<p>Of course, an individual legacy student may be a high-financial-aid-need student. But over a large enough number of students, the legacy pool will have lower average financial aid need than the non-legacy pool.</p>
<p>So…? You’re still using conjecture.</p>
<p>You want to say, some will be wealthy, so all this is about more bucks? But you don’t know it is. Nor do you know how legacies appear in the larger pool, just other assumptions about stats. So this goes in circles. </p>
<p>Harvard receives around $600 million of federal “sponsored” support. That’s about three times what their undergraduate tuition receipts are.</p>
<p>How different might Harvard be it it became tuition free? Would not charge for room and board? </p>
<p>Would it help or hurt the lowest SES? Travel and personal expenses would not be covered by financial aid and no Pell nor SOEG grants available. </p>
<p>Food for thought. </p>
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<p>Perhaps it depends on specific situations within the low SES group. For example, those from divorced families with uncooperative non-custodial parents would greatly benefit from this theoretical situation, since they tend to be out of luck with financial aid in the current situation.</p>
<p>If H became tuition-free, it might see more donut-hole income families applying.</p>
<p>Harvard gets 35% of its budget from endowment earnings (incredibly high). 20% is from student payments. Which is an incredibly low number for a college. But still a huge part of its budget. </p>
<p>To eliminate all student payments its $30 billion endowment would have to increase by $15 billion to stay equal with its current model.</p>
<p>Instead of raising an incremental new $15 billion, it could keep its admissions practices status quo. Which means doing things in a way that (while “need blind”) makes sure that it admits enough students whose families can pay. Legacy admissions is a piece of that business model. So is early decision, prep school admissions, having very high academic stat requirements, etc. </p>
<p>That’s why the connection of legacy admissions to alumni donations is typically over-stated. A Harvard alum who consistently donates $5k a year will have donated $125k by the time his kid applies to college. If his kid gets admitted, he’ll send $240k over the next four years.</p>
<p>To produce that four year cash flow, you’d need $1.2 million of endowment/alumni giving.</p>
<p>Is this 35% budget for undergrad only or the entire school? </p>
<p>“Harvard alum who consistently donates $5k a year will have donated $125k by the time his kid applies to college. If his kid gets admitted, he’ll send $240k over the next four years.”</p>
<p>While that’s not nothing, that is still above the vast majority of plain vanilla legacies who aren’t donating, or who are donating truly token amounts, like $50 or $100.</p>
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<p>Must have a few apples and oranges in there. What is the current net cost of 6,000 students at anywhere between 15000 and 30,000 ? </p>
<p>What has been the average return on 1B of H endowment for the past five years. Additionally, changes that the dedicated scholarship endowments are quite important at H, and that raising 200MM a year would be a cinch in Cambridge. </p>
<p><a href=“http://www.hmc.harvard.edu/investment-management/performance-history.html”>http://www.hmc.harvard.edu/investment-management/performance-history.html</a></p>
<p>6000 x 60,000 =360,000,000.</p>
<p>I believe their current scholarship funding is at 160 million which means they probably need to fund another 200 million to make it free.</p>
<p>All endowments are required (?) to spend 5% which means Harvard is using about 1750 million dollars to support the school spending?</p>
<p>So theoretically, they need 200 mil from somewhere, not necessarily a much larger endowment.</p>
<p>Colleges are not required to spend 5% of their endowments each year. Larger endowments don’t. See: <a href=“Research That Drives Thought Leadership | Institute”>Research That Drives Thought Leadership | Institute;
<p>Harvard is an interesting case. It is well known for operating under a system known as, “every tub on its own bottom.” <a href=“https://www.insidehighered.com/news/2010/12/13/budget[/url]”>https://www.insidehighered.com/news/2010/12/13/budget</a> </p>
<p>During the crash, different parts of Harvard had differing degrees of financial pressure: <a href=“http://yaledailynews.com/blog/2009/11/18/budget-cuts-hit-harvard-harder/[/url]”>http://yaledailynews.com/blog/2009/11/18/budget-cuts-hit-harvard-harder/</a> </p>
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<p>So the endowment is not a big pot of money supporting all parts of the university equally. The undergraduate college might depend upon good relationships with the alumni body to a greater degree than acknowledged.*</p>
<p>*For all I know, not being a Harvard person.</p>
<p>I wonder whether their graduate schools use more money from the endowment than their undergraduate college.</p>
<p>Compared to the parents of the traditional/non-professional graduate school students, more parents of UG students are expected to pay a more significant amount. I guess, overall speaking, the grad schools (including their professional schools) may cost the school more. Unlike Princeton which has a smaller grad school, all the grad schools (combined together) at Harvard University could be even larger than their UG college and I think a higher percentage of grad students get paid to attend the school. (Granted, some professional schools, like Harvard Law, could be quite profitable to the school.)</p>
<p>Sometimes I think the strategy that is used by these tippy-top universities is that they boost their overall prestige by boosting the prestige of their graduate schools. Once their overall prestige is boosted, many families are willing to pay a significant amount to send their child to their UG college.</p>
<p>Top LACs do not use the strategy.</p>
<p>Yes, PhD students get paid to attend, but that money presumably comes from research grant and similar revenue that the school is getting to work on the research projects that the PhD students are working on.</p>
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<p>Might be true for univesities. However, in Harvard’s case, they seem to be targeting 5% or more on average.</p>
<p><a href=“Endowment - Harvard University”>http://www.harvard.edu/about-harvard/harvard-glance/endowment</a></p>
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<p>Re: “from a low of 4.2 percent in fiscal year 2006”,</p>
<p>Did this low percentage (4.2%) give them the troubles? I remember that two years after 2006, these few colleges all of a sudden sweetened the deal for the parents of their college students. I also vaguely remember that, around 2006-2007, these colleges were investigated (by Congress?) to see whether they, as a non-tax-paying/non-profit organization, are too stingy to the students.</p>
<p>Its possible to head down some blind alleys when attempting to analyze financials for non-profits like Harvard which are very unique. But here is a link to the most recent statements.
<a href=“http://finance.harvard.edu/files/fad/files/har_fy14_financialreport.pdf”>http://finance.harvard.edu/files/fad/files/har_fy14_financialreport.pdf</a></p>
<p>Among the facts shown is that the law school funds the largest % of its annual revenue with tuition, followed by the business school. The divinity school is near the bottom, although its presumeably small compared to the others.
Arts and sciences gets about 20% of its revenue from tuition, compared to law at 46% and business at 39%. All this is in the first set of bar graphs, but its on a percentage basis so you’d need to know the absolute numbers to understand how they parse out.</p>
<p>It would be interesting to lay out the Ivy’s vs each other, plus a couple of other benchmarks like MIT, Stanford, and say, Michigan, Berkley and Virginia. </p>
<p>Usually the Board of the College (or whatever it’s called) allocates an annual percentage (of the general fund) based on projected needs plus some slush. This is different than some contractual need to use growth (or a percentage) of individual endowments, per donor specifications.</p>
<p>Around 2006 or 2007, there was fuss among all the colleges, when one Ivy was found not to be using an older endowed fund as the donor had originally specified. Lots of complications of need-only aid. College lost the lawsuit that the (current generation) family brought. That’s the issue I know from that time frame.</p>
<p>Harvard Arts & Sciences gets 51% of budget from endowment, 21% from student payments; 15% from govt and other sponsored funding. That’s probably about as high (for endowment) and low (for tuition) as you could find anywhere. A&S endowment is $15 billion. If you wanted to replace the student payments, you’d need another $6 billion of endowment. </p>
<p>Even Harvard needs those parents to write those tuition checks. </p>
<p>Does Harvard Arts & Sciences include both the UG college and the graduate school (excluding their 12? professional schools)?</p>
<p>If yes, how much of the endowment distribution is spent on their UG college and how much is on the graduate school.</p>
<p>The often mentioned “selling point” of Princeton is that because their graduate school (including the professional ones in this context, which it has none, I think) is smaller compared to other elite colleges, it has more “undergraduate focus”. LACs have the similar selling point.</p>
<p>I once learned that the research groups at some professional schools (yes, they award PhD degrees as well) could be larger than the counterparts of their traditional/non-professional graduate school. Some of the students in a professional school may not be in a professional program (i.e., not getting certified and not becoming a licensed professional after graduation.)</p>