<p>*"There is no question that, for the typical middle-class applicant, Harvard is far cheaper than many state schools," Vedder said. "But it is even worse: the typical Harvard student graduates in four years, while the typical student at a state university takes five years (and sometimes six) -- if she graduates at all."</p>
<p>...increasingly I am seeing role reversal: The private schools are in some respects really more 'public' than the so-called 'public' or 'state' universities," he said. "Moreover, schools like Harvard, Yale, Princeton and Williams are able to offer lower tuition fees because of their vast wealth, which, in turn, was largely accumulated as a result of tax exempt privileges granted by the federal government. Who is more 'public': Harvard or Cal State East Bay? It is a debatable proposition.*</p>
<p>^^^^Terrific news! Now all anyone has to do is get accepted to HYP or Williams and all of their financial worries are solved. In the meantime, back in the real world where the vast majority of us live…</p>
<p>Well, maybe that’s the moral of the story. If you want your financial worries to be solved, then study harder in high school so that you can be admitted to the top private U’s.</p>
<p>Perhaps the most telling point Vedder makes in this article is that so-called “private” colleges and universities in fact enjoy enormous public subsidies. My guess is that by the time you calculate the value of taxpayer-supported research and all its tax privileges from local property tax exemptions to tax-exempt “charitable” contributions to tax-free growth of its investment portfolio, Harvard’s public subsidy-per-student is many multiples that of a “public” university like, for example, UMass-Amherst.</p>
<p>“Well, maybe that’s the moral of the story. If you want your financial worries to be solved, then study harder in high school so that you can be admitted to the top private U’s.”</p>
<p>If only all of life were as simple as the above statement.</p>
<p>When you look at the middle quartile scores of these elites, the range can be shocking.</p>
<p>At Harvard, it’s ACT mid range is 31 - 35. That means 75% of the school has scored in the 97th percentile range or higher (mostly higher!). That hardly represents “the public” at large. To claim that they are “more public” is ridiculous. </p>
<p>Simply “studying harder” will not get you into these schools. Studying more and practicing for tests, just got us into the situation where we’re at now…where only the tippy top (unhooked) students can get in. With even more students “studying”, will start seeing mid ranges of ACT 34 - 35! And acceptance rates dropping to 1%!!!</p>
<p>Good students without strong stats (GPA 3.5/ACT 25), whose EFCs are in the $15k+ range, will often find that their local state school to be their most affordable option unless they find a lower ranked school that gives lots of merit for just good stats.</p>
<p>Let’s remember that much of the wealth posessed by “elite” private colleges is founded on donations from generous alumni. Research grants and tax-exempt status do not explain billion dollar endowments. Even the public UMichigan has a substantial endowment gained from alumni contributions and fund-raising.</p>
<p>Note that the article mentions CSU East Bay, which is an unimpacted CSU. This means that in-state freshman applicants meeting [minimum</a> CSU eligibility standards](<a href=“Cal State Apply | CSU”>http://www.csumentor.edu/planning/high_school/cal_residents.asp) get in. It is rather unlikely that many of the same applicants have a realistic chance of winning the Harvard lottery.</p>
<p>You’re not serious? Go to Harvard’s “planned giving” page. It’s all about the tax advantages of making charitable donations to Harvard–i.e., taking advantage of tax subsidies. Here, for example, is what Harvard says about the “charitable lead trust,” a legal tax-avoidance device whereby the donor makes a substantial gift ($1 million minimum) to a Harvard-administered trust, with the income to support designated Harvard programs for a specified period of years (say, 10 or 20 years), after which the trust terminates and the trust assets are distributed to the donor’s children or grandchildren subject to sharply reduced, gift, estate, and generation-skipping transfer taxes:</p>
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<p>Not to mention that Harvard’s endowment has grown tax-free since forever. If you or I invest after-tax money (i.e., money we’ve already paid income tax on), we’ll pay additional taxes–either capital gains tax or ordinary income tax, depending on the nature of the investment–on the growth in value of that investment. If you or I put money in a 401(k), it will grow tax-free; but eventually we’ll need to take that money out, and at that time we’ll pay tax on it. Harvard’s endowment consists of funds it acquired tax-free (or more correctly, tax-subsidized since the donor gets a charitable deduction); its investments can grow tax-free forever, and when it takes money out, it owes no tax. That’s an enormous set of tax subsidies. To suggest tax subsidies played no role in the growth of Harvard’s multi-billion dollar endowment is absurd.</p>
<p>There’s nothing wrong with an educational institution having tax-free status on its endowment and its profits since the gains are to be used for financial aid, etc. but, in cases like the ivies, where small amounts of gains are actually being used, and the endowments keep growing to mega sizes (rich getting richer), perhaps they should lose some tax-free status on a portion. Maybe the gains on the first five billion could be tax free, but after that…taxed. Or some other calculation. Or maybe X gains per year are tax free, but after that, taxed. That way all of the “less rich” endowments would remain the same, but those with mega, mega endowments would have to pay some taxes.</p>
<p>If I remember correctly, PTA and other tax-free groups can’t just keep carrying over money year after year…they have to spend a good bit. But maybe I’m not remembering that correctly. Others will know more.</p>
<p>Let’s look at Kiplinger “best value” data to compare not just Harvard to Cal State EB, but private schools to public schools more broadly. Here’s what I find from averaging the Kiplinger numbers:</p>
<p>Avg Total COA … Category
$48,235 … 100 “best value” LACs
$47,747 … 100 “best value” private universities
$33,958 … 100 “best value” public universities, out-of-state
$19,899 … 100 “best value” public universities, in-state</p>
<p>Avg Net Cost* … Category
$29,610 … top 20 “best value” public universities, out-of-state
$26,129 … 100 “best value” public universities, out-of-state
$25,763 … 100 “best value” private universities
$23,066 … 100 “best value” LACs
$21,042 … top 20 “best value” LACs
$20,769 … top 20 “best value” private universities
$12,070 … 100 “best value” public universities, in-state
$10,784 … top 20 “best value” public universities, in-state
Average Net Cost is the average of: total COA minus average need-based aid;
“Top 20” refers to the Kiplinger rankings, which consider quality factors as well as cost</p>
<p>Merit aid is another consideration.
Avg Net Cost after Merit … Category
$36,597 … 100 “best value” LACs
$36,417 … 100 “best value” private universities
Merit aid (in varying amounts) is awarded to 40% of students at the average “top 100” LAC and 35% of students at the average “top 100” private university. Kiplinger data is not available on merit aid at public universities.</p>
<p>I am convinced that many students would have found a school that would have provided them with extensive aid - whether financial aid at a rich private school, or merit aid somewhere else - if they had simply studied far harder. Fine, perhaps they wouldn’t have gotten into Harvard, but they could have gotten into somewhere quite decent and for low cost. </p>
<p>Let’s be perfectly honest - many (almost certainly most) high school students do not really take school seriously and hence do not study very hard.</p>
<p>Yet another way is to simply say that donations to certain extremely wealthy universities are no longer tax-deductible for the donors. The donors are still free to give whatever funds they want to those universities, but those deductions cannot then be used to lower their tax payments. But if those donors want to give to their poor local state universities, those donations would be fully deductible. </p>
<p>Frankly, I think the most egregious example of academic institutions who truly do not need any more tax-deductible donations, without a doubt it must be the elite business schools. Harvard Business School, Stanford GSB, Wharton, Northwestern Kellogg, Chicago Booth - these institutions truly do not need more donations. They are swimming in cash and yet wealthy corporate benefactors are eager to donate more. Nor is it particularly clear that the outputs of business schools actually provide a net benefit to society, as the trauma of the last few years has demonstrated so vividly.</p>
<p>“Frankly, I think the most egregious example of academic institutions who truly do not need any more tax-deductible donations, without a doubt it must be the elite business schools. Harvard Business School, Stanford GSB, Wharton, Northwestern Kellogg, Chicago Booth - these institutions truly do not need more donations. They are swimming in cash and yet wealthy corporate benefactors are eager to donate more. Nor is it particularly clear that the outputs of business schools actually provide a net benefit to society, as the trauma of the last few years has demonstrated so vividly.”</p>
<p>However, of those who do, there are still far more than will be able to get into the schools with very generous need financial aid which are highly selective and prestigious. Or big merit at slightly less selective schools (e.g. Robertson).</p>
<p>Of course, serious students can also go the opposite direction in school selection and go for the easy big merit. But many of the schools offering that are lower selectivity and prestige public schools (e.g. University of Alabama – Tuscaloosa, Birmingham, Huntsville).</p>