Best Values in Private Colleges -- 2009

A year ago, private colleges were struggling to navigate rough economic waters. Then they headed into the hurricane. Endowments plunged along with the stock market. Families whose savings had sunk or whose home equity had disappeared began rethinking plans to send their kids to private schools.

Students who did apply to private institutions, or who hoped to return, asked for financial aid in greater numbers and requested larger amounts. With resources tight for both parents and colleges, says Barmak Nassirian, of the American Association of Collegiate Registrars and Admissions Officers, “it was a very scary time all around.”

But here’s the surprise: In many cases, students who applied to college for the 2009-10 academic year actually received more financial help than the previous year’s applicants. Independent colleges boosted financial aid by 9% while keeping tuition increases -- an average of 4.3% -- to their lowest levels in four decades (increasing the average cost of a year at a private school to about $35,600). Some schools, worried about competition from public schools, accepted more applicants. And many vigorously pruned expenses. Result? Families found that private college was still affordable, and enrollments generally held steady. Says David Warren, president of the National Association of Independent Colleges and Universities: “What we’re seeing is a well-weathered storm.”

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To find schools that have weathered the storm especially well, look to Kiplinger’s 100 best values in private colleges and universities for 2009-10. These institutions, led by Pomona College among liberal-arts colleges and the California Institute of Technology among universities, provide a top-quality education at an affordable price -- usually because of generous financial aid.

Think you earn too much to qualify for financial aid? You might be pleasantly surprised. In recent years, most top-tier colleges and universities have extended financial aid almost exclusively to students with need. A few of the top 20 institutions in our rankings, however, bestow merit money to a significant percentage of students. Davidson (read more about it), Whitman and Grinnell on the liberal-arts side, and Rice, Stanford, Emory, Vanderbilt and the University of Richmond on the list of universities, offer scholarships to at least 20% of their undergraduates. Grinnell awards aid to an impressive 61%.

Delivering real value

Kiplinger’s definition of value starts with academic quality. Each year, we choose schools that are competitive enough to attract bright students and strong enough to keep them. Unlike other rankings, our rankings use numeric, not subjective, measures to determine quality. (For more on how we crunch the numbers, see How We Rank the Schools.)

True to our personal-finance focus, we also look at costs, including the price of attending the institution and its generosity when it comes to financial aid. Strange as it may seem to call a school that charges, say, $50,000 a year a good value, many of our top-ranked institutions give enough aid -- often in the form of grants -- to bring the average price to as little as half or less of the sticker price. Because liberal-arts colleges concentrate on undergraduates and universities extend their mission to graduate students, we separate our top 100 into two lists, but we apply the same academic and financial criteria to both categories.

This year’s top 100 private colleges and universities met the challenges of a slumping economy with brio, delivering quality, generous financial aid and, in a few cases, sticker prices that are almost as low as out-of-state tuition at some public institutions. Caltech, in Pasadena, which heads the list of private universities for the fourth time running, and Pomona, in Claremont, Cal., which leads the liberal-arts list for the second consecutive year, may be the past and current crown jewels, but gems appear throughout our rankings.

On the liberal-arts side, Swarthmore, outside of Philadelphia, edges out Williams, in Williamstown, Mass., for the number-two spot, in part because of the significant merit aid it awards to a few students. Both schools attract outstanding students and offer enough need-based aid to make them affordable to families with limited resources.

Princeton, Harvard and Yale, on the universities side, also offer ample need-based aid and have stretched the definition of need to include families with higher incomes. At Yale, where total costs run $48,450 per year, families pay an average of 10% of their income.

Some schools in our rankings simply offer a good education at a good price. Wheaton, Wofford, College of St. Benedict, Hillsdale, Knox and Thomas Aquinas, on the liberal-arts list, manage to keep total costs below $40,000. On the universities side, Elon, Creighton, Whitworth, Bradley, the University of Tulsa and Gonzaga also have sticker prices under $40,000. College of St. Benedict, in St. Joseph, Minn., and Bradley University, in Peoria, Ill., are both new to the top 100.

Cutting costs, not quality

Like many schools, Pomona has coped with reduced endowment revenue (down 22% from June 2008 to June 2009) and greater financial need by cutting expenses on everything except academics. The college froze salaries across the board, offered voluntary retirement packages to nonacademic employees and cut back on nonessentials, such as catering for administration events. As a member of the five-college Claremont consortium, Pomona is able to save money by sharing resources, including professors, across campuses.

Despite all these cutbacks, Pomona provides its students with a top-quality education in a setting that snowbound Ivy Leaguers can only dream of. This small school, with some 1,500 students, faces the stunning San Gabriel Mountains and basks in the Southern California sun. Almost all of its freshmen return for sophomore year, a sure sign of happy campers, and 90% of its seniors graduate on time, sparing their parents the expense of a fifth year. As for financial aid, if you need it, you get it. The average financial-aid package brings the $50,568 sticker price down to a modest $16,454.

About 25 miles west of Pomona College, students at Caltech enjoy an equally sun-saturated setting, along with the ultimate in academic nurturing: a student-faculty ratio of three to one, the lowest ratio on either list. Here, 100% of incoming freshmen score more than 700 on the math section of the SAT. Thanks to small classes and a compact campus, these left-brainers have plenty of opportunity to soak up each other’s smarts as well as the wisdom of an elite faculty that includes five Nobel-prize winners.

But it doesn’t take a math whiz to figure out that Caltech provides a great deal as well as great academics. It charges a relatively low sticker price of $46,629, and it knocks more than half off, on average, for students who qualify for need-based aid. It also offers merit scholarships, although those awards are being phased out, says Caltech president Jean-Lou Chameau. Students graduate with an average debt of $9,871, the second-lowest on our universities list. (Princeton leads in that category: Its students walk away with an average debt of less than $6,000.)

Caltech’s endowment did not emerge from the recession unscathed, but the hit could have been worse: It lost about 20% over the 12 months that ended in September, compared with Harvard’s 27.3% haircut and Yale’s 24.6% drop (as of June 30). The school responded to the downturn by cutting administrative costs and postponing long-term projects, but it continued to hire faculty and maintain financial aid. Last spring, applicants enthusiastically responded to Caltech’s efforts, accepting admission in record numbers. Chameau says the school has no problem squeezing in a few more students. “We will accommodate them, and they will be happy here.”

A mixed outlook

How will next year’s college applicants fare? Prospects are mixed. Tuition increases should remain in the 4.3% range, says Warren, making the average annual total cost of a private-college education a little more than $37,000 in 2010Ð11. That’s a smaller bump than the 6% increase of recent years. But the amount itself is hardly peanuts, especially compared with the $14,500 average total cost at a public school. Many private colleges already charge more than $50,000 per year.

Meanwhile, colleges that had recently expanded their financial aid, including replacing loans with grants, must now do so with vastly diminished endowments -- the well from which much of the aid is drawn. So far, top-tier schools have stood by their commitment. But some schools are quietly adjusting their admissions policies to weed out more-needy students, says David Oxtoby, president of Pomona. He hopes to continue Pomona’s no-loan policy, introduced in 2007, but won’t guarantee it. “We can’t commit to never pulling back.”