“… Totally eliminating tuition at the college would require merely using 4 percent of Harvard’s yearly investment income while still allowing the remaining 96 percent to be reinvested in the financial activities that appear to constitute the primary purpose of the totally tax-exempt $38 billion endowment, now ranking as one of the world’s largest hedge funds.” …
Opinion.
http://www.nytimes.com/2016/02/01/opinion/free-tuition-at-harvard.html?_r=0
I think the current financial aid policy is generous and adequate.
Instead of giving rich kids free tuition at Harvard they should donate the money to less well endowed schools for scholarships for students not in the 1%.
While it is true that students with family income of $65,000 or less may now attend Harvard tuition free, let’s consider a couple living in New York City with one child, a combined income of more than $180,000 and savings of $100,000. Based on the Harvard net price calculator, they would pay a four-year total cost of $150,000 (including room and board) to send their son or daughter to Harvard.
This seems a severe financial burden to many middle-class and upper-middle-class couples.
Totally eliminating tuition at the college would require merely using 4 percent of Harvard’s yearly investment income while still allowing the remaining 96 percent to be reinvested in the financial activities that appear to constitute the primary purpose of the totally tax-exempt $38 billion endowment, now ranking as one of the world’s largest hedge funds.
http://www.nytimes.com/2016/02/01/opinion/free-tuition-at-harvard.html?_r=0
^The above should be in all quotes, taken from an op ed written by Ron Unz for the NYT. Unz is the leader of the Free Harvard, Fair Harvard movement.
If the combined income were $150K, the total would be $60k. Read the other thread about “financial aid for middle class families.” The poster’s family makes $175K and their cost at Harvard would be $31K, $8K more than the state school.
And I don’t see why $40K/year for a $180k income family would be burdensome, frankly.
The free tuition proposal was rejected by Harvard’s administration. Agree with comp mom. If you make $180K, you are not that “needy” and can afford to pay most of the freight.
@compmom I ran the following numbers on the Harvard net price calculator: $175,000 in annual income/3 family members/1 child/$100,000 in cash savings/NY state resident and the net cost PER YEAR is $31,725, which works out to $126,900 over four years.
For a New York City resident, New York state and city taxes works out to be $9549 per year. https://smartasset.com/taxes/new-york-tax-calculator#00xLkFA2v9
What if junior wants to go to graduate school or professional school?
I have no idea where you get your figures.
Harvard receives massive tax benefits from the government in the form of government grants for research, no tax on the generous donations it receives every year and no tax on the considerable investment gains it receives on its endowment, which is managed as a a hedge fund by professional investors.
The larger issue is whether Harvard can and should be more generous with its financial aid, given what it has received from the American taxpayer.
My figures are from the Harvard financial aid site.
Having only one child means a higher tab, as does one child in college at a time.
I personally don’t think $31,725 per year is that much at that income level, with one child to pay for, but every family’s life is different. There are lots of other options for schools.
Often there is funding w/stipend for grad school.
If you have special circumstances, such as health issues in the family, they will listen. Harvard is much much better with these than many other schools.
I don’t think the best use of the endowment is to provide free education for the children of wealthy families that are unable to live within their means.
@danstearns, I agree with you.
Giving away a product (a Harvard education) that people are willing to pay a lot for makes no business sense whatsoever, too.
Maybe Mercedes should give away its cars, too, since it makes plenty of profits from its truck and bus manufacturing?
Unlike Mercedes, Harvard is incorporated as a nonprofit corporation, which, among other things, means it pays no federal income taxes and receives federally tax subsidized donations.
A for profit corporation should be run to maximize profits/shareholder equity. A nonprofit corporation, by law, is not allowed to do so, subject to loss of its federally tax exempt nonprofit status.
The Free Harvard, Fair Harvard slate, even if elected in full, would represent only 5 seats on the Harvard Board of Overseers. They would not actually be able to make Harvard tuition completely free.
What they will inject into discussions is the principle of increasing socioeconomic and ethnic diversity, while also being a magnet for talent, by further removing financial barriers to students who may otherwise be deterred from attending Harvard.
Even if one’s parents could afford, through material sacrifice, a Harvard education (or an education at another private elite), such a student may choose, or be forced via parental pressure, to take a full ride offer from, for example, a state flagship.
College costs have skyrocketed at a much greater pace than wages making them less affordable than ever while university endowments have mushroomed. It is certainly an appropriate time to have such discussions.
@HappyAlumnus Harvard’s goal is not, and cannot be, to maximize profits. Its stated goals and, that of many of its peers, are to (a) increase student body diversity while (b) pulling in talented students.
Thus, making Harvard “free” (more or less) serves the purpose of this particular elite, nonprofit educational business quite well.
Just one guy’s take on this. I am quite fortunate that my kid is a student at Harvard, and that we qualified for a very good grant. We are smack dab middle class.
Two years ago, when all this happened, our family finances were in trouble. Those circumstances changed in the last year, but we could not have ptedicted that then. Had Harvard’s offer been just $4000 less, we would have had to decline. DD would be at a no-name school on a NMF scholarship. Still an awesome deal, but not Harvard.
4K is not a lot of money. But we were that close to the edge. Poor planning on the parents’ part (that’s on me). But not my kid’s fault. And that, to me, is the thing.
I’m so grateful for Harvard’s finaid. But if circumstances were only slightly different, it wouldn’t have been enough. It was hard enough to say, “I’m sorry, but we can’t pay for Amherst. They want you, and they’re giving you so much money, but it’s not quite enough.”
If guaranteed free tuition would keep some middle class family from going through that with Harvard, I’m all for the idea. Even if it does mean a few rich kids get the same break.
@MyOdyssey, why did you list my name in your last post? Your last post has nothing to do with what I stated. Your argument is called a “straw man” argument.
I’ll respond to yours, however: rejecting calls for free tuition has nothing to do with maximizing profits. No institution should waste its resources (and people in charge of nonprofit institutions have fiduciary and other duties in their positions not to do so).
Offering free tuition to many Harvard students would be a waste of resources, since many Harvard students can and will pay large amounts (up to full price) for a Harvard degree. You may not know this, but many Harvard students are from affluent backgrounds, and many of them have ample ability to pay Harvard’s tuition.
Wasting Harvard’s resources would harm the school because its money would be frittered away in those cases, leaving less available to build academic excellence, which doesn’t come cheaply.
I would be fine with moderately increasing the financial aid threshold below which a student pays no tuition, however.
Also,@MyOdyssey, you may not know this, either, but Ron Unz, who is spearheading the free tuition movement, is a conservative activist who wants to eliminate traditional programs that have helped African-Americans and Hispanic-Americans achieve admission to Harvard. Is that what you want?
As a parent, I guess I never had any illusion that putting my kids through college could be done without some material sacrifice on my part. As a middle class parent I was grateful every day for the generous aid offered by Harvard. Was it free? No, but it was doable. Could she have taken full merit money elsewhere? Yes, we were very fortunate to have that choice. As a family, we decided that attending Harvard was worth the expense.
Contrast that with other child that attended State U - some merit money, but net cost was higher than Harvard.
So even though Harvard, along with Yale and Princeton, are probably the most generous need-based schools in existence, there will always be some who want more, more, more.
As I said in my earlier post, my opinion is that the greatest use of the funds generated by the endowment is not to provide a free education for the children of wealthy families that have chosen to not live within their means.
Harvard full pay parent here. Just north of the no aid line. Kind of like getting the speeding ticket when you have just gone from the 55 MPH zone to the 35 MPH zone. Do I wish it were easier for us, sure, do I feel that it is warranted, no I don’t! Harvard is amazingly generous and this is so beneficial to many students and their families.
I have about as much right to tell them how to spend their money as they do to tell me how to spend mine. It makes for provocative conversation though.
Post #10 (@HappyAlumnus): “Giving away a product (a Harvard education) that people are willing to pay a lot for makes no business sense whatsoever, too. Maybe Mercedes should give away its cars, too, since it makes plenty of profits from its truck and bus manufacturing?”
Post #11 (@MyOdyssey): “Unlike Mercedes, Harvard is incorporated as a nonprofit corporation, which, among other things, means it pays no federal income taxes and receives federally tax subsidized donations. A for profit corporation should be run to maximize profits/shareholder equity. A nonprofit corporation, by law, is not allowed to do so, subject to loss of its federally tax exempt nonprofit status.”
Post #13 (@HappyAlumnus): “@MyOdyssey, why did you list my name in your last post? Your last post has nothing to do with what I stated. Your argument is called a “straw man” argument. I’ll respond to yours, however: rejecting calls for free tuition has nothing to do with maximizing profits. No institution should waste its resources (and people in charge of nonprofit institutions have fiduciary and other duties in their positions not to do so).”
@HappyAlumnus I trust that the relevance of my post (#11) is fully apparent from the juxtaposition of our earlier posts (#10, #11 and #13).
Further, colleges “give away” spots in their entering and ongoing classes all the time to varying degrees via (a) academic scholarships, (b) athletic scholarships, (c) college funded need based financial aid.
Some colleges are already entirely tuition-free. A partial list can be found here:
http://time.com/money/2977702/22-colleges-free-tuition-moneys-best-colleges/
Then there are businesses like Google and Microsoft (search), Yahoo, College Confidential and countless other websites (news) that give away certain services for free because it serves their business interests to do so.
If free tuition serves certain of Harvard’s business needs, such as SES diversity, then it’s hardly a “breach of fiduciary duty” to implement free tuition. It is no more a breach of fiduciary duty than is giving full pay athletic or academic scholarships to certain entering freshmen or charging no tuition at all as do some colleges (see above link to Time).
On a different note, how does making Harvard tuition free or making its admissions process more transparent (the “fair” Harvard aspect of the proposed plan) a blow against URM, @HappyAlumnus? I have yet to hear any Harvard administrator try to defend keeping admissions opaque. Rather they have concentrated their public comments on the “free” aspect of the proposed plan.
Post #13 (@HappyAlumnus) “You may not know this, but many Harvard students are from affluent backgrounds, and many of them have ample ability to pay Harvard’s tuition.”
I agree that the current system still heavily favors children of the affluent. That’s why it’s worth considering alternatives to enhance SES diversity.
Here’s Ron Unz explaining the numbers behind (a) why Harvard can easily afford free tuition, (b) at least some middle class families still can’t afford Harvard:
http://hlrecord.org/2016/02/meritocracy-will-harvard-become-free-and-fair/
@MyOdyssey, for your question about “how does making Harvard…free…a blow against URM”, you need to read a lot more about Ron Unz and his background to see how he has acted in many ways that can be considered anti-URM.
Justify, please, giving away a Harvard education for free to white billionaires. Can’t do it? Then there goes the argument that Harvard should be tuition-free to all.
I’m not sure what adverse inference you want me to draw about Ron Unz. Presumably, you don’t know the man personally and rely on things you’ve read on various online publications.
Here’s what I gleaned from similar research.
Unz won the Westinghouse Science Talent Search as a senior in high school, ran unsuccessfully for the Republican gubanatorial nomination for the state of California, studied theoretical physics at Harvard and Stanford and, among other things, successfully opposed a California state proposition that would have denied social services to illegal immigrants.
https://en.wikipedia.org/wiki/Ron_Unz
Ideologically, Unz seems to be a mixed bag (much like the Free Harvard proposition seems to cut across ideological lines) but there’s no question that he’s a talented guy.
It’s interesting to note too that Ralph Nader, who no one has ever accused of being too conservative, is also behind the Free Harvard, Fair Harvard platform.
That’s why I don’t find labels - especially those designed to attack people rather than ideas – to be all that helpful.
@HappyAlumnus (Post #17) “Justify, please, giving away a Harvard education for free to white billionaires. Can’t do it? Then there goes the argument that Harvard should be tuition-free to all.”
If a billionaire’s son decides to enroll at West Point, the Naval Academy, etc., which are tuition free, does it completely undermine the basis for tuition free higher education at those institutions? Apparently not to those to run them. I’m sure children of the wealthy have graduated from West Point, the Naval Academy, etc.
Harvard’s endowment will hit $74 billion (double what it is now) in 9 years assuming a compounded annual growth rate of around 8 percent per year. http://www.investopedia.com/calculator/cagr.aspx
An 8 percent compounded growth rate might be too conservative, given the excellent investment returns Harvard has enjoyed through the years and the substantial donations it receives every year. Harvard and Stanford each received over $1 billion in tax deductible donations in 2015 alone. http://money.cnn.com/2016/01/27/pf/college/university-biggest-gifts/
Fairness and equity thus requires looking not only at whether a recipient of a free Harvard education “deserves” it but also at whether it’s fair or politically feasible for Harvard to continue growing its endowment while keeping its tuition policies the same.
Already, there have been proposals to force universities to spend more of their endowment or to eliminate their tax exempt status altogether citing among other things that elite universities pay their money managers much more than they subsidize tuition for students.
http://www.nytimes.com/2015/08/19/opinion/stop-universities-from-hoarding-money.html?_r=0
http://www.npr.org/2015/08/22/433735934/in-elite-schools-vast-war-chests-malcolm-gladwell-sees-obscene-inequity
Ron Unz is hardly an outlier in advancing his Free Harvard thesis, which if adopted, would head off intervention by legislative fiat.
The Harvard Board of Overseers has around 30 members. The Board of Overseers is also subordinate to the President and Fellows of the Harvard Corporation. http://www.harvard.edu/about-harvard/harvards-leadership/president-and-fellows-harvard-corporation
It is impossible for Unz to kick off a one man revolution, even if elected to the Board of Overseers. He will have to present his data and analysis and persuade others of their soundness.
@MyOdyssey, Ron Unz has appeared at conferences where Jared Taylor, the white nationalist, has also appeared. That is very disturbing to me. I’m not saying that he wants to abolish affirmative action for racist reasons, and I’m not saying that he has a racist bone in his body, but I am not comfortable with the whole scenario.
West Point and other military schools (government-funded) have a different purpose and different funding from Harvard. They are not comparable. The other tuition-free schools are ones that either were given a large donation by a donor in order to make them tuition-free, or are rinky-dink schools that people wouldn’t really pay for. None of them correlate at all to Harvard. I have given generously to Harvard and I never intended for my money to fund free education for wealthy white people, and I assume that others are like me.
Finally, an 8% growth rate is not substantiated by past growth. You need to pick a number that is much more conservative, which would better track reality.