<p>I agree cellardwellar, but the OP is about money not the quality of college departments.</p>
<p>P.S. I have never understood why someone would attend a law school that was unaccredited but that is precisely my point. Those schools exist because people are willing to pay. They MAKE money.</p>
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Universities are being run as businesses more and more, and any business that can afford to pay tens of millions of dollars to investment managers are making a profit in my book.
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<p>Become a shareholder.</p>
<p>"Should the loss of tax exemption status apply only to Harvard, or should all institutions of higher learning be treated the same way?"</p>
<p>Typically these schools spend 4 - 4.5% of there endowments per year and typically they earn, over the long term about 9.8% a year. The earnings not spent are reinvested and of course new giving adds to the endowment. The net result is these endowments are growing rapidly while of course tuitions continue to outpace the CPI by 2+% a year.</p>
<p>In my opinion when investment income for an institution exceeds tuition income they have effectively changed the business they are in and it is time to begin taxing both investment earnings and contributions. </p>
<p>A university does not have stockholders and not being on the market effectively means the administrators and faculty own it. Yes there is a board but it generally is not in a position to exercise much oversight in a system of collective governance such as exists in the modern university. In essence the faculty and administrators run the place and spend the money in a manner that best suits them. They are the owners and as such they reap substantial financial rewards.</p>
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With an average of, say, 12 students per faculty member
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<p>Some highly endowed universities have fewer students per faculty member (and more support staff members per faculty member than your example assumed).</p>
<p>"What exactly is the point of taking money from harvard or yale and putting it into the US Treasury."</p>
<p>The point for doing this would be to put that money to work for its intended purpose - education. If Harvard were a publicly traded company sitting on a nest egg that large corporate raiders who have a bad rep they don't deserve would swop done on the sucker and break it up. One of the reasons capitalism works so well in this country is that money flows effectively to the projects with the highest demand and those are the projects that can afford to pay the highest rates because their investors are most confident they will succeed financially.</p>
<p>Corporate raiders and the stock market fill the role of money mobers in this system but for corporations and individuals too for that matter that are not publicly traded we have the IRS ro reallocate their excess profits.</p>
<p>Cstixj:</p>
<p>I agree that online schools and unaccredited schools can make a bundle. But that is an entirely different business more akin to a racket. I personally don't know of any reputable university that also runs such a school on the side. MIT for instance offers fantastic online courses, but they are all free. </p>
<p>My main point was that professional (accredited) schools don't generate extra revenues for the universities general fund. At Harvard, HBS, HMS and HLS don't give a penny to subsidize the tuition of the Harvard undergrads out of the tuition they collect from their own graduates. To a large extent the various schools operate independently. Most of the gifts from alumni of the various professional schools also stay with the schools. (By design). </p>
<p>It is a different story for the Graduate School which is part of FAS, just like Harvard College. Even there, Harvard does not make any money from tuition. Many grads students pay no tuition and get stipends for research. A portion of research grant money is always allocated to overhead and as such it can also cover costs shared by the College and the Graduate School.</p>
<p>Cellardweller,
I do not disagree with you. The original post makes no mention of Harvard. Perhaps it is a poor example of how funds are held among high endowment schools. In any event, for whatever reason, schools like Princeton have the available wealth and CAN pay a student's full tab if they choose to. The QUESTION is, should they? This is what the OP is about.
We should not get hung up on whether Harvard can afford to do so at the undergrad level. To the extent that schools can, should they??</p>
<p>Graduate education is much more expensive than undergraduate education. The figures I've seen are 1.5 times to 2 times more per student. It's all related to student/faculty ratios and the fact that many grads school pay their students to attend. When you look at overall per student endowments for universities, you have to signficantly discount the number when looking at undergrad education (which is, I believe, the point Marite was trying to make).</p>
<p>BTW, no college or university that I have seen is charging anywhere near $45,000 room, board, tuition ON AVERAGE. The highest net average I've seen is in the $29,000 to $30,000 range although there may be a few schools slightly higher than that. The big endowment schools usually charge a little less because they tend to have larger financial aid discounts.</p>
<p>Washdad:</p>
<p>What I wrote is absolutely true of Harvard's professional schools. Money raised at the Business School stays at the Business School and does not go to cover the deficits perennially run by the Divinity School or the Graduate School of Education, both of which have poor alumni.</p>
<p>As a matter of fact, the Faculty of Arts and Sciences which includes both Harvard College and the Graduate School of Arts and Sciences is running a deficit. I've seen the figure of $80 millions quoted. This seems to be due to the spate of new construction and the hiring of something like 100 more profs over the last few years. </p>
<p>I expect that at other universities, there may be more transfer of funds from one entity to the other, as Harvard is infamous for its "each tub on its own bottom" philosophy. Nonetheless, I also expect that this transfer is limited.</p>
<p>In regard to Interesteddad's comments, not only are graduate students more expensive, but raising funds for graduate education is far more difficult than for undergraduates. Princeton gives a full ride for five years to all graduate students it admits and its peers are scrambling to provide competitive packages. Most offer a full ride for a couple of years and guaranteed teaching slots (and tuition waivers) for another 2-3 years.</p>
<p>As someone who has been picking up two full fares, I disagree with the notion that colleges should pick up more of the tab. One can argue that FAFSA or the College Profile ought to calculate EFC in a more favorable way to applicants. My understanding is that these forms are not devised by the colleges themselves.</p>
<p>I attended college and grad school on full scholarship and fellowships. Now that I am able to pay for my kids undergraduate education, I am happy to do so.</p>
<p>Higherlead, you have a very rosy view of the track record of corporate raiders.</p>
<p>If Harvard were to be "raided" to put its capital to better use, expect to see its retirees left without a pension or medical care (and thrust into the ranks of the uninsured); its hard assets sold off for cash; its research efforts suspended in an effort to "monetize" its past investments in patents and innovation, etc. Tuition ain't dropping anytime soon-- when a corporate business is raided the price of its primary products don't go down, the employees and retirees just get screwed in an effort to reward the raiders and bondholders.</p>
<p>And don't be naive.... corporations get huge tax write offs. In my city, multi billion dollar financial institutions get lured to set up operations here with tax benefits that run for decades. It makes the tax exempt status of the local college look like a joke.</p>
<p>Interestedad, Many of the schools we are looking at, those with significant endowments, have price tags above $40K per year (with fees you approach $45K). Take at look at the Ivies for starters.
Also, even though, for the sake of this discussion, you have to reduce the endowment because of funds restricted to grad school, you also have to take into account that you have now also reduced the pool of students (to undergrads only). For all we know, the per pupil available endowment might go up when looking at it this way.
But, again, I think we need to get back to this posts essential question - for schools like Princeton that are wealthy enough to pick up the tab for all students, should they do so, or at the very least contribute more to those not requiring need (since Princeton already meets 100% of need)??</p>
<p>UVa operates its law and business programs as profit centers. They more than pay for themselves and both are highly ranked. They receive no state funds and pay a fee to the state for campus infrastructure.</p>
<p>I guess I think this is all subjective-
Sure we could say Princeton et.al. could be lowering their tuition costs for everyone- even though that might inhibit the amount of aid they would be able to offer low income students/invest in future projects.</p>
<p>I would also like to point out- that say your EFC is $50,000. You probably feel put upon, as $50,000 is a significant amount of moola.
If my other calculations are correct, a $50,000 EFC- indicates income of $200,000 ( roughly)</p>
<p>While this EFC may feel like a hardship to this family, they still have $150,000 ( assuming they go with the high cost school) for living expenses.
Also, this sort of income also may have provided the student with opportunties to qualify for merit aid that a student whose family only earns $50,000 doesn't have.</p>
<p>If your income is $52,000, I bet your EFC is closer to $13,000.
Family lives in same area at high EFC family- yet after their EFC is paid ( out of loans, income and savings), they only have $39,000 of income left.</p>
<p>Rather than give more aid to the first family-if fairness and access is an issue, I would rather the colleges increase aid to students from families who are fighting to stay "middle income".</p>
<p>Who is already visibly represented on campus? Those from families making over $100K or those making under $100K?</p>
<p>But, again, I think we need to get back to this posts essential question - for schools like Princeton that are wealthy enough to pick up the tab for all students, should they do so, or at the very least contribute more to those not requiring need (since Princeton already meets 100% of need)??</p>
<p>this is a variation of Old But Wise's question. And my answer is: Should Princeton not require Bill Frist Jr. to pay full fare? The Frist Student Center is testimony that the family does not need subsidizing. Should the children of millionnaires and billionnaires be subsidized? In the name of what?</p>
<p>EK: I agree. I wonder what the role of FAFSA and the Profile is in all that (see previous post).</p>
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I would also like to point out- that say your EFC is $50,000. You probably feel put upon, as $50,000 is a significant amount of moola.
If my other calculations are correct, a $50,000 EFC- indicates income of $200,000 ( roughly)</p>
<p>While this EFC may feel like a hardship to this family, they still have $150,000 ( assuming they go with the high cost school) for living expenses.
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<p>I agree with the overall point that more income is better than less...</p>
<p>A $200k gross income will, all things being equal, be an after-tax income of $125-150k. Not bad, but still not $200k. That after-tax TR&B of $45k is nearly a third of the family's disposable income. That's a lot, even for that $200k high-income family.</p>
<p>In some respects, a "hidden" bad situation for college would be a family with a single wage earner of $70-80k, who then has a spouse go back to work when the kids are in high school. Family income jumps a lot (maybe even doubles), but they have had no opportunity to save huge amounts for school. High income means high EFC, but short time earning the large salary means little or no available savings. If that $70k was earned in a high-cost area like Boston, Los Angeles, Fairfax, Chicago or Seattle (hi!), the pre-second-income savings would possibly even be non-existent. Not as bad as the family of five with an income of $60k, but still a bad scenario for EFC.</p>
<p>Good point marite, but what about the children of middle class families who don't quite qualify for assistance, but are very, very close. I am talking about the middle class parents who struggle. Are they on their own as well?</p>
<p>Interesting data from Berea College website. Berea College provides free tuition to all students. Its endowment is about $800+millions. By contrast, Skidmore college, which charges approximately $45k per year for tuition, room and board, had an endowment in 2004 of $177millions.</p>
<p>According to the Berea website, it takes $432k of endowment principal to endow one tuition scholarship ($22k) for one year. </p>
<p>I don't know about middle-class families who don't qualify. The best endowed universities are the most generous. They do not give merit aid, but their need-based aid is very good. As various websites (and mini) will tell you, many of the students who qualify for need-based aid come from families making up to $150k per year, sometimes even more. If the college does not count the family home as an asset, the financial aid package can be quite generous.</p>
<p>It stands to reason. Skidmore College, with an endowment of only $177millions cannot be as generous as Swarthmore College whose endowment is well over the $1 billion mark, not to mention Harvard. Families which do not qualify for need-based aid can also try for merit aid at some excellent institutions.</p>
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what about the children of middle class families who don't quite qualify for assistance, but are very, very close.
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<p>The worst case is for the student whose parents will not pay their EFC. We hear about cases like that every year on CC. But even in that case, the students have affordable choices, whether it is a "merit scholarship" at a non-Ivy elite college, or paying list price at a tax-subsidized state university. College is least accessible to the lowest-income families, but there is some college access for every family.</p>