Despite charging no tuition, Berea College in Kentucky is thriving—providing a high-caliber education and building up an endowment of more than $1 billion, Abby Jackson reports for Business Insider.
Berea has a strong reputation: Among liberal arts colleges nationally, Berea is ranked 69th by U.S. News & World Report.
Related story: Dallas school to become nation's eighth 'work college'
The school is also relatively selective, admitting only 34% of students in fall 2013, according to the National Center for Education Statistics.
Berea's strong reputation is also reflected in its yield rate, the percent of accepted students who actually enroll, which was 72% in fall 2013. For comparison, that ranks fifth among liberal arts colleges nationwide, according to U.S. News & World Report—and it is higher than Yale University's reported yield rate of 66%.
Berea also reported an endowment of $1,012,401,100 in 2013—more than Vassar College, the University of Georgia Foundation, and the entire University of Tennessee System, according to a report by the National Association of College and University Business Officers and the Commonfund Institute.
How did Berea do it?
First, the administration keeps spending in check by forgoing many amenities and spending just $27,000 per student per year. (Many of Berea's peers spend about $40,000 to $60,000 per student). "We are really quite utilitarian and a student who can afford to pay for college probably on grounds of amenities and facilities wouldn't choose Berea College," Lyle Roeloff, Berea's president, told Business Insider.
Berea also saves money by asking students to work up to 15 hours per week—reducing the need to hire external employees—and maintaining an organic farm that produces a portion of the cafeteria's food.
Berea's operating funds come from a combination of the endowment, federal funding, and private fundraising. Almost all first-year students are eligible for Pell Grants, according to its website, and Roeloff has said in the past that fundraising is "a never-ending obligation of Berea presidents."
According to Jackson, there are now only nine tuition-free colleges in the nation (National Center for Education Statistics, accessed 4/1; Snider, U.S. News & World Report, 1/21; Jackson, Business Insider, 3/30).
Next in Today's Briefing
Around the industry: Bats in the president's home cause a flap on campus