Harvard and the Ripple Effect
Posted on December 31st, 2007 in Uncategorized | 12 Comments »
In the Boston Globe, Linda Wertheimer follows up on Jonathan Glater’s Times piece of a couple days ago, looking at the consequences of Harvard’s recent decision to enlarge its financial aid policies for families making up to $180,000 a year.
Most of the colleges doing away with loans belong to an exclusive group of roughly three dozen schools with sizable endowments - $35 billion, in Harvard’s case. Their shift is increasing pressure on less-affluent colleges to come up with new strategies to sweeten financial aid for a wider group of students, some of whose families have been calling admissions officers asking whether they would be offering no-loan aid deals, too.
…Yet, even if all colleges could afford to eliminate loans, several admissions and financial aid directors say they would be reluctant to change a long-held tradition of holding students and their families responsible for part of college costs if they can afford to contribute.
Is it possible that students who don’t have to pay for college would feel less invested in the experience and value it less? Sure it is.
“Philosophically, one of the dangers is we’ve made debt a four-letter word,” said Lee Coffin, the dean of admissions at Tufts, which this fall eliminated loans for students from families making less than $40,000 a year and will not extend the offer to higher-income families. “I wonder what it will do to a generation that will go to college without any personal sacrifice. You start taking loans away, and you start saying, ‘Here’s a free ride.’ “
But it also seems possible that many students who got a free ride to Harvard would come out of those four years with a deep sense of gratitude to the institution, perhaps one that would result in financial contributions down the roadâespecially without those pesky loans to pay off.
It’s fascinating to watch this debate that Harvard has sparked. This is a good conversation to be having, especially because we don’t talk enough about higher education (and education generally) in this country. Drew Faust deserves some credit for helping to spark this debateâand not feeling that she has to dominate it.
12 Responses
12/31/2007 10:37 am
Great debate Richard and thanks for your fairness in crediting Drew Faust for initiating it with her initiative.
Your hunch that “many students who got a free ride to Harvard would come out of those four years with a deep sense of gratitude to the institution, perhaps one that would result in financial contributions down the roadâespecially without those pesky loans to pay off” is particularly interesting. Obviously many financial aid officers are not as imaginative. Perhaps the real issue this debate is highlighting is the necessity to bring imaginative leadership to Universities,the kind of leadership Drew Faust is demonstrating.
Your hunch of course is a testable empirical question, but to answer it someone will need to take the initiative. If any University is in the position to take the risk to experiment it is Harvard. Isn’t it wonderful that Drew Faust understands that and is ready to use Harvard’s resources to answer these kind of worthwhile questions?
12/31/2007 10:44 am
Linda Wertheimer talks also about another scandalous fact in higher education, the significant increase in tution cost in real terms over the last 20 years.
If a sizable number of universities are to follow Harvard’s lead, particularly those who can’t rely on endowment income to underwrite the cost of the education they provide, they will need to address the drivers of the out of control inflation of college tuition. That is much harder to do because unlike increasing financial aid, which has no obvious costs and many benefits, bringing expenditures under control has clear costs.
12/31/2007 12:03 pm
Why don’t you have the money, 9.44? Can you break it down for us? Otherwise it’s simply hard to fathom.
12/31/2007 12:04 pm
Linda Wertheimer’s article is a poster child for the kind of ill-researched journalism that has become characteristic of The Globe’s when it comes to education. She does not even mention that the motivattion for Harvard’s move is the current debate regarding whether a private corporation that cannot demonstrate that it spends 5% of its endowment income is indeed contributing to the public purpose that justifies its tax exempt status.
The debate you propose Richard, should really be about this issue, not about the level of subsidy places like Harvard decide to transfer to students to justify their internal cost structures. Let the private practices of Universities remain private, not the subject of public debate, and let these private corporations pay taxes on their income and use these public resources to fund State and Federal public programs to address important purposes such as improving K-12 education and college access for poor students.
Private institutions like Harvard are not to be expected to address these public concerns, they never have and they don’t have. Let them just pay taxes on the income they make as private corporations and keep the rest of their own internal affairs private.
12/31/2007 12:22 pm
It stands to reason that if Universities expect to have tax exempt status they should report to the public enough information demonstrating that they serve a public purpose and that they manage their resources well.
Some of this information includes:
1. What do their graduates learn? This requires instituting value added assessment systems that can help the public discern what knowledge students gain when they attend different institutions.
2. Who benefits from access to each university and college? This requires transparent reporting systems on the socioeconomic and ethnic composition of the applicant pool, admit pool and graduating pool to understand how those who benefit from public subsidies -in the form of tax exemptions- reflect the population at large.
3. How do universities manage their resources. What is the cost structure of different programs and units? What percentage of expenditures are instructional expenditures? What percentage are administrative expenditures? How are faculty and administrators paid in each University, and how does that compare to remuneration in the sector?
4. Do universities comply with the legal framework governing other public entities? For example with regards to discrimination.
12/31/2007 12:51 pm
Excellent, 11:22am. And those requirements would apply to churches too, right? This blog is beginning to sound like those Sparatacist Youth League folks calling for Harvard to be nationalized.
12/31/2007 2:33 pm
11:03 — Clearly you don’t live in the New York metropolitan area.
12/31/2007 8:15 pm
Since when is Harvard a Church or a Religion? Perhaps the institution is sustained in as much Faith as in Veritas but if the State had received state taxes on the income generated by the endowment of this private institution, and spent only a fraction of this income in the State’s education budget, it could fund the boldest education reform ever in the State’s history and one of the most ambitious education reforms in the nation.
Now, would Harvard graduate Deval Patrick, and other Harvard graduates in the State House and in Congress have the will to claim from Harvard what is only fair?
12/31/2007 11:09 pm
Just so long as you treat all nonprofits the same way, my friend, the Catholic church included.
1/1/2024 1:46 am
I thought it was the status of ‘non profit’ that was in question for Harvard. Non profits are supposed to do just that, to cover their costs and make no profit. How is an organization that can’t spend 5% of the INCOME netted by its endowment a non profit?
Happy New Year!
1/1/2024 10:55 am
No further tax evation
without serious examination!
A Mass. Taxpayer.
1/1/2024 10:10 pm
At least Harvard doesn’t tell its community who to vote for like the Catholic Church does, a serious violation of non-profit status. How do they get away with it?
Do you really think that Harvard would have stayed in business for 350 years if it spent 5% of its endowment or more every year? Over the long run, there are going to be lean years and fat years. You moderate your expenditures and plough some of the interest back if you want to stay in business forever. Of course, if your objective is to have Harvard go out of business, or be weakened, it makes sense that you would want it to spend down its endowment. Perhaps what Congress wants is simply for Harvard to follow the US savings rate, which is, what, 0%? Works great for ordinary Americans, why not for Harvard?