Harvard's status as a premium product might be harder to maintain if they didn't inflate their prices to stay above their "standard" competitors (state schools).
They can maintain their elite status while heavily discounting tuition to those with financial need, since the very image of "premium product" means that there will always be people willing to pay for it. It is essentially a self-fulfilling idea.
I recall visiting Harvard during a high school debate tournament, and being utterly unimpressed with the facilities compared to what I had seen at non-ivy-league schools. The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates.
The flipside of this is that we are talking about goddamn Harvard. They don't need high prices to signal that they are an elite school, they have a reputation that literally goes back centuries.
Besides, the reputation of a school isn't built on its tuition, it is built on the alumni. The only "positive" signal from a high tuition is that it is a filter to reduce the number of poor students that your child might have to interact with and increase their chances of falling in with some other elite rich kids to fast track their way up to the C suite or some lucrative board seats.
The flipside of that is that if Harvard charged $1M a year, they'd still have more applicants than spots.
The sticker price of Harvard is not what the median applicant pays. Some applicants -- e.g. Jared Kushner -- literally do pay millions [0]. Others pay a small fraction of that [1].
My 2c: lowering the sticker price at elite schools would be great because it would lower the perceived barrier to entry. Those perceptions matter, especially to folks who don't come from the Professional Managerial class and don't have a clear understanding of how the system works.
But I also see why they don't -- they do, after all, want to make sure that rich families pony up.
It still raises the barrier to entry since the kids who can't technically afford the school now have to not only qualify to be accepted, but also qualify for the scholarship. The latter is not a guarantee.
Some private schools (not sure Harvard is one) have a "if accepted you WILL go" rule - which boils down to pay as much as you can, take some (usually relatively low) loans, and the college will cover the rest. You may have to go on work-study.
I think the "loans" part should be removed, myself.
I don't know about Harvard (EDIT: now I do, it's the same), but Yale's policy on this is that they do not expect students to take loans, and that the university will provide 100% of the demonstrated financial aid need for an admit.
Princeton does the same thing. Ivy League schools are cheeper than state schools for some students.
I think this is the correct route. I don't see anything wrong with wealthy families paying a high sticker price as long as admissions is mostly need-blind, and students with less resources get a break.
+1, I attended a relatively endowment-rich private “top school” (not Harvard) and every other student I knew said “it was by far the cheapest school i was accepted to!”
Everyone I knew from high school that attended private schools, or “good schools” out of state paid out the nose (or their family did). I grew up in a relatively affluent area, so most people didn’t get much aid. My family could afford to pay for my schooling too, but I had one of the lowest bill of anyone, excluding some in-state public schools, because private schools with big endowments heavily subsidize almost all students that aren’t rich foreigners, 1%er kids, GI bill/someone-else-pays attendants.
TLDR: Schools know who can write a blank check, and they set the sticker price based on those students. Everyone else is subsidized.
Usually the hard part is the "expected FAFSA parent contribution". If you have children that may consider college, spending some time now to structure things can help (the FAFSA ignores some assets and counts others):
"The flipside of this is that we are talking about goddamn Harvard. They don't need high prices to signal that they are an elite school, they have a reputation that literally goes back centuries."
Is this true? My understanding is that Harvard was a finishing school for much of its history. It only began to transform into a world class research university on the German model after WWI.
Remember though that if you are a smart poor person (here poor means not filthy rich) Harvard will give you a discount on tuition. I'm not sure how much or how it works, but I'm under the impression that only a tiny minority actually pay the full price.
It subsidizes everyone else's tuition, and is a critical piece of the value proposition for privates schools: access. By subsidizing the the poor-but-outstanding with money from the still-accepted rich-but-dumb, they maintain the opportunity for those two groups to intermingle, granting access to networks that that poorer students would be able to break into otherwise, which the rich also benefit from in the form of having known-competent individuals in their network.
That's the primary reason to go to private school. That's what justifies the 2-4x price gap with public universities. All the niceties (not having to enter into a bi-yearly battle royal for seats in limited space classes, not having to put up with overly impacted class sizes, other little luxuries) are just there to maintain the appearance of prestige. The actual value comes from the admissions department.
> they maintain the opportunity for those two groups to intermingle, granting access to networks that that poorer students would be able to break into otherwise, which the rich also benefit from in the form of having known-competent individuals in their network.
I went to a private school and I saw a lot of friend groups and social structures that find ways to limit those networks to “rich and competent” instead of “just competent”.
Eg Fraternal organizations (bonus: also gender limited) like fraternities, finals clubs, or supper clubs with massive fees and tight cultures are one big common example. I was (embarrassingly) in such a club and there was definitely a riff between incomes (“wanna fly to New Orleans for Mardi Gras this week, we’ll only miss a few days of class?”)
Obviously spring break trips or not having to work a campus job. Eg Yacht week.
Also: expensive clubs with extra dues, equipment
A big thing that I didn’t expect, but is something that IMO schools don’t do a good job to address is that many lower-income students just don’t understand that sort of academic world because no one taught them. Eg I met a freshman student who thought professors wanted him to fail and that there was an adversarial relationship. Furthermore, he thought office hours are when the professors shouldn’t be disturbed. Once someone just explained that professors want you to succeed and hold office hours to help you succeed, he became more successful, less stressed, and spent less time studying alone. My parents taught me all this, and my high school held office hours… but many students never learn how this world works!
I think that is a myth, unless the student is paying more than say $100k per year. Elsewhere I read that average fees were about $50k, but I presume there is quite some variation.
Total operating expenses = $5.4 billion[1]
Operating Revenue: Endowment income 36%, Education/Tuition 21%, Research 17%, Gifts 9%, Other 17%[1]
The 21% Education/Tuition income is split: Degree Seeking Education 13%, and Continuing and Executive Education: 7%[3]
Student income 1.2 billion[3]
There are 30,391 students including 8,527 undergraduate and 21,864 graduate students at Harvard University for academic year 2020-2021. By attending status, there are 19,030 full-time and 11,361 part-time students[2]
Assuming teaching the students costs 2.5 billion (rest is research costs) and 25000 full-time-equivalent students, then if each rich student pays enough to fully subsidise a second poor student, the rich student would need to pay $200k, and you trend towards a larger percentage of the students being rich.
Sure, but not all of the subsidized students are paying nothing. Plenty just get enough aid that it works out to being about even with going to a public university, but with the added benefit of a larger percentage of the students being rich (and generally getting a better educational experience). The fact that having those rich kids at the school is actually the primary value proposition for expensive private schools shifts the priorities substantially compared to a "the rich kids aren't paying enough to offset all the other students" rote accounting.
I have reread your comment multiple times, and I am struggling to understand the purpose of both your comments, and the meaning of your recent reply eludes me. Are you are responding at all to the idea that “wealthier full-fee students are not subsidising other students at all”?
The closest I can paraphrase your point-of-view would be “rich students are great”, or potentially that poor students gain by associating with rich students?
Sorry, I made 2 separate points and didn't delineate them clearly.
1) The view that the value given by over charging the rich students should be based on the number of students' tuition they eliminate is not fairly representing the situation, and understates the impact of having, say, a quarter of the student body paying significantly more than the "true" price. If the school spends say 20k/student, they charge some students 60k and others 10k, then each rich student has subsidized 4 poorer students. If a parent donates a large sum to get their kid into the school, that number is likely much greater.
2) Expensive schools using their high tuition offset by discretionarily providing merit (or need chosen by merit) based aide as a filter to distill the student body to only the high-performing, rich, or both is the main value proposition of expensive schools. Every pairing both within and between those two groups are valuable to the students, relative to say an acquaintance with an economically disadvantaged mediocre student. It subtly turns the universal experience of making new friends at university into a massive opportunity for networking, which many students don't even realize while they're engaging in it. It's not egalitarian, but it is extremely valuable to its beneficiaries.
> If the school spends say 20k/student, they charge some students 60k and others 10k, then each rich student has subsidized 4 poorer students. If a parent donates a large sum to get their kid into the school, that number is likely much greater.
My point is that you are misrepresenting the scale of the figures. I suspect the figures are more like $50k fees, and $100k costs? Given those figures as assumptions, rich kids need to pay way way more, and the fees paid by poorer students matters less. Otherwise you just end up with a school with mostly rich kids. I go into my assumptions for the figures in the other post I linked to.
> Expensive schools using their high tuition
Undergrad tuition fees only makes up something like 13% of Harvard income, and some of that is paid for by “poorer” students. I think your argument hinges upon tuition income being the most significant income to the school. Remove 13% of costs (crazy admin staff) and Harvard doesn’t need any tuition income from rich kids any more for undergraduates.
Google result shows “Harvard's 2019 class [snip] a massive 82 percent of those scholars are economically advantaged” i.e. rich kids are obviously not subsidising poor kids.
I am merely trying to point out that you are making deep assumptions, annd your anssumptions appear to be false, although admittedly I have only done some superficial googling.
I presume Harvard is a finishing school, for networking and status signalling. Especially given its 98% pass rate!
> massive opportunity for networking
I would hope that poorer students manage to network into the rich kid networks (I totally agree we should be realistic about how the world works, regardless of how “unfair” it may be). Whether poor students can effectively network is another question. I have certainly seen articles from poor kids explaining how difficult it is to break into wealthy cliques e.g. can’t pony up cash to join sporting events or outings, and don’t understand the social queues.
I admit I don’t really know much about the topic, since I went to a middle class school in a country on the edge of the world, and I have never spent time with wealthy scions. I am relatively wealthy compared with my friends (excluding the friends that I made my wealth with). Note: I’m using undergraduate and graduate in the UK meaning, not the US meaning, which I don’t grok.
> The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates.
Good professors, students, and networking makes a good education though, so yes it is really going to a better education.
Nah, that's just nepotism. What you learn (i.e. what is on the syllabus) is very much a secondary factor in terms of the actual value you get out of it, at least compared to a decent state school.
Some of the best professors I've had in terms of actually learning things were in tiny departments that had no networking capabilities worth speaking of in terms of post-graduation economic success.
There are people out there who don't mind paying $200k per annum to get admitted to Harvard (for undergrad, of course). So, it is not about their prices, but their exclusivity. People go to Harvard, because Harvard recruits kids of uber wealthy, kids of powerful politicians--basically kids of the power, of the uber wealth. It is a self-perpetuating machine, which creates misery of everyone, because this machine produces the elite and the secretaries for the elite--thereby colluding among each other to the detriment of everyone else.
Yeah, and their financial aid goes pretty far. I remember when I applied maybe 10 years ago or so, it would have cost around $5k/yr or even less. Coming from a middle-class family in the Midwest.
They seem to make it possible for anyone to afford to go there. (They’re just very selective about who can.) So I would never say they’re overpriced or expensive. Maybe it costs a lot if you come from a rich family, but for them, the price doesn’t matter. And for those of us who aren’t rich, it wouldn’t be expensive.
This is very abnormal for non-elite private schools. If I’d gotten in to any of the elite schools, I think they would have been the cheapest options by far… even compared to state schools.
They can maintain their elite status while heavily discounting tuition to those with financial need, since the very image of "premium product" means that there will always be people willing to pay for it. It is essentially a self-fulfilling idea.
I recall visiting Harvard during a high school debate tournament, and being utterly unimpressed with the facilities compared to what I had seen at non-ivy-league schools. The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates.