It Costs How Much?

By Martha Hunter Shepard ’66


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What does it cost to be a student at Rhodes these days—really cost?

Definitely not the $200 students paid in 1925-26, the college’s first year in Memphis.

Not even this year’s advertised tuition price of $33,400.

The true cost to provide a Rhodes education is approximately $50,000 per student.

So who pays the difference between the actual cost and the tuition charge? And who pays for the financial aid that most students require?

Mostly, you. The money you give to the Annual Fund, plus income generated from the endowment, including endowed scholarships/fellowships, along with student financial assistance from the federal government (Pell grants, work-study) make it possible for Rhodes students to attend classes. All education costs are subsidized. In higher education, that’s the way it’s always worked.

In the higher education business model, our primary purpose is to invest in our product—well-educated students. In addition, Rhodes’ goal is to meet 100% of qualified students’ demonstrated financial need. We’re making progress in that area, but financial gaps for our students still exist. It’s an expensive proposition, but one to ensure the best and brightest get a shot at the best liberal arts education around.

As the Rhodes Vision states, “We aspire to graduate students with a lifelong passion for learning, a compassion for others and the ability to translate academic study and personal concern into effective leadership and action in their communities and the world.”

You can’t put a price tag on that, but you have to start somewhere.

Where the money comes from is a good place to begin.

• In 2008-09, Rhodes’ gross income budget was $76.8 million (see Income Budget chart).

• Tuition, fees, room and board accounted for $61.6 million of it.

• The allocation from the endowment fund provided $11.5 million.

• Gifts to the Annual Fund provided $2.6 million; miscellaneous income $1.1 million. Where and how the money goes is carefully appropriated. Last year, after allocating approximately $20 million for financial aid, Rhodes was left to work with $57 million of its $77 million gross operating budget (see Expense Budget chart).

The endowment and the role it plays in providing financial aid is all-important, especially in the current economic climate.

In June 2008, Rhodes’ endowment was valued at $282 million.

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In February 2009, it had dropped to $212 million.

The college ended its fiscal year in June with an endowment value of approximately $230 million, down about 18% from the previous year. That’s a significant reduction, but Rhodes fared much better than a number of institutions where losses have exceeded 30% or more.

While the endowment value is slowly on the way back up, for now, the college can’t count on it rebounding to pre-downturn levels anytime soon. According to Allen Boone ’71, Rhodes’ vice president for Finance and Business Affairs, the college is in for some belt-tightening.

“Last year’s negative investment performance will affect endowment support to the operating budget. Even if there’s an economic recovery, Rhodes will be facing fiscal pressures for at least the next three to five years,” says Boone. “That means that since endowment investment growth is subject to market conditions that are largely beyond our control, increased support for Rhodes will go far in helping close the gap.”

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Nor can Rhodes count on a full enrollment of 1,600 students and the tuition they contribute to the operating budget.

Says Boone, “The college is highly dependent on tuition for the majority of its operating income, so any volatility in enrollment magnifies the effect on operating budget revenues.”

In other words, if 25 current students are unable to return in the fall because of personal financial constraints, or if Rhodes doesn’t meet its goals for the number of entering students, the college’s proposed operating budget suffers.

The good news is that, thanks to the professional staff and the Board of Trustees, Rhodes’ finances are carefully managed:

• We balance the budget (this is the 36th year in a row we’ve done it).

• We allocate it efficiently (we look to the future, we carefully plan where every dollar goes and we stick to it).

• We run a tight ship with a smart, minimal staff (we employ a little more than half the staff comparable colleges do).

• Standard & Poor’s has assigned our underlying bond rating as A+.

• We have a considerably lower debt burden than most comparable institutions.

Rhodes has always been a good investment—now more than ever. Says Boone, “While we’re able to absorb the financial shocks now, it’ll be tight for the next few years and we are even more dependent on philanthropic support. The longer the downturn lasts, the harder the fiscal choices will be.”

It still takes a village to make it work. It always has. Throughout the college’s history, donors have helped subsidize every single alum’s Rhodes education. A great deal of it has been, and is, anonymous—do you know who gave how much to subsidize your education?

Yet when it comes to giving, many people think their individual gift doesn’t matter, that it would be too small or that the big gifts cover everything, so why bother?

The truth is, every gift—small, large or in between— matters because every gift is creative. All gifts come together to create financial aid, scholarships, faculty salaries and other critical programming. Fortunately for alumni and for today’s students, it’s the way it’s always worked.



"This is right on! I liked it when I heard it from Allen Boone at the March Alumni Board Meeting!" - William H. McLean ′57


"This is one of the best articles that I′ve seen in Rhodes Magazine. As a staff member and as an alumnus, I really appreciate that the college is giving us an understanding of where the money comes from and where it goes. It makes me feel much better about my investments in Rhodes both in terms of my choice to work here and in my giving. Thank you!" - Jay Eckles ′00




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