Suppose a hypothetical college has 1000 students and wants $40 million revenue coming in from tuition + room + board + … from parents. There are several possible options, such the the ones listed below. Stanford and many other colleges have been gradually shifting from option 1 to something closer to option 2, but with far more granularity. Sticker price goes up for the wealthiest students, and average net cost goes down for everyone else.
Option 1 – Each student pays $40m / 1000 = $40k
Option 2 – The wealthiest 50% of students pay $80k and the least wealthy 50% of students pay $0.
For example, among federal FA recipients Stanford’s average net cost was as follows. Note that Stanford is very low cost for typical families with <$75k income. Stanford’s net price has been decreasing for this group over time, as well as for the $75k to $110k. It’s only the wealthy kids that have the higher sticker price over the listed years (after adjusting for inflation and assuming typical financial circumstances for FA).
Average Net Price by Income among Fed Database Kids (Median of past 3 years)
$0-$48k Income – Stanford = $1k
$48-$75k Income – Stanford = $2k
$75-$110k Income – Stanford = $11k
$110k+ Income – Stanford = $46k
Perhaps, but “learning” is only a small part of what customers at colleges are paying for (or at least the well-established colleges that would be discussed in places like CC). Students are paying for a four-year (or five-year) residential experience that ends in a marketable, brand-name credential. Hence the anger and even lawsuits from parents when classes switched to Zoom early in the pandemic - mostly same professors, mostly same material, very different experience. You can learn in lots of ways and in lots of places throughout your life, but that learning doesn’t often include bonding over late-night snacks with lifelong friends or an extensive alumni network that helps you get a job or the ability to hang a fancy piece of paper on the wall that says University X. Count me in the camp that doesn’t expect much change in 20 years, with the possible exception of curbing the excesses of for-profit schools (fingers crossed).
That’s great if a kid can be admitted - most won’t be. Stanford, and other super elite schools, serve a very small number of college students. I don’t think using Stanford, with its vast pool of financial resources, as an example of how schools mitigate the rising cost of attendance to be very relevant.
At a school like Stanford, the real cost isn’t $40k. It’s likely even more than the sticker price. We can argue whether a college education should cost that much, but the rich are subsidized too. No wonder these colleges are popular for everyone.
In another recent thread a poster suggested looking up Drexel instead of Stanford, so I looked up Drexel. Drexel showed a small decrease in average net cost over time, after adjusting for inflation. If you name a different school, I’ll look it up.
The referenced colleges are not-for-profit and have to report revenue + spending. Tuition often composes only a small fraction of overall spending at high endowment per student colleges. If I remember correctly, at Princeton it was <5% . Princeton’s endowment is >$2 million per student.
Socialism would be government owned businesses. Much of education in the US (K-12 and college) is government owned businesses, even in states where socialism is generally unpopular.
Universities similar to Stanford or Princeton routinely spend 4-5% of their endowment every year. That translates to around $80-100k per student (even before revenues from tuitions, etc.) for these schools. Here in NJ, many public school districts spend $20k or more per pupil while providing only a tiny fraction of the services these universities provide. Do they all spend too much? Yes, but they do it supposedly to meet our demand.
As mentioned in my earlier post, colleges are required to report revenue and expenses, so one can look up specific numbers. Numbers from 2020 IPEDS are below. I compared Stanford, Princeton, and Drexel. I suspect that the gap between the listed revenue and expenses at Stanford and Princeton largely relates to an increasing endowment. There may also be other expenses categories that are not included in the total. It looks like tuition composed 6% of Princeton’s revenue in 2020. The <5% figure I remembered was apparently from a different year in which there was a larger investment return.
There aren’t many highly selective schools who have done away legacy consideration. Here are the schools with under a 25% acceptance rate that do not consider legacy status (according to their CDS*):
California Institute of Technology
Massachusetts Institute of Technology
Pomona College
Johns Hopkins
US Military Academy
UCLA
US Merchant Marine Academy
Cooper Union for the Advancement of Science and Art
UCB
Northeastern University
Plus Amherst College.
Did I miss any?
(*HMC reported to the State of California that it does not consider legacy, but reported on its data set that it does, so it is not included.)
How much of the Stanford expenses per student is due to medical school students or medical school expenses that somehow become part of the expenses for other students?
Here is spending analysis from Williams college for 2018-2019. It also shows $115k per student, and Williams has no graduate schools to muddy up the data.
The expenses per student are the total expenses divided by the total full time equivalent students. The actual amount spent on a particular student will vary widely between different schools within Stanford, as well as between different students within the same school (popular major with by classes vs unpopular major with small classes). I agree that the total instructional expenses are probably dominated by the medical school. Stanford’s larger professional presence also contributes to why Stanford’s average tuition revenue per student is notably larger than Princeton.
Somehow these institutions with enviable, seemingly endless resources have backed themselves into a corner where they are utterly dependent on admitting classes that are comprised of fifty percent full-pay students, give or take.
I thought maybe Olin. But it does. I don’t know how Olin can consider legacy, since it hasn’t been around long enough for alums to have children attend, but “alumni/ae relation” is “considered” according to the CDS. Are they looking at sibs maybe? If so, is that what HMS does?