Harvard says tuition will be free for families making $200K or less
abcnews.go.com
abcnews.go.com
> 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.
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.
Keep in mind that people who do not complete a degree also accumulate student loans.
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.
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.
same for people without degrees. having a degree increases odds of success and pay
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).
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.
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.
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)
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.
A very confusing aspect of the US college system is that very few students pay the full sticker price.
About 55% of Harvard undergraduates receive some type of financial aid, according to the university.
but it allows universities to admit a much wider range of students than they normally would.
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?
They could easily fill all of their slots with people who can afford to pay the full tuition.
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.
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.)
because it maxes out at only $60k a year
They’d let you in, look at your financials
>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 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.
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.
On the whole though I think Harvard has a budget
Yeah because the services the provide are insanely expensive.
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.
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?
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.
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.
Also the primary benefit of Harvard vs a state school is the network effects and the credentialing of having a degree from Harvard.
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
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.
Income as a number doesn't have much meaning until Cost of living is taken into account.
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.
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.
This is explicitly mentioned on the FAFSA's web site: https://studentaid.gov/help/reporting-special-financial-circ...
Basically, budgeting issues for the body.
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
It's very doable with money left over
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!
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.
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.
> 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.
* 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.
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.
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.
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.
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?
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.
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.
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.
> 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.
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.
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.
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.
Also, under $200k is a big range. What % are below $100k? Or below $80k, the median family income?