<p>In light of Harvard's announcement to reduce the cost of an elite education for middle income students, do you think Penn will follow their lead?</p>
<p>no, at least not for awhile, harvard has a huge endowment, so its much easier for them to do</p>
<p>^^ That’s exactly right. The only schools that are going to be able to offer close to what Harvard can are Yale, Princeton, and Stanford, and even they might not come close enough.</p>
<p>For the other elite schools with smaller endowments (Penn, Columbia, Dartmouth, UChicago, Duke), the only way they would be able to match is by using a substantial amount of loans, which would kind of defeat the purpose of the financial aid if loans become to excessive.</p>
<p>When Penn gets $20 billion in endowment, then we’ll talk. Although I may not like it (ED Financial Aid Applicant) thats the way it goes.</p>
<p>Harvard has $35 billion and 6700 undergrads</p>
<p>Penn has $6.6 billion and 9700 undergrads</p>
<p>You do the math. When it comes to money, Penn just can’t compete.</p>
<p>This reminds me of the 1980s when Reagan knew he could kick off an arms race with the Soviets and drive them into bankruptcy because America was so much richer. Harvard may end up doing the same thing. Hopefully Penn will be wise enough to realize it can’t possibly compete and instead use this as a rallying cry for alumni to pony up the cash.</p>
<p>^ It’s called the “Making History” capital campaign. A major portion of it–$350 million–will endow additional undergraduate financial aid. That’s assuming that Penn only reaches the campaign’s $3.5 billion goal. They’re already up to $1.69 billion less than 2 months after the beginning of the 5-year public phase (i.e., they’ve raised almost $100 million in the past month and a half alone). Look for the ultimate amount raised to be significantly higher than $3.5 billion, and for the additional undergraduate financial aid endowment to also be higher than the $350 million goal.</p>
<p>And ilovebagels has it right–Harvard’s (and probably others to follow) move can only serve to help Penn convince donors to pony up even more cash for undergraduate scholarship endowment to help Penn compete effectively with its peers for students.</p>
<p>Penn is poor.</p>
<p>Relatively.</p>
<p>True. But it’s a lot less poor than it use to be. And it’ll be even less so in the future. The growth curve has been steepening, and one of the main goals of this capital campaign is to make it even steeper. For example, in addition to raising money right now, the campaign has an explicitly stated goal of significantly increasing alumni involvement on a long-term basis, including financial support (e.g., levels of annual giving).</p>
<p>Harvard’s endowment is an outlier in academia, and in investment in general. You could say that Harvard is Harvard only because of their endowment…</p>
<p>While it would be nice to see Penn follow suit, and there has been talk in recent days (in the wsj, nyt, and on campuses) of making all ivy education free, it’s probably not a priority right now. Campuses can spend a certain amount of their endowment each year, and you have to compare the options available.</p>
<p>What’s interesting is that they could make all undergraduate education free with (relatively) little more money - at a place like Penn, tuition doesn’t cover most of the cost of education, and they draw on the endowment to cover the whole cost. Getting rid of tuition actually wouldn’t cost that much more.</p>
<p>^ Actually, to completely eliminate undergraduate tuition would require about $360 million a year (10,000 students @ $36,000). If we assumed that Penn would spend 5% of endowment per year for this expense (Penn and its peers actually spend closer to 4% of their endowments per year), that would require $7.2 billion in endowment funds JUST to cover the annual undergraduate tuition replacement. Of course, the endowment also funds many other things, so it would have to be substantially larger than $7.2 billion. Maybe some day, especially if the endowment continues to increase at a much faster rate than does tuition.</p>
<p>That’s not actually true. Over 1/3 of tuition is used for tuition for other people - it goes to financial aid. If no one needed financial aid, the actual cost for tuition would be much lower. (10,000 people don’t pay 36,000 each. Many pay much much less) The average number per student contributed is more like 20,000, which leads to $200 million a year that Penn would need to cover (and 3.2 billion fewer dollars that don’t need to be in the endowment). While I agree with your point - it’s still a way off - it’s not as far as you think, because the current price discrimination system inflates costs. It would be a completely new paradigm for education, and they might be able to accelerate endowment growth if they have this target in mind. Completely covering undergraduate expenses is the future, and as soon as schools like Princeton and Yale jump on this idea, you can bet that Penn and the rest of the Ivies will follow suit by reprioritizing endowment spending.</p>
<p>If what you’re saying is true, that does put it a bit closer. Still, Penn would need at least $4 billion in endowent funds devoted just to funding undergraduate tuition, and the current capital campaign is only seeking an additonal $350 million for undergraduate aid. Looks like you and your classmates will need to be making some pretty big donations over the next few decades. :)</p>
<p>Don’t forget the $2 billion outlays for eastward expansion</p>
<p>^ That’s the real reason we probably won’t see tuition decreases anytime soon. Penn’s got an amazing opportunity with the eastern edge of campus expansion, and the money will give them a lot more than cutting tuition would. Harvard and Columbia are both exploring similar expansions, but they don’t have the adjacent nature and scope in the city that Penn’s does. Penn’s already the largest employer in Philly (from the hospitals) and this expansion will allow it to be a dominant presence in philadelphia</p>
<p>^ Still, only $924 million–or 26% of the $3.5 billion capital campaign goal–is slated to go towards physical campus improvements (including the first phases of “Penn Connects”). And don’t expect Penn to spend much–if any–endowment money on “Penn Connects”. Physical expansion projects generally have a fundraising life of their own.</p>