Harvard and Yale and tuition discounts...
Yesterday, on the way back from the CASE V conference after a Writing Right for the Web session with 100+ people, my phone rings and its a student reporter from Yale. Turns out the Harvard announcement this week about new tuition discounts based on family income level has trumped a Yale assouncement about something similar planned for January.
How, the chap is asking, do I think this early Harvard announcement will impact Yale in the market place? And my answer is, "Not very much." After all, Yale's market strength is built on much more than the discount rate and at this point in the recruitment cycle for 2008 the great majority of people know where they prefer to enroll. If Yale announces something similar in January, that's still well in advance of final decisions that might be based on net cost before deposit due dates.
But the call also got me thinking while driving in a heavy rain (and for the safety-minded, I took the first call but put the conversation off until later in the afternoon) about why schools with almost impregnable marketing strength take such charitable steps. Thoughts like that bring out the cynic in me just a bit.
Princeton Starts a Trend
Back in 2001, Princeton was the first highly selective school to do something like this when it eliminated loans for a range of middle class students. At the time, I wrote that this wasn't just a gift from Santa Claus or the tooth fairy. Instead, it was a reaction to increasing numbers of students and their families who were electing to take advantage of generous merit scholarships from colleges not quite as selective. Muhlenberg College came to mind, with an excellent record for medical school placement. If you're bright enough to get accepted at Princeton, you'll likely get a nice merit scholarship at Muhlenberg and enter med school with less debt.
What's the motivator today for the Harvard move and what comes along next? Just might be the increasing pressure in Congress and from the Department of Education focused on very wealthy universities who are not using much of their endowment (relatively speaking) to offset their high cost. And so fewer students from the middle class enroll and the schools become progressively more limited to higher income families. And that, of course, isn't supposed to happen as much as it seems it is in the United States.
Endowment Income for Tax-Exempt Status?
The Harvard move does represent reaction to the market. In this case, an effort to fend off further intrusiveness by the Federal government. Imagine, for instance, a future in which things got so bad that schools like Harvard faced limitations on their tax-exempt status. Much better to slice off some endowment income now to lower costs for students.
Details of the Harvard plan and USA Today coverage are at http://blogs.usatoday.com/ondeadline/2007/12/harvard-aims-to.html
USA Today followed up the next day with another story on a similar move by Duke University at http://www.usatoday.com/news/education/2007-12-10-harvard-aid_N.htm
The story got front-page coverage from the NY Times but was buried well inside yesterday's edition of the Wall Street Journal.