Harvard's yearly cost will finally crack the $25,000 barrier next year, when annual student tuition and fees rise from $24,880 to $26,230.

The rise comprises a 5.4 percent hike in total student costs, the smallest rate of increase in more than 20 years, according to a University press release.

The hike is necessary to maintain the quality of undergraduate education amid increasing financial pressures, said Dean of the Faculty Jeremy R. Knowles. The University is presently engaged in several massive building efforts, including the recent renovations to the Yard dorms.

Applicants to the class of '98 and students receiving financial aid should not be concerned by the rise in costs, said Director of Financial Aid for Harvard-Radcliffe James S. Miller last week.

"Financial aid packages tend to go up every year as it is," said Miller. "The reality is that aid has increased faster than cost....We have one of the strongest college financial aid departments in the nation, where the average aid award is worth $18,000."

According to University figures, the average scholarship granted to an undergraduate has grown by 6.7 percent each year over the past eight year, compared to a 6.2 percent annual rise in annual costs for students.

Next year's $1,350 price rise combines increases in tuition, room and board charges, student service fees and the student health fee.

Tuition will go up from $16,856 to $17,851, a 5.9 percent increase. The room cost and student services fee will increase 4.5 percent from $4,500 to $4,705, and board prices will rise 4.4 percent from $2,910 to $3,040. The Harvard undergraduate health fee will increase from $614 to $634 (3.25 percent).

Knowles said yesterday that the increase in costs is relatively small because the Faculty has cut expenses through administrative restructuring, lowering its deficit by more than $10 million over the past four fiscal years.

Student costs have risen at a slower rate each of the last four years, Knowles said. Last year, costs grew by 5.8 percent, he said.

The tuition and fee students pay cover only about half of the cost of the services the University provides its undergraduates.