May 12, 2008
Dear Bowdoin Parents and Families,
During their campus meetings last weekend, the Board of Trustees approved the College's budget, including tuition and fees for the 2008-09 academic year. The administration and the Financial Planning Committee presented another balanced budget, with total projected operating expenses of $140.2 million including financial aid. Our comprehensive fee for next year will be $48,570, an increase of five percent over the current year. The costs of attendance at Bowdoin for 2008-09 are as follows:
|Student Activity Fee:||$ 400|
We pay close attention to the budget, developing our annual recommendations over months of internal discussions, review of spending requests, and meetings with Trustees. We take seriously our responsibility to provide a first-rate education while controlling costs in every way possible. I am satisfied that we have made the best use of our resources and again stretched our operating dollars to improve the College for new and returning students.
Bowdoin is fundamentally about engaging students of uncommon promise in an intense, full-time education. Our excellence is all about people, and the scale and intimacy of the College are both a source of our distinction and the driver of many of our costs. More than 60 percent of our budget goes to salaries and benefits for the outstanding faculty, lab assistants, staff, coaches, counselors, food service workers, facilities staff, and other people who make Bowdoin the special place that it is. We sustain a talented faculty, a student-teacher ratio of 9.7 to 1, and opportunities that are not available in other college or university settings. We focus our budget on those priorities, and we attempt to manage all of the other categories of expense in a responsible way.
As in the past, a significant portion of our operating revenue is from sources other than tuition and fees. The endowment, which had a value of $827.7 million on June 30, 2007, is well managed, growing at a rate that is in the top tier of all colleges and universities. Our five-year annualized return of 16.5 percent is well above the mean return of 11.1 percent of our peer colleges, and the distribution from endowment to operations ($32.59 million for next year) is our second-largest source of revenue. This represents 5 percent of the twelve quarter lagging average of our endowment - a formula we utilize to prudently account for ups and downs in the economy. The generous gifts of alumni, parents, and friends also provide significant operating support of more than $7.5 million each year. Our continued success on these two fronts - in building the endowment through gifts and good management, and in securing annual contributions - is essential to our financial model and to sustaining and strengthening Bowdoin programs into the future. Without our non-tuition revenue sources, our fee would approach $83,000 per student.
In most respects, the budget for next year is remarkably similar to previous Bowdoin budgets, reflecting our confidence, momentum, financial health, and strong liberal arts traditions. However, we made one change that is the most significant new operating expense in the seven years since I returned to Bowdoin as president, and I want to review that decision and discuss what it means to the College. And, as forecasters predict $4.00 per gallon prices at the gas pump for this summer, I'd like to provide a brief report on Bowdoin's efforts at energy conservation and sustainability.
The Elimination of Loans
In January 2008 we announced that Bowdoin will eliminate loans for all new and current students receiving financial aid, replacing those loans with grants beginning with the 2008-09 academic year. As of the date of this letter, Bowdoin remains one of only three colleges with endowments of less than $1 billion to eliminate loans for both new first-year and current students.
Given our resources, the percentage of Bowdoin students who receive aid, the size of the aid packages we provide, our commitment to "need-blind" admissions, and our pledge to meet the full demonstrated need of students for all four years, it was and is an ambitious effort for the College. Given our circumstances, I am very proud of our campus team both for the strong consensus that Bowdoin should take this action, and for all of the analysis that brought us to the point of understanding that we could afford it. We received the unanimous support of the Board of Trustees in a special January session held to discuss this issue, and the alumni and community reaction to our announcement has been incredibly supportive. Typical are these messages from a Class of 1962 graduate: Wonderful news! I am proud to be a Bowdoin alumnus; and the following from the mother of a 2006 graduate who wrote: Thank you for making a Bowdoin education available to more qualified students regardless of their ability to pay. Congratulations on stepping up to the plate on this important issue.
The elimination of loans will cost the College $2.7 million in the 2008-09 budget year - equal to the spendable income we would earn on $54 million in endowment. We have found ways to cover this significant new expense in the short term; in the long run, I am committed to persuading alumni and other donors of the need to build our financial aid endowments to support the no-loan policy.
The Shifting Landscape
Bowdoin is committed to enrolling the most talented and promising students, regardless of their ability to pay. The Commonwealth of Massachusetts provided the College's first scholarships in 1814, when a year at Bowdoin cost less than twenty-five dollars. We now have hundreds of scholarship funds and will provide more than $22 million in grant aid next year to 40 percent of the student body.
Financial aid has changed lives - including mine - and has made Bowdoin a stronger institution, as we have become one of the most socioeconomically diverse colleges in the nation. We have kept our strong commitment to Maine students as the College has enrolled more young men and women from around the nation and the world. We are proud of our progress and the ways in which we provide access to a Bowdoin education. But today, we face a new reality as the cost of higher education makes it increasingly difficult for students and their families to afford a college like Bowdoin, even with our financial support.
There have always been subtle differences in how colleges used their financial aid dollars, but this past summer the financial aid landscape began to shift dramatically. Nearly six years after Princeton announced that it would eliminate student loans, Harvard rolled out its own "no loan" policy combined with significantly reduced family contributions towards tuition for those earning up to $180,000 per year. Throughout the fall and early winter, Amherst, Williams, Pomona, Swarthmore, Haverford, and a number of other schools announced modifications to their financial aid programs, eliminating or reducing loans for their students on aid. During that period, we at Bowdoin were closely examining our own policies, financial projections, and aid formulas, seeking a way to address increasing college costs and greater need among our students and their families. As the fall semester came to a close, we were having intense conversations about several options.
The loan burden for Bowdoin students had become a real issue. Under our recent policies, the average student in the Class of 2011 receiving financial aid at Bowdoin would have a debt of approximately $21,000 at graduation. Our first-year loans were among the highest in a group of ten schools with which we compete. The vast majority of our students go on to pursue graduate or professional study after Bowdoin, often taking additional loans in much larger amounts to complete their further degrees.
We began to accumulate anecdotal evidence that students might be making career or education choices not on the basis of their talent, interests, and promise in a particular field, but rather on their capacity to repay student loans from their undergraduate years. As a college devoted to the common good, we had to seriously consider the fairness of that result, particularly since many of our students find their path in vital but often lower-paying fields such as teaching, social work, or non-profit organizations. Among the reactions to our announcement was this one from a woman who graduated in 1979: Fabulous! As a Bowdoin alum who depended greatly on financial aid to graduate from Bowdoin and, with law school loans, carried a huge debt well into my 30s, I can appreciate the significance of this decision. I shall increase my giving to help shoulder the impact of the 'no loan' policy. Bravo!
The Future Landscape
Many students, families, and alumni have celebrated our announcement, and many have since asked what impact the announcement has had and what the next changes in financial aid might be. It is too soon to answer either question, but I worry about a couple of possibilities affecting students and families.
One worry is that fewer low-income students will be admitted at some colleges as these institutions struggle to compete in the no-loan world. "College X" might juggle its resources to provide no-loan packages by reducing the overall number of students on aid. "College Y" could stretch to compete in the no-loan arena, sustaining its financial aid program but reducing its other offerings as they try to manage limited resources. Schools that can no longer offer competitive aid packages may simply reduce their commitments to poorer students in favor of what higher education calls "full pay" men and women.
At Bowdoin, we specifically addressed the potential reduction of opportunity in our discussions of a no-loan policy. With approximately 12 percent of our students currently receiving Pell grants, Bowdoin is considered to be among the most economically diverse liberal arts colleges. Eliminating loans is expensive, but the Trustees agree that we will not fund that step by reducing our commitment to educate men and women from the poorest segments of our society.
Rising energy costs are a difficult issue for each of us in our personal lives, and it is a very challenging issue for a college in Maine, both with respect to the annual budget and in terms of meeting our commitment to a healthy planet.
On Earth Day 2008 Bowdoin launched its new sustainability Web site at www.bowdoin.edu/sustainability/. I encourage you to visit the site to learn more about what Bowdoin is doing - with the significant involvement and encouragement of our students - to limit energy consumption and contribute to a healthier planet. Our primary focus has been to switch to lower carbon fuels and to increase energy efficiency; in the past six years, we have achieved a 40 percent reduction in CO2 emissions and managed to limit our increases in electricity and thermal energy usage to about 16 percent. We first switched from #6 to #2 heating oil in 2003-04, then developed dual-fuel capability and began to rely more heavily on natural gas in the past two years. These steps, along with our purchasing strategies, have allowed the College to limit annual utility budget increases to five percent.
Under the terms of the American College and University Presidents Climate Commitment, which I signed last year, we are committed to reducing sharply and eventually eliminating all of Bowdoin's global warming emissions. Being a twenty-first-century college means developing a practical, as well as a principled, approach to sustainability. Therefore, students drive much of the day-to-day activities on campus. Our Sustainable Bowdoin office is staffed with sixteen students and thirty volunteers who help coordinate a wide variety of campus initiatives. Students also delve deeply into real-world challenges through service learning courses, which channel learning into projects benefiting specific organizations in Maine. More than eight-hundred students have taken part in service learning since 2000, helping community partners including The Nature Conservancy, Maine Green Power Connection, Morris Farm, Maine State Planning Office, and Maine Rivers.
As you may know, the College has developed geothermal heating and cooling for several new and renovated buildings over the past five years. Our newest construction effort, the Watson Arena, is on track for a January 2009 opening and we expect to achieve Leadership in Energy and Environmental Design (LEED) certification for the rink - one of only a handful of LEED-certified hockey rinks in the country.
Our energy initiatives will continue in a number of other areas: greater use of hybrid vehicles in the College's fleet; replacement of all incandescent bulbs in forty-eight buildings on campus; offsetting electricity purchases with renewable energy certificates (RECs) from Maine hydro and wind power facilities; investigation of solar panels in certain facilities on campus; and new recycling efforts for major College weekends such as Reunion and Commencement.
The core values of Bowdoin College have endured for more than two-hundred years: a strong academic program in the liberal arts; a fantastic, world-class faculty that places great emphasis on both teaching and research; students from a broad range of backgrounds blessed with talent, eager to learn and determined to contribute; and a residential experience that fosters lasting friendships, teaches principled leadership, and underscores the value of service to the common good. I am proud of where we are as a College, and I believe strongly in the budgetary and program choices we have made to improve Bowdoin for current students.
Thank you for your confidence in Bowdoin, and best wishes for a wonderful summer.