George Washington’s “Tuition Slowdown”

There’s apparently a limit on how much money some colleges can raise in tuition.

George Washington University is approaching that limit. As I pointed out in my piece about the school in 2010, the institution is heavily dependent on tuition. George Washington covers nearly 80 percent of annual expenses with tuition revenue. Furthermore, it’s long been in the habit of funding more projects by simply enrolling more students.

But it’s reaching the end of that project. According to an article by Chelsea Radler in the school’s student newspaper, The Hatchet:

The University anticipates a plateau in tuition revenue, a shift that contributed to its decision last month to double its cash reserves.

As enrollment inches closer to the city-imposed population cap, the student body’s growth rate is stabilizing, stifling long-term growth in tuition revenue. The anticipated slowdown led partially to the University taking on more cash, Senior Vice President for Student and Academic Support Services Robert Chernak said.

The cap has an important role in how the university operates. According to the article, there were a total 16,394 students last fall. That’s just 159 students short of the city-imposed cap.

That’s potentially interesting because the institution has been a leader in some innovative strategies. One of those strategies was to increase tuition (GW has increased tuition 3 percent annually since 2007). But tuition increases are not unlimited, and this increase, which affects total revenue, is impacted by the school’s total enrollment, which can’t change much, at least if nothing else changes.

[Update: Candace Smith, GW’s executive director of media relations, responds:

The university is forecasting that tuition revenue is expected to grow year over year six percent. Administrators have explained… that the university is able to grow tuition revenues elsewhere, such as with study program abroad.]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer