In his letter to the student body, Norton explained simply that "costs go up every year" for colleges, just as in an average household.
A large part of these costs come from the Colleges desire to offer competitive wages for its faculty and staff members. Providing benefits such as health care, a cost which increases every year, as well as keeping up with the market from other schools, puts substantial pressure on St. Olafs budget, Norton explained.
Unlike other businesses, which can provide better wages by increasing productivity instead of the price of the product, many colleges find they prefer lower productivity a smaller faculty-to-student ratio and small class sizes thus creating higher prices.
St. Olaf also accumulates energy expenses, whether by purchasing utilities or covering transportation. In addition, the college has to catch up financially with the impact of energy expenses accrued this academic year after the price had already been set.
Other costs include the purchase of food, the labor to prepare it, and increasing interest rates on building debt.
Despite the significant increase in the endowment, administrators feel it would not be wise for the College to draw too heavily on its funds to mitigate a price.
Norton explained that in order to prevent a "whipsaw" effect caused by the ups and downs of the stock market, the college looks at the state of the endowment over 16 quarters (four years) and calculates its average worth.
Then, administrators determine what percentage of this average can be taken to cover expenses. herefore, although the endowment may be doing well, the Colleges budget will not be greatly affected.
Naturally, the increase in the comprehensive fee for the coming academic year has many students concerned. As Norton writes in his letter, "Affordability and accessibility remain a high value [at St. Olaf]."
In effect, the vast majority of the student body will not be seeing the specific $2,800 price increase because of financial aid. The college does assume that next years fee will provoke an increased need for aid.
Indeed, as Norton writes, St. Olaf still plans "to meet the demonstrated financial need for all students who qualify." On average, financial aid will move proportionately to the price.
Between covering its operating expenses and setting aside sufficient funds for to meet financial aid needs, the new $35,600 comprehensive fee will only bring St. Olaf approximately three percent more revenue.