Under $100K they're covering housing, food, and more:
> Undergraduate students from families with annual incomes of $100,000 or less will not only have tuition covered but also housing, food, health services and other student services, the university said.
A very confusing aspect of the US college system is that very few students pay the full sticker price. Most universities have sliding scales for tuition through various grants and scholarships.
Strangely, even talking to college students reveals that most of them don't understand this situation. You'll frequently hear college students explain that they got "lucky" to get a lot of grants, discounts, and/or scholarships to attend, but in reality all but the most wealthy families get a lot of "tuition assistance".
The situation confuses foreigners and even US people to no end, but it allows universities to admit a much wider range of students than they normally would. It's not uncommon to look at their statistics and find a significant portion of their student body pays nearly nothing in tuition. Harvard is taking this to an extreme, but there are similar programs at all of the other big universities.
One critical exception: There are sleazy for-profit universities who take advantage of the fact that some people don't understand this game and use it to charge exorbitant rates to people who can't afford it. Avoid those, obviously, and do your part to discourage others from looking at them.
This sliding scale tuition structure explains the massive discrepancy between the $200K+ per year sticker price for a 4-year degree at private universities and the fact that most students graduate with nowhere near that much debt.
A very confusing aspect of the US college system is that very few students pay the full sticker price.
At Harvard, that 'very few' is 45%. From the article:
About 55% of Harvard undergraduates receive some type of financial aid, according to the university.
You say:
but it allows universities to admit a much wider range of students than they normally would.
The high sticker prices combined with variable discounts aren't there to change the pool of students. Their purpose is to ensure that each student (or their family) pays close to the maximum they'd be willing to pay.
Do you like it when you visit a SaaS product's pricing page and it says 'call for pricing'?
Well, how about if it was totally normal that, before a SaaS provider was willing to quote you a price, you had to provide them with a list of your assets and a copy of your most recent tax return?
I didn't say they're trying to maximize total revenue. I said they're trying to maximize revenue from each student.
Those two are not the same.
They're not stupid. They're not going to destroy the university's reputation by admitting only people who can pay a lot. That would work for a couple of years, but eventually it would be known a party school.
They clearly also aren’t maximizing revenue from each student because it maxes out at only $60k a year. There are many students at Harvard whose families would pay more than that.
On the lower end there’s no way that 25% of the students are willing to pay nothing at all.
If they really wanted to maximize what each student pays they wouldn’t publicly disclose the formula. They’d let you in, look at your financials, and then give you an individualized quote that takes “you’re unique circumstances into account.” (They do that to some extent by offering additional scholarships to some people, but they wouldn’t give you a formula that defines the ceiling.)
If they were to set the sticker price much higher than that, it would be cheaper to hire a full time tutor for 32 weeks per year. With the price that high, it would be difficult to maintain the charade that 'tuition' fees are primarily set to fund tuition.
They’d let you in, look at your financials
But they do look at your financials. You don't just say 'hey this is what I have, trust me bro'.
Harvard isn’t even in the top 10 most expensive colleges. They could easily add a $90k tier and no one would bat an eyelash.
>they do look at financials
Of course they do. Did you ignore the rest of what I wrote?
The point was that they wouldn’t give you a price ceiling. Did those revenue maximizing enterprise software companies put “call for a quote, but it’s not gonna be more than $150 a seat”?
They could easily add a $90k tier and no one would bat an eyelash.
This is a reasonable point. I'm sure they can't deviate too much from other Ivy Plus fees, as it would show they're just being greedy. But this doesn't explain why they don't just nudge up even more over time. Maybe they can't charge $90k this year, but they could add $10k per year for the foreseeable future, as long as other Ivy Plus colleges do the same thing.
This is sort of what has happened, but it appears there's some limit.
My point is that, at some level, it becomes obviously a scam. If you charge someone $60k for a year's tuition, you can sort of justify it.
But at $90k, it would be the same price as hiring a full time (40 hour per week) tutor at $70/hour for 32 weeks. At some point what you're doing becomes totally transparent even to those who would like to believe you.
The point was that they wouldn’t give you a price ceiling.
Two thoughts about that:
1. If you're rich and your kid doesn't quite meet the bar, you can get in to a top university through donations. I'm not talking about bribing an athletics coach, but donating to the university itself.
2. If there were no sticker price at all, again it would seem very shady. It's hard to explain when you're a university with a huge endowment that gets tax breaks and federal funding, why you can't publish the maximum tuition price.
How do you think they set the sticker price? Do you think they aim to make a certain modest margin on the undergraduate class as a whole? Do you think the total amount they receive in undergraduate fees is a reasonable markup (say, 30%) on the reasonable cost of the services they provide?
I think that like any organization, there are different people with different goals. I think some are true believers and are trying to minimize cost while others are interested in building their personal power base by raising tuition to pay for pet projects.
On the whole though I think Harvard has a budget, and they set the sticker price so that when you combine tuition, disbursements from their endowment, and federal grants, they meet the requirements of their budget.
>Do you think the total amount they receive in undergraduate fees is a reasonable markup (say, 30%) on the reasonable cost of the services they provide?
Yeah because the services the provide are insanely expensive. Harvard's operating expenses are more than they get in tuition revenue, so if you look at it from a markup perspective, it's a negative margin.
You can argue that the services they provide aren't worth it, but clearly the people who go there believe they are.
Right, but how do they set that budget? The cost part of the budget is the result of decison-making.
Yeah because the services the provide are insanely expensive.
The 'insanely expensive' isn't something inherent to the services themselves. Harvard can spend tons of money because it has tons of money.
Imagine a SaaS company that has really inefficient operations. Would you be willing to pay a higher price for that product than for a competing one that has equally good features and UX, just because the former is insanely expensive to operate?
You can argue that the services they provide aren't worth it, but clearly the people who go there believe they are.
People aren't paying for the services. They're paying for the name.
Imagine this. Harvard offers any student a $20k per year discount on fees, with one condition: you don't get the piece of paper, and you can never tell anyone you studied at Harvard, or even imply that you did. Would people take that deal? They'd get all the same services, so why not?
>Right, but how do they set that budget? The cost part of the budget is the result of decison-making.
The same way any organization sets a budget. A bunch of competing interests fight it out.
>The 'insanely expensive' isn't something inherent to the services themselves.
The thing you're missing here is that sure people want the name, and the networking, but they also want and education, and an experience. The experience is very expensive to provide.
>Imagine this. Harvard offers any student a $20k per year discount on fees, with one condition: you don't get the piece of paper, and you can never tell anyone you studied at Harvard, or even imply that you did. Would people take that deal? They'd get all the same services, so why not?
Let's do another thought experiment. All Harvard students get to vote. $20k per year discount, but Harvard gets rid of the multi-billion dollar campus. No rec-center, no marble buildings, no enormous libraries, no stadiums, no manicured landscaping, no pomp and circumstance at all. Just a couple big gray buildings full of classrooms and army barrack style accommodations far enough outside of town that land and construction are cheap. Plus they fire all of their top tier professors and hire lecturers from community colleges.
Harvard students expect amenities. They expect grandeur. And they expect exclusivity, so Harvard can't just bump up their total enrollment to 50k like a big state school.
If you look at big state schools without the name, Harvard tuition sticker price isn't that much higher. University of Massachusetts Boston (ranked #214 in the US) is just under $40k for out of state students.
> it would be cheaper to hire a full time tutor for 32 weeks per year.
A large part of the value of top universities is that they have top professors. You wouldn't be able to match the quality of all the different professors a student interacts with for $60k per year with a private tutor.
Depends on the undergrad. I had a ton of interactions with top professors in undergrad because I sought it out.
Yes, because you sought it out. But consider your classmates. What's the median amount of time they spent 1:1 or in a small group (4:1 or smaller) with a 'top professor'? I would be surprised if it were more than 1 hour per week.
Also the primary benefit of Harvard vs a state school is the network effects and the credentialing of having a degree from Harvard
You've got to the core of it. The network effects and the credential are things Harvard can bestow solely because it's Harvard. The tuition fees students pay don't create the network effects. They don't create the value of the credential. These are almost solely due to the flywheel effect from the selective admissions process. Smart people want to go to Harvard because other smart people want to go to Harvard.
As a contrast to the hand waving in the other posts which claims many don't pay full price, the degree I got cost $20k per semester for the 2 years I attended university after community college, paid in full each semeser. That's one data point, I know. And maybe it's an outlier.
I'd be interested to know, of the people who got grants and other support, what percentage of their total tuition was it? And what percentage of people got support?
It's also worth noting, that there's a difference between knowing you'll have support and the uncertainty of not knowing.
In a sense isn't that exactly what OP is saying is happening today? Only the super wealthy actually pay the sticker price on college, everyone else is subsidized by some combination of taxpayer-funded grants, scholarships (usually provided by the super wealthy), or just straight-up discounts (covered by the wealthy students paying full price).
You can’t fund all this stuff only by taxing “the super wealthy.” The math just doesn’t math. That’s why every developed country that has free college also has heavy taxes on middle and upper middle class people.
Me too! But nobody is fixing to materially raise my taxes. Somehow, “the top 1%” became “the super wealthy” and “billionaires,” and engineers and lawyers and doctors continue to enjoy tax rates that haven’t materially gone up since Reagan.
If you’re not going to significantly raise my taxes, and instead are ranting about the “super wealthy,” you’re just cosplaying about universal healthcare and free college. The math doesn’t match. People in the top 1% of the wealth distribution have an average wealth of $18 million: https://taxfoundation.org/blog/super-rich-pay-effective-tax-.... They have an average AGI of about $1 million/year. The total income for this segment is about $1.8 trillion. You could double their taxes to over 50%, and that would bring in less than $500 billion a year. It wouldn’t even get halfway to closing the deficit, much less paying for universal anything.
Meanwhile, people in the top 10% have an average wealth of $3.8 million, and average AGI of $273,000. Their total income is $4.9 trillion. So the people outside the top 1% but inside the top 10% reflect a potential tax base of $3 trillion. And we refuse to raise taxes on these people.
Fun fact: if we taxed all income over $500,000 at a 100% tax rate it wouldn’t even cover our current budget deficit, let alone allow for such a massive spending increase.
Em. People filing returns over $500K reported an aggregate AGI of $3.8 trillion for 2022. After subtracting out the $981 million in income taxes they paid, you'd still be left with about $2.8 trillion, about a trillion more than the deficit.
Not that they wouldn't immediately shield their income if you tried. Still, I don't see any issue with maximizing our tax revenue from the top 1% by increasing their taxes until total revenue starts to drop, though I'd also be happy just dramatically increasing inheritance taxes and eliminating tax shields since billionaires still die regularly.
This is sorta why the hysterics by the punditry on Twitter and the media about student loan debt or about college degrees being worthless, are overblown or unfounded. The sticker price is seldom, if ever paid in full.
Not only huge discounts on the tuition-side, but also tons of forbearance and payment plans after graduating. There are many people with homes, 6-figure jobs paying off loans slowly and gradually, while enjoying career success and a high standard of living compared to those who do not have degrees.
It's not as daunting as the large figure of money would suggest when the returns from a degree are still largely positive compared to without a degree.
This is oversimplifying. The path to a good career after graduation is still fraught with many traps and pitfalls.
Ask anyone who finished university in late 2008 to 2010 how their job prospects were compared to those that finished just two years earlier in 2006.
Compounded by the fact that there is no way to discharge the debt if you get exploited into signing up to $100,000+ of debt for a degree that provides no good stable income afterwards.
Close to 90% of all student loans are federal and qualify for income based repayment. The vast majority of students don’t have any private student loans, so if they can’t find a job they pay nothing.
If they make money but not enough, they’ll pay 10% of any income above 1.5x the poverty level.
Plus there are very generous forbearance terms if you’re temporarily struggling.
"There are many people" is a useless platitude to any number of people who fall through the cracks.
Personally I had to wait until I was 25 to get some loans I needed to finally finish a degree, because my family was paper rich, wasn't paying anything, but was still on speaking / visiting terms with me. The system doesn't accept that as an answer; you have to show an extreme degree of alienation / separation (I can't remember the specifics, but a loan counsellor basically told me to give up).
>There are many people" is a useless platitude to any number of people who fall through the cracks.
And so too is "any number of people who fall through the cracks". For any given situation or context in which the vast majority fare okay at least, there will be a certain number who fall through the cracks (just as there will be some who do very well) and you can't design all the rules around a system to completely eliminate the possibility of falling through the cracks, or at least you cant without risking externalities that make some key part of it worse for many more people.
As a criticism of any complex system, pointing out unusual worst cases is usually little more than a sort of useless hand-wringing for the sake of doing so, unless one has a solution to propose.
I agree with the idea that you can't get rid of all the cracks, and I'm not particularly salty that I did manage to fall through one of them (for a while). It's just one minor problem in, as you said, a complex system that is full of them, as all systems are.
However, I think you're descending a sort of contemptuous name-calling with the "useless hand-wringing for the sake of doing so", considering that the subject was an attempt to make a very large change to the way the system works. That change was rejected (and, as the OP to my comment said, called by many "hysterics"), but it was nonetheless a proposed solution. Now... we're in the process of a massive change of a very different type, with the DoE getting chopped into pieces and universities being threatened (very vaguely for now, since the focus is still on other areas, but I think there's no doubt that their time will come if the current admin can maintain its momentum).
In general, the populace is aware that there are quite a lot of cracks and is, in the haphazard way that democracies do things, trying to apply solutions.
I also wonder if people who get loans might be different than the people who search for and get aid. It might be more frictionless to get into debt than get a scholarship, even if it would be possible.
It's a good move but blanket 200k may mean that a kid from a well-off family in Iowa with a 150k income is able to get free tution while a kid with not so well off family in California with a 210k income is unable to get free tution.
Income as a number doesn't have much meaning until Cost of living is taken into account.
But I’ve also never met or heard of a $200k household that I wouldn’t consider “well off”. Typically, stories about these “not well off” yet “over double the median income” households are budgeting issues.
People don’t like to admit that because most people blame external forces instead of evaluating their own choices.
Multiple kids + unexpected chronic health issues can quickly change this equation. And before you go judging someone for having multiple kids, consider that a) demographic collapse is probably very bad and we don't want our society to make having kids exceptionally hard, rather than the default norm and b) people may decide to have kids without expecting significant and rapid changes to inflation and cost of living.
Often those "chronic health issues" (obviously not you specifically) are related to poor health choices that are easily fixable. In a world with easy access to Ozempic/Wegovy/Zepbound, many have no excuses in the 200K+ club for not fixing that.
You would need to set aside $10-15k a year for 18 years, depending on the interest rate, to accumulate $320,000 in cash for 4 years at an $80k school at full freight.
A family making $200k in California takes home about $130k, so call it about 10% of their net income over the child's lifetime. That's some pretty significant budgeting!
It depends on location. In San Francisco a mortgage on a median house might be over $80k/year and child care for a young kid $20k-$30k/year. Then $50k in taxes, assume two kids, that's maybe $180k and we haven't even bought groceries yet. Or healthcare.
It seems unlikely you are spending $30k on child at the same time as you are sending kids to college. Not many families have such an age gap.
Getting a mortgage that is 40% of your income is fairly irresponsible (I’m sure it does happen though). You also didn’t count property tax which is probably like $20k
The comment I replied to implies that all $200k income families are "well off". I think this is a reasonable counterexample, and in SF tuition assistance for childcare includes families up to a little more than $200k so the city government appears to agree.
Yes, it would be extremely irresponsible for a family making $200k to buy even a very bad house in the Bay Area. The bottom rung of the home-owning middle class is much higher than that.
Okay but renting a normal sized place would be $60k. Then child care for a young kid. Then taxes. If both kids are in childcare, fine, but childcare costs go away after they go to school.
Besides the obvious that there needs to be some sort of cutoff, it's more of a socioeconomic angle, not economic. By doing it this way it also encourages a larger geographic distribution and thus a wider range of background demographics.
To make matters worse, a kid from a well off family in Iowa is way likelier to stand out and get admission to such colleges than a kid from California, especially the bay area, where smart kids from well off families are common and standing out is hard.
People are going out of their way to extol Harvard's supposed largesse, and how hardly anyone pays sticker. First, 45% do pay sticker according to the article.
Second, another way to look at this is that Harvard is putting a cap on a family earnings that it doesn't feel entitled to. ~$83K/year (post tax) is a massive amount of money for one child of a family making even $300K/year or $500K/year (pre tax).
The sticker price does matter, and this exemption is lipstick on the pig.
The problem with American higher education (and American healthcare, for the matter) is that they have persistently grown to opportunistically consume all the discretionary income of Americans.
> People are going out of their way to extol Harvard's supposed largesse, and how hardly anyone pays sticker. First, 45% do pay sticker according to the article.
> Financial aid will be available to many students from families with incomes above $200,000, depending on individual circumstances.
The cost of an American higher education is something worth discussing, but I think starting the discussion with inaccurate information is problematic.
Sigh, there is a lot of misinformation about this and higher education tuition.
* It’s not a new policy, when I went to school the same threshold was ~$150k
* It’s not a step function, it’s a sliding scale (with <0 tuition, i.e. cost-of-living assistance below that number, and some (but not full) tuition above $200k)
* It’s not just for athletes or minorities - I was neither (by Harvard standards, Indians were fairly common and not considered a minority in admissions processes). Lots of smart kids whose parents did not make a lot of money fell into this bucket.
* It’s not a small subset of the student body (as tzs said); despite what you might perceive, a large fraction of students came from modest backgrounds. It was balanced by a sizable fraction that came from incredibly well-off backgrounds. But the total number that had donated a building to get in were pretty small (there are only so many buildings).
Higher education has many, many flaws, but please examine the facts before you respond with knee-jerk cynicism.
Thank you for this. Unfortunately (IMO) many people seem to have a very short memory, or lack research skills, and I think this leads people to a cynical response.
On France the elite schools are very expensive (by our standards). Universities are basically free.
They are expensive for wealthy people. Depending on how much you earn, you get a progressive cost that covers the tuition of the less fortunate. There is no threshold (200k would be insane).
I pay a lot but I also keep in mind my father who came from an extremely poor family and graduated from our most prestigious engineering school. This what we call the social elevator and it works.
With the size of Harvard’s endowment, 11% of its operating income coming from federal sources, and its tax exempt status, it’s hard to understand why anyone has to pay tuition regardless of need.
Tuition is around 21% of their revenue and the endowment is 37%. That corresponds to around a 4.8% withdrawal rate currently which would go up to around 7% if they covered tuition. And 7% is probably too high to do in perpetuity.
Harvard has an endowment of about $55 billion dollars. Student population is about 22,000. At an industry standard 4% drawdown, they could provide $88,000 of “aid” to every student indefinitely.
If you exclude foreign students and make them pay a full ride, or change that cap to a family net worth of <$5M, you could easily cover everybody else.
> At an industry standard 4% drawdown, they could provide $88,000 of “aid” to every student indefinitely.
Just to confirm: Are you saying that all endowment proceeds should go towards student aid? What would you suggest be done to restricted-purpose investments?
To the question "How does Harvard afford raising the threshold by $50,000?", I think the plan is to use endowment investment returns to cover the cost.
It's amusing that people keep wanting to portray Harvard admits as Horatio Alger stories when even the "middle class" ones that get free tuition are the least sympathetic, most elite (by virtue of getting in) people on the planet.
Building a system that's resilient to a bunch of smart people going "what if I retire a few years early if I realize my kid might go to Harvard?" seems nontrivial.
This doesn't work as I actually did this game! Had no job and no income. They ask for a list of assets and they take 5% per year. So if you have a $1M in savings they take $50K per year.... $2M and then you are paying full boat in any case.
> Once you're admitted, the Financial Aid Committee will assess your family’s financial need and offer you an award to meet it. We determine need based on your family’s income, assets, and overall financial circumstances. … We know that each student's financial circumstances are unique. Your financial aid officer will work with you all four years to understand your needs and take the stress out of affording Harvard.
Well fuck them very much. They wouldn't even cover the tuition for families of faculty or workers unlike the small technical college down the street previously.
There's still some good teachers there, but a lot of them have left the rat race that the admin created. The beurocratic hellhole sitting in harvard yard is more interested in lining their pockets than in education.
Harvard provides 100% of demonstrated need; just it works out that they cover all for those earning under $200k (plus all food/housing under $100k).
So e.g. if you make $210k/year in California with a family of 4, and the parents have $300k in cash and short term investments, they cover $45k -- or about 2/3rds of tuition. With $0 in investments, they cover $57k-- 90% of tuition.
If both kids are in college in this situation, they move to $65k, or slightly over 100% of tuition in this situation.
The article never said that kids from families earning over $200k pay full tuition.
I do think the function could look pretty dang steep around $200k-- if you are in a low cost of living state with significant investments and one kid. But that's an edge case.
Please do not assume that a single article contains the full truth of a situation. People are empowered to do their own research. Curiosity is better than cynicism.
Graduated aid is like graduated taxation. It takes a bit of thinking to get your head around it, but it usually means there isn't a binary cut off point.
Tuition is often subsidized with the expectation that graduates will get a better salary than otherwise, generating more tax income in the long run than the amount of the subsidy. As such, free or heavily subsidized tuition can actually be a great investment for the government.
And yes, from that point of view, the students are the product.
This is true for public universities but does not apply to Harvard, which is not part of the government. Any benefit that Harvard obtains from an increased tax base is incredibly attenuated and not really relevant.
It’s actually easier for the Ivy League schools: they have huge endowments to cushion year to year variation, and they have massive international draw so Harvard or Yale can offer many students a great aid package and still come out ahead thanks to the rich international students paying full price for the prestige and the chance to intern with top researchers.
My wife is a high school science teacher and many of her students have been surprised that they were looking at a higher total loan with state schools because so much of the costs have been shifted away from general fund revenue.
Under $100K they're covering housing, food, and more:
> Undergraduate students from families with annual incomes of $100,000 or less will not only have tuition covered but also housing, food, health services and other student services, the university said.
A very confusing aspect of the US college system is that very few students pay the full sticker price. Most universities have sliding scales for tuition through various grants and scholarships.
Strangely, even talking to college students reveals that most of them don't understand this situation. You'll frequently hear college students explain that they got "lucky" to get a lot of grants, discounts, and/or scholarships to attend, but in reality all but the most wealthy families get a lot of "tuition assistance".
The situation confuses foreigners and even US people to no end, but it allows universities to admit a much wider range of students than they normally would. It's not uncommon to look at their statistics and find a significant portion of their student body pays nearly nothing in tuition. Harvard is taking this to an extreme, but there are similar programs at all of the other big universities.
One critical exception: There are sleazy for-profit universities who take advantage of the fact that some people don't understand this game and use it to charge exorbitant rates to people who can't afford it. Avoid those, obviously, and do your part to discourage others from looking at them.
This sliding scale tuition structure explains the massive discrepancy between the $200K+ per year sticker price for a 4-year degree at private universities and the fact that most students graduate with nowhere near that much debt.
Do you like it when you visit a SaaS product's pricing page and it says 'call for pricing'?
Well, how about if it was totally normal that, before a SaaS provider was willing to quote you a price, you had to provide them with a list of your assets and a copy of your most recent tax return?
If they were maximizing for revenue, they’d just only admit people who could afford it.
They could easily fill all of their slots with people who can afford to pay the full tuition.
I didn't say they're trying to maximize total revenue. I said they're trying to maximize revenue from each student.
Those two are not the same.
They're not stupid. They're not going to destroy the university's reputation by admitting only people who can pay a lot. That would work for a couple of years, but eventually it would be known a party school.
They clearly also aren’t maximizing revenue from each student because it maxes out at only $60k a year. There are many students at Harvard whose families would pay more than that.
On the lower end there’s no way that 25% of the students are willing to pay nothing at all.
If they really wanted to maximize what each student pays they wouldn’t publicly disclose the formula. They’d let you in, look at your financials, and then give you an individualized quote that takes “you’re unique circumstances into account.” (They do that to some extent by offering additional scholarships to some people, but they wouldn’t give you a formula that defines the ceiling.)
Harvard isn’t even in the top 10 most expensive colleges. They could easily add a $90k tier and no one would bat an eyelash.
>they do look at financials
Of course they do. Did you ignore the rest of what I wrote?
The point was that they wouldn’t give you a price ceiling. Did those revenue maximizing enterprise software companies put “call for a quote, but it’s not gonna be more than $150 a seat”?
This is sort of what has happened, but it appears there's some limit.
My point is that, at some level, it becomes obviously a scam. If you charge someone $60k for a year's tuition, you can sort of justify it.
But at $90k, it would be the same price as hiring a full time (40 hour per week) tutor at $70/hour for 32 weeks. At some point what you're doing becomes totally transparent even to those who would like to believe you.
Two thoughts about that:1. If you're rich and your kid doesn't quite meet the bar, you can get in to a top university through donations. I'm not talking about bribing an athletics coach, but donating to the university itself.
2. If there were no sticker price at all, again it would seem very shady. It's hard to explain when you're a university with a huge endowment that gets tax breaks and federal funding, why you can't publish the maximum tuition price.
How do you think they set the sticker price? Do you think they aim to make a certain modest margin on the undergraduate class as a whole? Do you think the total amount they receive in undergraduate fees is a reasonable markup (say, 30%) on the reasonable cost of the services they provide?
>How do you think they set the sticker price?
I think that like any organization, there are different people with different goals. I think some are true believers and are trying to minimize cost while others are interested in building their personal power base by raising tuition to pay for pet projects.
On the whole though I think Harvard has a budget, and they set the sticker price so that when you combine tuition, disbursements from their endowment, and federal grants, they meet the requirements of their budget.
>Do you think the total amount they receive in undergraduate fees is a reasonable markup (say, 30%) on the reasonable cost of the services they provide?
Yeah because the services the provide are insanely expensive. Harvard's operating expenses are more than they get in tuition revenue, so if you look at it from a markup perspective, it's a negative margin.
You can argue that the services they provide aren't worth it, but clearly the people who go there believe they are.
Imagine a SaaS company that has really inefficient operations. Would you be willing to pay a higher price for that product than for a competing one that has equally good features and UX, just because the former is insanely expensive to operate?
People aren't paying for the services. They're paying for the name.Imagine this. Harvard offers any student a $20k per year discount on fees, with one condition: you don't get the piece of paper, and you can never tell anyone you studied at Harvard, or even imply that you did. Would people take that deal? They'd get all the same services, so why not?
>Right, but how do they set that budget? The cost part of the budget is the result of decison-making.
The same way any organization sets a budget. A bunch of competing interests fight it out.
>The 'insanely expensive' isn't something inherent to the services themselves.
The thing you're missing here is that sure people want the name, and the networking, but they also want and education, and an experience. The experience is very expensive to provide.
>Imagine this. Harvard offers any student a $20k per year discount on fees, with one condition: you don't get the piece of paper, and you can never tell anyone you studied at Harvard, or even imply that you did. Would people take that deal? They'd get all the same services, so why not?
Let's do another thought experiment. All Harvard students get to vote. $20k per year discount, but Harvard gets rid of the multi-billion dollar campus. No rec-center, no marble buildings, no enormous libraries, no stadiums, no manicured landscaping, no pomp and circumstance at all. Just a couple big gray buildings full of classrooms and army barrack style accommodations far enough outside of town that land and construction are cheap. Plus they fire all of their top tier professors and hire lecturers from community colleges.
Harvard students expect amenities. They expect grandeur. And they expect exclusivity, so Harvard can't just bump up their total enrollment to 50k like a big state school.
If you look at big state schools without the name, Harvard tuition sticker price isn't that much higher. University of Massachusetts Boston (ranked #214 in the US) is just under $40k for out of state students.
> it would be cheaper to hire a full time tutor for 32 weeks per year.
A large part of the value of top universities is that they have top professors. You wouldn't be able to match the quality of all the different professors a student interacts with for $60k per year with a private tutor.
How much interaction do undergraduates have with those 'top professors'?
Depends on the undergrad. I had a ton of interactions with top professors in undergrad because I sought it out.
Also the primary benefit of Harvard vs a state school is the network effects and the credentialing of having a degree from Harvard.
As a contrast to the hand waving in the other posts which claims many don't pay full price, the degree I got cost $20k per semester for the 2 years I attended university after community college, paid in full each semeser. That's one data point, I know. And maybe it's an outlier.
I'd be interested to know, of the people who got grants and other support, what percentage of their total tuition was it? And what percentage of people got support?
It's also worth noting, that there's a difference between knowing you'll have support and the uncertainty of not knowing.
Cool, tuition should be taxpayer funded by the American people, namely the super wealthy.
In a sense isn't that exactly what OP is saying is happening today? Only the super wealthy actually pay the sticker price on college, everyone else is subsidized by some combination of taxpayer-funded grants, scholarships (usually provided by the super wealthy), or just straight-up discounts (covered by the wealthy students paying full price).
There are a lot of other things that money should go towards before college tuition. Maybe we start with our abysmal primary and secondary education.
You can’t fund all this stuff only by taxing “the super wealthy.” The math just doesn’t math. That’s why every developed country that has free college also has heavy taxes on middle and upper middle class people.
I’d happily pay more taxes if it meant my country had healthcare and education.
Me too! But nobody is fixing to materially raise my taxes. Somehow, “the top 1%” became “the super wealthy” and “billionaires,” and engineers and lawyers and doctors continue to enjoy tax rates that haven’t materially gone up since Reagan.
If you’re not going to significantly raise my taxes, and instead are ranting about the “super wealthy,” you’re just cosplaying about universal healthcare and free college. The math doesn’t match. People in the top 1% of the wealth distribution have an average wealth of $18 million: https://taxfoundation.org/blog/super-rich-pay-effective-tax-.... They have an average AGI of about $1 million/year. The total income for this segment is about $1.8 trillion. You could double their taxes to over 50%, and that would bring in less than $500 billion a year. It wouldn’t even get halfway to closing the deficit, much less paying for universal anything.
Meanwhile, people in the top 10% have an average wealth of $3.8 million, and average AGI of $273,000. Their total income is $4.9 trillion. So the people outside the top 1% but inside the top 10% reflect a potential tax base of $3 trillion. And we refuse to raise taxes on these people.
Fun fact: if we taxed all income over $500,000 at a 100% tax rate it wouldn’t even cover our current budget deficit, let alone allow for such a massive spending increase.
Em. People filing returns over $500K reported an aggregate AGI of $3.8 trillion for 2022. After subtracting out the $981 million in income taxes they paid, you'd still be left with about $2.8 trillion, about a trillion more than the deficit.
Not that they wouldn't immediately shield their income if you tried. Still, I don't see any issue with maximizing our tax revenue from the top 1% by increasing their taxes until total revenue starts to drop, though I'd also be happy just dramatically increasing inheritance taxes and eliminating tax shields since billionaires still die regularly.
Source: https://www.irs.gov/statistics/soi-tax-stats-individual-stat... (Table 1.1, row 57)
There are entire skyscrapers filled with people whose job it is to make sure rich people pay as little tax as possible.
Source?
This is sorta why the hysterics by the punditry on Twitter and the media about student loan debt or about college degrees being worthless, are overblown or unfounded. The sticker price is seldom, if ever paid in full.
Not only huge discounts on the tuition-side, but also tons of forbearance and payment plans after graduating. There are many people with homes, 6-figure jobs paying off loans slowly and gradually, while enjoying career success and a high standard of living compared to those who do not have degrees.
It's not as daunting as the large figure of money would suggest when the returns from a degree are still largely positive compared to without a degree.
This is oversimplifying. The path to a good career after graduation is still fraught with many traps and pitfalls.
Ask anyone who finished university in late 2008 to 2010 how their job prospects were compared to those that finished just two years earlier in 2006.
Compounded by the fact that there is no way to discharge the debt if you get exploited into signing up to $100,000+ of debt for a degree that provides no good stable income afterwards.
Close to 90% of all student loans are federal and qualify for income based repayment. The vast majority of students don’t have any private student loans, so if they can’t find a job they pay nothing.
If they make money but not enough, they’ll pay 10% of any income above 1.5x the poverty level.
Plus there are very generous forbearance terms if you’re temporarily struggling.
This is oversimplifying. The path to a good career after graduation is still fraught with many traps and pitfalls.
same for people without degrees. having a degree increases odds of success and pay
"There are many people" is a useless platitude to any number of people who fall through the cracks.
Personally I had to wait until I was 25 to get some loans I needed to finally finish a degree, because my family was paper rich, wasn't paying anything, but was still on speaking / visiting terms with me. The system doesn't accept that as an answer; you have to show an extreme degree of alienation / separation (I can't remember the specifics, but a loan counsellor basically told me to give up).
>There are many people" is a useless platitude to any number of people who fall through the cracks.
And so too is "any number of people who fall through the cracks". For any given situation or context in which the vast majority fare okay at least, there will be a certain number who fall through the cracks (just as there will be some who do very well) and you can't design all the rules around a system to completely eliminate the possibility of falling through the cracks, or at least you cant without risking externalities that make some key part of it worse for many more people.
As a criticism of any complex system, pointing out unusual worst cases is usually little more than a sort of useless hand-wringing for the sake of doing so, unless one has a solution to propose.
I agree with the idea that you can't get rid of all the cracks, and I'm not particularly salty that I did manage to fall through one of them (for a while). It's just one minor problem in, as you said, a complex system that is full of them, as all systems are.
However, I think you're descending a sort of contemptuous name-calling with the "useless hand-wringing for the sake of doing so", considering that the subject was an attempt to make a very large change to the way the system works. That change was rejected (and, as the OP to my comment said, called by many "hysterics"), but it was nonetheless a proposed solution. Now... we're in the process of a massive change of a very different type, with the DoE getting chopped into pieces and universities being threatened (very vaguely for now, since the focus is still on other areas, but I think there's no doubt that their time will come if the current admin can maintain its momentum).
In general, the populace is aware that there are quite a lot of cracks and is, in the haphazard way that democracies do things, trying to apply solutions.
> the returns from a degree are still largely positive compared to without a degree.
Keep in mind that people who do not complete a degree also accumulate student loans.
I also wonder if people who get loans might be different than the people who search for and get aid. It might be more frictionless to get into debt than get a scholarship, even if it would be possible.
It's a good move but blanket 200k may mean that a kid from a well-off family in Iowa with a 150k income is able to get free tution while a kid with not so well off family in California with a 210k income is unable to get free tution.
Income as a number doesn't have much meaning until Cost of living is taken into account.
Tuition assistance isn't a binary all-or-nothing.
Every university like this uses a sliding scale.
In this case, their scale slides to the point that under $200K family income you pay nothing for tuition.
Under $100K they'll even cover food and housing.
Yes cost of living does matter.
But I’ve also never met or heard of a $200k household that I wouldn’t consider “well off”. Typically, stories about these “not well off” yet “over double the median income” households are budgeting issues.
People don’t like to admit that because most people blame external forces instead of evaluating their own choices.
Multiple kids + unexpected chronic health issues can quickly change this equation. And before you go judging someone for having multiple kids, consider that a) demographic collapse is probably very bad and we don't want our society to make having kids exceptionally hard, rather than the default norm and b) people may decide to have kids without expecting significant and rapid changes to inflation and cost of living.
This is one of the reasons why—although university admissions and financial aid has lots of paperwork—there is still a major human element.
This is explicitly mentioned on the FAFSA's web site: https://studentaid.gov/help/reporting-special-financial-circ...
The vast majority of people at 200k+ and "not doing well" are suffering from self inflicted budget issues.
How do you know?
Often those "chronic health issues" (obviously not you specifically) are related to poor health choices that are easily fixable. In a world with easy access to Ozempic/Wegovy/Zepbound, many have no excuses in the 200K+ club for not fixing that.
Basically, budgeting issues for the body.
Kids don't cost that much tbh. It's not as if having 2 kids vs 4 kids makes $100k vs $200k the same
Do you have four kids and live in a city?
You would need to set aside $10-15k a year for 18 years, depending on the interest rate, to accumulate $320,000 in cash for 4 years at an $80k school at full freight.
A family making $200k in California takes home about $130k, so call it about 10% of their net income over the child's lifetime. That's some pretty significant budgeting!
It depends on location. In San Francisco a mortgage on a median house might be over $80k/year and child care for a young kid $20k-$30k/year. Then $50k in taxes, assume two kids, that's maybe $180k and we haven't even bought groceries yet. Or healthcare.
It seems unlikely you are spending $30k on child at the same time as you are sending kids to college. Not many families have such an age gap.
Getting a mortgage that is 40% of your income is fairly irresponsible (I’m sure it does happen though). You also didn’t count property tax which is probably like $20k
The comment I replied to implies that all $200k income families are "well off". I think this is a reasonable counterexample, and in SF tuition assistance for childcare includes families up to a little more than $200k so the city government appears to agree.
Yes, it would be extremely irresponsible for a family making $200k to buy even a very bad house in the Bay Area. The bottom rung of the home-owning middle class is much higher than that.
Divorce and remarriage create lots of nonsensical situations.
Okay but renting a normal sized place would be $60k. Then child care for a young kid. Then taxes. If both kids are in childcare, fine, but childcare costs go away after they go to school.
It's very doable with money left over
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Besides the obvious that there needs to be some sort of cutoff, it's more of a socioeconomic angle, not economic. By doing it this way it also encourages a larger geographic distribution and thus a wider range of background demographics.
To make matters worse, a kid from a well off family in Iowa is way likelier to stand out and get admission to such colleges than a kid from California, especially the bay area, where smart kids from well off families are common and standing out is hard.
Yeah my definition of not well off is minimum wage. Maybe I am wrong here and Starbucks is really paying barristas 200k per year IDK?
People are going out of their way to extol Harvard's supposed largesse, and how hardly anyone pays sticker. First, 45% do pay sticker according to the article.
Second, another way to look at this is that Harvard is putting a cap on a family earnings that it doesn't feel entitled to. ~$83K/year (post tax) is a massive amount of money for one child of a family making even $300K/year or $500K/year (pre tax).
The sticker price does matter, and this exemption is lipstick on the pig.
The problem with American higher education (and American healthcare, for the matter) is that they have persistently grown to opportunistically consume all the discretionary income of Americans.
> People are going out of their way to extol Harvard's supposed largesse, and how hardly anyone pays sticker. First, 45% do pay sticker according to the article.
No. Do not make assumptions like that.
The source material is easy to find. It's https://college.harvard.edu/admissions/why-harvard/affordabi...
From the source material:
> Financial aid will be available to many students from families with incomes above $200,000, depending on individual circumstances.
The cost of an American higher education is something worth discussing, but I think starting the discussion with inaccurate information is problematic.
From the article:
> About 55% of Harvard undergraduates receive some type of financial aid, according to the university.
Which implies that 45% of Harvard undergrads do not receive any financial aid, ie pay sticker price. Anecdotally that would match my expectations.
Sigh, there is a lot of misinformation about this and higher education tuition.
* It’s not a new policy, when I went to school the same threshold was ~$150k
* It’s not a step function, it’s a sliding scale (with <0 tuition, i.e. cost-of-living assistance below that number, and some (but not full) tuition above $200k)
* It’s not just for athletes or minorities - I was neither (by Harvard standards, Indians were fairly common and not considered a minority in admissions processes). Lots of smart kids whose parents did not make a lot of money fell into this bucket.
* It’s not a small subset of the student body (as tzs said); despite what you might perceive, a large fraction of students came from modest backgrounds. It was balanced by a sizable fraction that came from incredibly well-off backgrounds. But the total number that had donated a building to get in were pretty small (there are only so many buildings).
Higher education has many, many flaws, but please examine the facts before you respond with knee-jerk cynicism.
Thank you for this. Unfortunately (IMO) many people seem to have a very short memory, or lack research skills, and I think this leads people to a cynical response.
On France the elite schools are very expensive (by our standards). Universities are basically free.
They are expensive for wealthy people. Depending on how much you earn, you get a progressive cost that covers the tuition of the less fortunate. There is no threshold (200k would be insane).
I pay a lot but I also keep in mind my father who came from an extremely poor family and graduated from our most prestigious engineering school. This what we call the social elevator and it works.
With the size of Harvard’s endowment, 11% of its operating income coming from federal sources, and its tax exempt status, it’s hard to understand why anyone has to pay tuition regardless of need.
Tuition is around 21% of their revenue and the endowment is 37%. That corresponds to around a 4.8% withdrawal rate currently which would go up to around 7% if they covered tuition. And 7% is probably too high to do in perpetuity.
> Tuition is around 21% of their revenue
The bulk of that tuition is grad school tuition — MBA, law school, and all non-terminal master’s degrees being large contributors — plus exec ed.
Undergraduate tuition is a small fraction of that.
Harvard has an endowment of about $55 billion dollars. Student population is about 22,000. At an industry standard 4% drawdown, they could provide $88,000 of “aid” to every student indefinitely.
If you exclude foreign students and make them pay a full ride, or change that cap to a family net worth of <$5M, you could easily cover everybody else.
> At an industry standard 4% drawdown, they could provide $88,000 of “aid” to every student indefinitely.
Just to confirm: Are you saying that all endowment proceeds should go towards student aid? What would you suggest be done to restricted-purpose investments?
Money is fungible and that’s clearly more than enough to cover the cost of the service provided. It doesn’t have to be the sticker price.
> Harvard says tuition will be free for families making $200K or less
I read this as Harvard being more stringent on admitting more students whose families make enough to pay their children’s tuition.
There’s nothing wrong with that. Harvard has to make money.
If you think I’m wrong, understand that there will be limited funding available for this program.
> I read this as Harvard being more stringent on admitting more students whose families make enough to pay their children’s tuition.
From https://college.harvard.edu/admissions/why-harvard/affordabi...:
> Most importantly, your financial situation will not affect your chances of admission to Harvard College.
> If you think I’m wrong, understand that there will be limited funding available for this program.
First of all, be aware that this program is not new. Until now the cutoff was $150,000, not $200,000. See https://web.archive.org/web/20240229232535/https://college.h...
To the question "How does Harvard afford raising the threshold by $50,000?", I think the plan is to use endowment investment returns to cover the cost.
It's amusing that people keep wanting to portray Harvard admits as Horatio Alger stories when even the "middle class" ones that get free tuition are the least sympathetic, most elite (by virtue of getting in) people on the planet.
This feels ripe for gaming.
Building a system that's resilient to a bunch of smart people going "what if I retire a few years early if I realize my kid might go to Harvard?" seems nontrivial.
This doesn't work as I actually did this game! Had no job and no income. They ask for a list of assets and they take 5% per year. So if you have a $1M in savings they take $50K per year.... $2M and then you are paying full boat in any case.
This is some of the best news I've heard this year. Hopefully other ivys follow suit.
Since you are not clear, it's worth noting that the other Ivys do have free tuition at some level. For Yale it's $75k, per https://admissions.yale.edu/affordability-details. For Stanford it's $150k, per https://news.stanford.edu/stories/2025/02/stanford-sets-2025...
That would be great, though shouldn't this be adjusted for the number of kids?
The source material (https://college.harvard.edu/admissions/why-harvard/affordabi...) answers this:
> Once you're admitted, the Financial Aid Committee will assess your family’s financial need and offer you an award to meet it. We determine need based on your family’s income, assets, and overall financial circumstances. … We know that each student's financial circumstances are unique. Your financial aid officer will work with you all four years to understand your needs and take the stress out of affording Harvard.
The text you quote doesn’t really answer the question. Does “number of kids” come under their interpretation of “overall financial circumstances”?
Best I can answer is this: https://college.harvard.edu/admissions/why-harvard/affordabi... (the page I referenced) has a link to https://college.harvard.edu/financial-aid/net-price-calculat..., and that page asks for both the size of the family, and the number of children in college. From that, I infer that they take the number of kids into account in some way.
$200,000 family income and below, with typical assets
I wonder what that means exactly, but haven't been able to find any details.
There’s a calculator here: https://college.harvard.edu/financial-aid/net-price-calculat...
But it doesn’t seem to have been updated yet, because I put in income of $200k and assets of $0 and still got less than a full tuition grant.
Thanks for the link. Ok so as I suspected, even with very little income but if one has assetts, there is no discount.
why dont they increase class sizes
Well fuck them very much. They wouldn't even cover the tuition for families of faculty or workers unlike the small technical college down the street previously.
There's still some good teachers there, but a lot of them have left the rat race that the admin created. The beurocratic hellhole sitting in harvard yard is more interested in lining their pockets than in education.
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The source material (https://college.harvard.edu/admissions/why-harvard/affordabi...) shows that's not true.
People can adjust income to qualify. Rich people will be first to game the system.
You'd think Harvard educated people could come up with a continuous function rather than a step function.
Students who are unable to understand a continuous function are not Harvard material anyway :-/
You have said this twice, but it's not accurate.
Harvard provides 100% of demonstrated need; just it works out that they cover all for those earning under $200k (plus all food/housing under $100k).
So e.g. if you make $210k/year in California with a family of 4, and the parents have $300k in cash and short term investments, they cover $45k -- or about 2/3rds of tuition. With $0 in investments, they cover $57k-- 90% of tuition.
If both kids are in college in this situation, they move to $65k, or slightly over 100% of tuition in this situation.
It was accurate according to the article. Thank you for providing better information.
The article never said that kids from families earning over $200k pay full tuition.
I do think the function could look pretty dang steep around $200k-- if you are in a low cost of living state with significant investments and one kid. But that's an edge case.
Please do not assume that a single article contains the full truth of a situation. People are empowered to do their own research. Curiosity is better than cynicism.
Graduated aid is like graduated taxation. It takes a bit of thinking to get your head around it, but it usually means there isn't a binary cut off point.
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Harvard has a $53.2 billion endowment. That's where the money comes from.
We know where the money comes from. That's the point.
If you're not bringing the money, you're the product.
> If you're not bringing the money, you're the product
Well, yes. It’s university. It’s a privilege to attend, not a commodity product.
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Tuition is often subsidized with the expectation that graduates will get a better salary than otherwise, generating more tax income in the long run than the amount of the subsidy. As such, free or heavily subsidized tuition can actually be a great investment for the government.
And yes, from that point of view, the students are the product.
This is true for public universities but does not apply to Harvard, which is not part of the government. Any benefit that Harvard obtains from an increased tax base is incredibly attenuated and not really relevant.
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... then proceeds to admit only 5 people making lt 200k
More than half of Harvard undergraduates come from families making under $200k per year.
You speak as if that's a lot, but more than 85% of US families make under $200k per year.
Also, under $200k is a big range. What % are below $100k? Or below $80k, the median family income?
100% correct. a common misconception is that Ivy League admittees are the elite. It's mostly the middle class.
Is there any source supporting this claim? I find that very hard to believe. I think the same cannot even be said for a lot of UCs.
See the data here - it’s slightly off as the middle bucket ends at $249k but that doesn’t substantially change the point:
https://features.thecrimson.com/2023/freshman-survey/makeup/
It’s actually easier for the Ivy League schools: they have huge endowments to cushion year to year variation, and they have massive international draw so Harvard or Yale can offer many students a great aid package and still come out ahead thanks to the rich international students paying full price for the prestige and the chance to intern with top researchers.
My wife is a high school science teacher and many of her students have been surprised that they were looking at a higher total loan with state schools because so much of the costs have been shifted away from general fund revenue.
A lot of international students receive scholarships from their own country to study at the best universities. Brains are a strategic resource.
Who coincidentally happen to be amazing at some sport or another.
Boo Income based anything is completely anti American