<p>^^^^</p>
<p>100% correct.</p>
<p>As an example…</p>
<p>Soutwestern University (TX)…top 75 LAC
Tuition= $35,240
357 frosh X $35,240 = $12,580,680 in potential revenue</p>
<p>239 awarded need based institutional grant, average $26,000
239 x $26,000 = 6,214,000
115 awarded merit, average $ 16,000
115 X $16,000 = 1,840,000</p>
<p>Total Discount = 6,398,000</p>
<p>Net Revenue = $6,182,680</p>
<p>Where does the $6,398,000 in discounts come from…
Endowment = $240,000,000
Payout = 4.5% X 240,000,000 = $10,800,000</p>
<p>Let’s assume 60% of that goes towards tuition discounts (the rest towards other things)…
$6,480,000</p>
<p>Basically, the endowment would cover the discounts for Frosh only.
Annual fund contributions won’t even come close to making up the difference for Soph, Jr, and SR class discounts.</p>
<p>Southwestern actually has a very strong endowment compared to most LACs… A college like Central (IA) with an endowment of $70,000,000 is even more tuition dependent and doesn’t even come close to paying for discounts with endowment and annual fund payouts.</p>