The basis on which Yale University and other private institutions set annual tuition levels and long-term pricing policies is considered. The rising cost of private higher education is examined in relation to historical trends, economic data (price and income inflation), the financial condition of the institution, comparative cost data from other schools, and studies of the impact of cost on enrollment. Information is provided on the following: the growth of Yale's undergraduate tuition rates and total student charges (i.e., tuition plus room and board) over the past three decades; the changing role that tuition and room and board income has played in Yale's overall financial picture over the past 10 years; one method of calculating the full cost of a Yale education in 1970-71 and 1979-80; the actual dollar gaps and the ratios between undergraduate student charges at Yale and at four basic categories of higher education institutions (public and private four-year universities and public and private universities); and tuition and room and board charges at the eight Ivy League schools plus M.I.T. and Stanford. The results suggest that current educational costs, despite their recent rapid increases, are not significantly above historical levels (after adjusting for inflation), are not unfair to students, are affordable to most families, and are in line with the costs of other private institutions. In addition, no serious impact on the quality or diversity of the student body was indicated by the analysis, which suggests that Yale's major competitors, as well as private institutions generally, follow a similar pricing policy. A bibliography is appended. (SW)