYU takes seriously the issue of rising college costs and its impact on students and families. In addition to the expansion of scholarship aid, we know we must devise long-term strategies to alter the trajectory of college costs at NYU. In February of this year, NYU announced the smallest increase in year-to-year cost-of-attendance in 20 years – 2.0 percent. This has achieved by moderating tuition increase, freezing room and board at this year’s rate, freezing NYU registration and service fees and increasing our stock of lower-cost dorm rooms by 50 percent. Additionally, in March the University announced that Federal Work Study recipients and other wages for student workers would increase to $15/hour over the next three years. These efforts are in addition to a re-engineering process the University conducted between 2007 and 2011 to reduce its administrative operational budget by over $65 million.
Making a difference in the trajectory of college costs at NYU will continue to be a priority in the coming years. For this reason, NYU has established an Affordability Steering Committee that has been tasked to examine a wide range of policies that could be implemented to reduce the cost of attendance while maintaining critical research and teaching missions.
Thank you for the opportunity to discuss NYU’s institutional efforts to provide access to a higher education regardless of family income or background.
Lynne P. Brown