<p>Because things seem quiet tonight, I am hopeful that this thread will provoke some discussion.</p>
<p>As most of you know, educational institutions can of course be stratified based on their endowment per student. For purposes of illustration, Exeter at the very zenith of its wealth had a billion dollars and 1100 students, so its endowment per student was about 900,000. At about the same time, Harvard had about 35 billion and 18,000 students, resulting in nearly two million dollars per student. This was all very well illustrated in a NYT article of about two years ago, well before our current financial implosion.</p>
<p>Some have suggested that the strength of an institution bears a direct relationship to its endowment per student. That is the notion that I am going to dispute on this otherwise quiet evening.</p>
<p>Students at any institution of course benefit from that institutions wealth. But different students will derive distinct levels of benefit from that wealth. Since much of endowment income is used to fund financial aid, it seems that the major beneficiaries of an institutions wealth are those who are awarded financial aid. Now this is of course self evident and a statement of the obvious.</p>
<p>But what is not so self evident is that it is misleading to suggest that the benefit that any given student derives from the wealth of an institution is in direct proportion to the wealth of that institution. In fact, a full pay student is deriving a smaller benefit from the wealth of the institution than a student with an award. SO STATING THAT ALL STUDENTS BENEFIT IN DIRECT PROPORTION TO THE WEALTH OF THEIR SCHOOL IS MISLEADING. Exeter's 900,000 per student overstates its benefit to those who are full pay. Yes, those who are full pay are subsidized beyond what they pay in tuition, but it does not take away from the fact that the endowment per student statistic overstates their benefit. </p>
<p>That is my contribution on this quiet evening. Maybe it is fatuous. I hope I did not ruffle any feathers.</p>
<p>“In fact, a full pay student is deriving a smaller benefit from the wealth of the institution than a student with an award.”</p>
<p>Really? Do you believe what you are saying? </p>
<p>There has been so much negativity lately on this forum about FP vs. student on financial aid that I find it very disheartening. All students at boarding schools benefit from exposure to students from other cultures and socioeconomic backgrounds. I know that my daughter was accepted to her school based on MERIT and is contributing greatly to her school community. She is deriving the same benefit from her school as each of the students in her grade, no more, no less.</p>
<p>Goodness me, noobsmom, what Pan meant was that FP students derive less benefit from the wealth of the institution because they are paying so much to go there. Think of it this way. Just for illustration, let’s say that Exeter’s tuition for boarding students is $40,000 per annum. FP students, then, are “getting” 860,000 “benefit” each year, whereas full aid students are getting the whole 900,000 because they’re not paying $40,000 a year. I think that that’s what Pan’s statement meant. It wasn’t to ridicule FP students. It is still a very abstract statement, but it was not a statement meant to deride you.</p>
<p>My son will attend George School in the fall. Some of the NPV of its endowment (roughly $170 million), will be used to provide financial awards to approximately 45% of its students if the grants are in keeping with the 2008-09 school year.</p>
<p>Pan’s statement above:
“… SO STATING THAT ALL STUDENTS BENEFIT IN DIRECT PROPORTION TO THE WEALTH OF THEIR SCHOOL IS MISLEADING. Exeter’s 900,000 per student overstates its benefit to those who are full pay. Yes, those who are full pay are subsidized beyond what they pay in tuition, but it does not take away from the fact that the endowment per student statistic overstates their benefit.”</p>
<p>Assuming this is true, are FP families more inclined to seek out schools with a lower percentage of FA students? Would they steer clear of a school with FA stats like a George, for example, in an effort to obtain “more endowment/student bang for their buck?” Or, in the increasingly unpredictable world of BS admissions, do they simply turn a blinds-eye to the FP/FA ratio and its implications on $$ benefits derived in an effort to simply “get in where the kid fits in”?</p>
<p>This is an interesting question that I don’t think has been raised before in this forum. Just wondering how important a metric it is, or will become, to FP families when researching prospective schools.</p>
<p>Tom, you understood what I was trying to articulate exactly. But the benefit that any student derives is not the whole endowment per student value, but rather THE INCOME ON THE ENDOWMENT PER STUDENT. So in the case of Exeter two years ago, the benefit is not the 900,000, but rather the income on 900,000. And full pays, although they take some of that income, take less than students with awards. So the 900,000 OVERSTATES the benefit for the full pay.</p>
<p>$220 million divided by 18,000 students = somewhere around a $12,200 annual deficit per student.</p>
<p>The endowment is large, but now thought to be illiquid, and they’re (presumably) reaching the point at which they’ll need to sell assets into a bear market, which will reduce the endowment further, thus decreasing income. Oh, and their first attempt to sell some obligations didn’t take. A perfect storm.</p>
<p>I do think that students still want to go to Harvard, and UVA. I think that prestige carries the day for many families. It’s only that the endowment value/student isn’t a reliable metric right now. A large endowment could mean more opportunities for students, but it need not. It’s possible to have a large endowment because your board spends as little as possible.</p>
<p>Right now, I would regard an endowment as a reserve, which makes it unlikely that a school will suddenly close up shop. (I’ll regard Conserve as a special case.) I think it’s an open question, how accurately endowments have been valued.</p>
<p>This thread just seems to be in the same spirit as others I’ve seen of late on this site. Somehow the FA students are getting “more” benefit? I think all students are deriving the same benefit from the bs experience. We don’t need to point out that FP students are somehow extracting only $860,000 vs. $900,000. It’s really pointless. </p>
<p>There have been other threads, exclaiming that FA students don’t seem appreciative enough of their FA awards, that they should work off some of the tuition assistance, etc. All students contribute equally to the school with their talents, intelligence, diversity, etc. and all are gaining from being surrounded by such.</p>
<p>Periwinkle, the deficit that is referred to in the Globe article pertains to the FACULTY OF ARTS AND SCIENCES ALONE! As you know, FAS encompasses only the College, the graduate school and a few other minor divisions. The 18,000 students that you cite in your post represent the ENTIRE UNIVERSITY. So the potential per student deficit at FAS is much higher. And no, I do not think that the value of such a degree has taken a nosedive. I merely adhere to the concept of TRUTH IN ADVERTISING. Full pays do not derive as large a benefit from endowments as do aided students. I do not see how we can get away from that fact.</p>
<p>OK, so full pay students are subsidized by the endowment less than financial aid recipients. How is quantifying that difference useful? I just don’t get the point. </p>
<p>If, however, you really care about dollars spent on your kid that don’t come out of your pocket (which is what that calculation tells you), then why not have your kid go to a school that will give him a merit scholarship? It may not be as good a school for your kid, but then you can get as much benefit from the endowment as a financial aid kid. Hey, you may think it’s a bargain. For me, that’s called false economy as I’d rather pay more (and am in the lucky position to be able to do so) to get her to the best school for her.</p>
<p>The expense/student can be cut in different ways, not just by fa. Take a look at how expensive it is to have competitive hockey teams. Maintaining those rinks is expensive. How about golfers on an 18-hole golf course? Often schools rent out hockey facilities or have some public golf play. However, I doubt that this comes close to covering costs. Anyway, I’m just pointing out that there are different ways to look at this.</p>
<p>Pan, for the sake of discussion…FP do derive as large a benefit from endowments as do aided students. It’s an indirect benefit, but necessary to sustain BS’s value.</p>
<p>BS are in demand because of their culture, which is created by the socio economic diversity. School endowments given to F/A students creates a culture that puts achievement at the core. Without this, BSs–at these levels of tuition–would be a homogeneous country club culture rather than a dynamic learning environment and would attract an entirely different customer and ultimately create less demand.</p>