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<p>That’s an interesting point, but I’m skeptical about the “surtax” idea. That concept would make sense if Oberlin’s sole source of revenue were tuition, but that is not the case. The college also has an endowment of about $700 million, which at a standard 5% payout would produce $35 million in annual revenue. That far exceeds the $10.8 million the college invests annually in merit awards, presumably to get the students it wants.</p>
<p>The college also spends about $40 million a year on need-based aid. So I suppose you could say the college spends more on aid ($40.6 million need-based + $10.8 million merit = $51.4 million total) than it takes in from endowment payout ($35 million), so to that extent there’s a $16.4 million cross-subsidization going on. But remember, that $16.4 million is coming not just from full-pays, but from every student’s tuition; everyone is contributing to a common fund to enable strong students to attend who otherwise would not be able to do so. So if there’s a “surtax” it’s shared by the entire student body at roughly $5K per student, but it’s used to enable 83% of the students to attend who otherwise might not be able to attend, and without them (it’s fair to assume) the college would likely have a far weaker student body by virtue of missing both highly qualified but high-need students currently supported by the college’s need-based FA, and highly qualified but low-need students who are drawn to Oberlin by merit aid.</p>
<p>So maybe it’s not such a bad bargain if an extra$5K/year places you admist a strong student body.</p>