How Berea College Makes Tuition Free with its Endowment | Hacker News Reader

How Berea College Makes Tuition Free with its Endowment

theatlantic.com

49 pointsdanso34 comments

Berea is great - both the college itself, and the community around it.

There's a local community high school with ties to the college; students there who are keen can attend classes at the college, for both high school and college credit. It seems like a great way for kids to "test drive" college in general, and more smoothly transition to independence.

And, the community high school looks straight out of The Jetsons: http://marrillia.com/wp-content/uploads/2017/03/berea-commun...

Yeah, my wife and I went to the spoonbread festival a few weeks ago it was a lot of fun.

The college does a lot of cool things in the area. A lot of the classes in the area for crafts and such are nice.

Beware friendly Berea-- of the temptation to change your tuition free-stance, even a little bit. It's a slippery slope.

Rice University was founded in 1912 with an endowment and grants and the stipulation in its very charter saying "no tuition", but then the administrators moved to change the charter (to eliminate the racist "white" requirement) and as part of that also, guess what, moved to start charging (1965) rather than depending on the endowment.

The tuition has grown steadily since, from 0 to a third the price of comparable private schools in the 90s (and comparable price to public universities) to now be a pretty full-freight $50k/year.

This, combined with the steadily increasing tuition across all universities -- (inflation eased in 1982 but colleges kept increasing rates discovering the market would allow them to charge more) -- has cynically angered me for some time.

Unlike a business, the tax-sheltered endowments fuel a bit more cynicism than just a raw price increase. There was a joke at Princeton back in the 90s that if the board of directors ever allowed the university to spend down the endowment, they could fund ever-increasing tuition for all students for the next thousand years. Is perpetuity truly needed/healthy?

An education is supposed to free a person, not put them in bondage/slavery.

An endowment should free and empower the students (and thus our civilization) as they start their lives, not the administrators and faculty and institution.

Beware, you educators and administrators who put chains on your students to feather your nest and attempt to increase your prestige!

Beware you administrators who create unnecessary buildings with dozens of spaces empty 90% of the time all to woo professors or create your own mini-legacy. And then claim the university is meeting glowing "sustainability" and energy efficiency objectives! (You may get to stay in your office but the degree of walking for students ever-increases and now shuttles are needed!)

Beware you ranking agencies who weight how much a university spends per student as a factor in how good the university is!

Beware you congresspeople who make it easier for universities to charge more by creating huge student loan programs that allow students to go into great debt and subtly mis-direct their ambitions and outcomes towards those which allow them to service their debt!

OK, rant out. Thanks for passing along the article. There has been some progress at the above named institutions to provide tuition for lower-income families. I don't consider it adequate to address all my points.

I empathize with your viewpoint, but this may not be the place for rage. Berea is doing things right, even from your perspective. Shouldn't we applaud that instead of taking this opportunity to cast stones?

I applaud Berea. Just want them not to take it for granted having witnessed other schools slide off the path they're on.

> There was a joke at Princeton back in the 90s that if the board of directors ever allowed the university to spend down the endowment, they could fund ever-increasing tuition for all students for the next thousand years.

Back of envelope: Princeton endowment ~22B. Enrollment ~8200. Current tuition ~$45K/yr. 22 * 10^9/(8200 * 45000) = 59.6.

So in ~60 years, without even adding in inflation or the "ever-increasing tuition" or allowing more students as population increases, they'd empty the endowment.

That’s assuming the rest of the endowment isn’t reinvested. You’d need less than a 2% annual return on that $22B to fund the tuition in perpetuity.

Princeton tuition was 26K in 2001. It is now 45K. That's 3% growth in tuition, cutting into your estimate.

The current endowment growth is already being spent to fund the university to the tune of ~4-6% [1].

So, if you take that source away, tuition would likely have to pick up the slack.

Care to rerun your numbers adding this all in?

[1] https://www.princeton.edu/news/2013/10/18/princeton-endowmen...

Princeton's current 2018 size is $25.9B. In 2001 it was $8.4B, so a annual growth rate of over 6% per year.

So Princeton would have to spend 1.6% of their endowment every year to offer free tuition to their students. Assuming their rate of return on the endowment (including alumni contributions) can grow faster than the cost of tuition growth, they can provide free tuition for their students indefinitely.

Princeton tuition was 26K in 2001. It is now 45K. That's 3% growth in tuition, cutting into your estimate.

The current growth is already being spent to fund the university to the tune of ~4-6% [1].

So, if you take that source away, tuition would likely have to pick up the slack.

Care to rerun your numbers adding this all in?

[1] https://www.princeton.edu/news/2013/10/18/princeton-endowmen...

I will briefly note that getting a world class education completely for free is an extreme form of privilege that few people can hope for. There can be a downside to that.

I once saw a question on a very toxic forum by some self proclaimed idealist with a scholarship who was extremely critical of their classmates and their obsession with trying to find a well paid job after graduation. It seemed lost on this jerk that most of their classmates likely were saddled with crushing student debt and would need well paid jobs to service their student loans.

I don't know what the solution is. I do know that when people get something completely for free, they typically undervalue it and frequently don't really appreciate it, among other things.

I hear you.

The culturally-encouraged pseudo-slavery of debt really bothers me.

Yes, that really bothers me too. Ideally, I would like to see a situation where it is possible to have an entry level job, cheap rental and apply for standard federal financial aid and make it work with some reasonable degree of effort at a fairly high percentage of schools.

One of my concerns with free tuition at elite universities is that it is likely to become one more way that "them that has, gets." My suspicion is that the vast majority of slots will still go to kids from wealthy families, though ability to pay is no longer one of the ways poor people get excluded. There are lots of ways to exclude poor people without using their income per se as a means to exclude them.

If the most elite colleges have free tuition and you see rich kids getting a free ride because of it, then the gulf between rich and poor only grows. It won't shrink.

That's very problematic, for a long list of reasons.

One issue is that we should be looking to make education available to those with interest and ability in a particular area. We should be developing policies with an eye towards furthering human and societal development. Education that is too much about credentialing can turn into justification for "welfare for the rich." You get the job because you have the credentials. You got the credentials because of who your dad was, not because you are actually interested or talented. It makes you sure you remain comfortably upper class, never mind that you are essentially a leech on society.

There are two ways to be rich:

1. Add enough value that everyone is better off, including you.

2. Extract value from the world and society such that you are very much better off, but it is questionable if anyone else is. Your employees have terrible lives. The environment is being destroyed. Etc. But, hey, your bank account remains fat and that's all that matters.

The world needs to perpetually guard against that second thing. And we struggle with it.

To get into Berea your family has to meet financial requirements[1]. Translated: "you're poor enough." So, the common background of everyone on campus is pretty humble.

There will be jerks anywhere-- that's a given. But, I can assure you that most of all graduates who come from Berea are very grateful to the institution especially given the insane rate at which tuition continues to increase.

Since it's a liberal arts program, writing and reasoning are a core part of the curriculum. I would say by virtue of going through the program, you're able to better appreciate it at the end. I think learning about the world at an age when your views are malleable is more meaningful than learning about compilers.

1- https://www.berea.edu/admissions/financial-requirement/

My grandfather went there in the late 20s-early 30s, graduating with degrees in economics and woodworking IIRC. As I recall he described education there as very much a group effort - working together was a bonding and binding experience.

The Cooper Union in NYC used to do something similar for over a century until they were forced to stop in 2014 due to a combination of many financial factors, including the financial crisis of 2008.

You can read the entire story of it here: https://en.wikipedia.org//wiki/Cooper_Union_financial_crisis...

Sounds like a great thing.

There's another college, located pretty closely, that also offers no tuition. (It's College of the Ozarks, in Missouri.)

I wish there were more schools like these.

Berea Computer Science alumn here. Ask me anything.

I grew up in Appalachia (pronounced "app-uh-lai-cha" by us), and have to say Berea was a godsend. I was lucky to start as desktop support and move on to a network engineer later. The labor program is probably the only reason why I became a somewhat competent programmer out of college, since I was writing "production" code before having my first real full time job. You can read more about the labor program here[1]

The college is very particular about your time there, since it's free and all, so your first year you're not allowed to have a car on campus, enter the opposite sex's dorm rooms, and (in some cases) you're tasked with a job that you may or may not like. Some of this may or may not have changed in the past 10 years. Most people hear this and think, "that's crazy," as I did at the time, but as I've grown older -- I've grown to appreciate it.

Another interesting thing is how forward thinking the community is in the town of Berea. Kentucky isn't the friendliest for being a moderate or liberal, but (I would say) Berea is probably the friendliest community I've ever been apart of. It's a place where you can having engaging discussions and make friends at local establishments (BC&T[2] being my favorite).

With regards to the article, the endowment, and replicating the model -- it would be hard. The college runs itself efficiently while maintaining a high quality of education and student services. Replicating this model elsewhere would mean cutting many staff, removing the luxuries that many people enjoy and most likely lowering salaries. Lower salaries work in Berea because the cost of living is so low; however, that's not the case in many areas and no one is going to volunteer themselves for a salary cut.

The labor program has a lot of infrastructure around it (payroll, staff, processing incoming students) that would be hard to replicate. I think existing universities would have to run a program within or alongside their work-study programs and grow it overtime.

1 - https://www.berea.edu/labor-program-office/a-guide-to-the-la...

2 - https://www.tripadvisor.com/Restaurant_Review-g39187-d222579... ( Seems that they don't have a website )

> I grew up in Appalachia (pronounced "app-uh-lai-cha" by us)

Isn’t that the usual pronunciation of it? How else do people pronounce it?

App-ah-lay-shia, as I've always heard it up on the far northern end.

Does anyone see the student debt as a positive thing? Curious.

Bankers.

Or you could, you know, get the government to pay for it, through taxes.

You mean the people instead of government right? Gov is basically the employees we choose to administer part of our money.

We don't choose administrators of government, only the symbolic representatives. The actual administrators are most often politically connected "appointees" not "employees". Which is a completely different merit and vetting process than we normally consider in terms of employment.

And, also, government creates the money we trade around as 'ours.'

People give value to the currency, if we stop using it it becomes just paper. Maybe that would apply for gold standard backed currency.

Look at the correlation between currencies traded around the world and currencies that are trade-able with governments to pay taxes. By volume, most trades are made in currencies created and backed by governments. People can and do make their own, but it's a fraction of economic activity.

[0] https://en.wikipedia.org/wiki/Fiat_money [1] https://en.wikipedia.org/wiki/Modern_Monetary_Theory

The last thing US education needs is further tuition inflation because now the government going to pay for everyone's $60k/year liberal arts degree.

I think there's a place for government-funded higher-ed, but it has to be for schools that can keep costs under control (most likely state and community schools) as opposed to what seems to be a cry for unlimited education spending everywhere that will only accelerate ballooning costs.

We should commend the private efforts like Berea does. That is a much better model than putting the cost burden on everyone.

I think we can commend private efforts like Berea, but also hold the government accountable in its spending. Tax collection and government spending are two different things: mismanagement of tax revenue only related to tax collection in that the latter allows for the former in that there becomes something to mismanage. If we want to stop collection because of mismanagement, then the government shouldn't have bailed out the banks in 2008. If you don't want to pay for someone else's liberal arts degrees, then you petition ask the government to only sponsor scholarships and grants for careers that are in demand / the state or nation as a whole lacks.

The government should run its own schools to compete with the private ones, and then immediately suspend all aid and loan programs for private universities.

Public money for private institutions is almost always a stupid idea with bad, unintended outcomes.

The inflation in tuition is a result of two things - increased expectations of the "college experience" by students, and the easy availability of cheap money from those students via non-dischargable government loans. Asking the government to pay for it would be like when Oprah handed out free cars. [0]

I'm hoping that a new generation of freshmen are telling the admissions people: "I want to go to your school, but I'm worried about the debt. Can I get a discount if I never use the free candy & coffee bars or the climbing wall and get a regular mattress instead of the expensive memory-foam one?"

[0] https://www.autoblog.com/2014/09/12/oprah-free-car-giveaway-...

I suspect they'd rig it as some elaborate "opt-out" process.

I recall at my university, circa 2000, you could theoretically get back the fee that paid for the student council services, but you had to go to some random room in the middle of the day to claim it and it was USD1/semester. Meanwhile the much larger gym fee was not refundable.

The wealthy today are continually looking for ways to destroy civilization and actively leave behind a worse legacy for humanity. At least in the US.

Pour billions into educational endowments, then on top of that charge students enough to make them indentured slaves for decades.

Pour money into hospitals, then manipulate the politics around the health insurance industry to ensure people are financially ruined when they get sick.

Where are the Carnegies, leaving behind libraries free to all, or parks open to everyone? Carnegie was an ass to his employees when he was building his fortune, but at least then he saw some obligation to leave something behind to improve society.

The powerful and wealthy today, as a whole, seem to have lost all interest in moving society forward.

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