<p>Most of the schools that are being discussed here have very small endowments, so these schools don’t really count on ‘being paid out of the endowment’. These schools are very tuition dependent, so they really need students to enroll in order to make it through. Their worry from year to year is not that they won’t get enough donations, but not enough students. Just a few years of less than expected enrollment means serious problems.</p>
<p>As for high price, it is well-known that people consider the sticker price a marker of quality. So a higher price brings in more applicants and thus more people likely to attend. And again, because these institutions are so heavily dependent on tuition, they need to attract students. The higher price actually convinces people to apply. See several articles in major papers over the years about how schools have raised tuition and seen an increase in applications, enrollments, etc. Of course, for some it may have the effect of dissuading applying, especially if they are unaware of the discounting.</p>
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<p>This article is a bit out-of-date, though.</p>
<p>As for financial aid, most of these schools with low endowments have very poor need-based aid, heavily weighting their resources towards ‘merit’ and overall discounting. They typically heavily gap students and their aid is mostly in the form of loan, often putting loan amounts as high as 7K.</p>
<p>The Ivy League schools and their policies with regards to aid should not be used as a proxy for what happens at most other private schools, especially the same, regional and not highly endowment private LACs. They operate on a totally different set of conditions.</p>