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> Today, Harvard’s tuition is $52,659, representing an 89 percent increase in real cost. The Harvard education is certainly not 89 percent better than it was 36

> Today, Harvard’s tuition is $52,659, representing an 89 percent increase in real cost. The Harvard education is certainly not 89 percent better than it was 36 short years ago, nor is it 89 percent more difficult to provide. The common refrain about higher education costs is state governments have cut back on subsidies, so it's interesting seeing this stat for Harvard since it doesn't get the same level of state support, has an endowment, and still saw tuition double.

zdragnar 4y ago
Harvard's status as a premium product might be harder to maintain if they didn't inflate their prices to stay above their "standard" competitors (state schools). They can maintain their elite status while heavily discounting tuition to those with financial need, since the very image of "premium product" means that there will always be people willing to pay for it. It is essentially a self-fulfilling idea. I recall visiting Harvard during a high school debate tournament, and being utterly unimpressed with the facilities compared to what I had seen at non-ivy-league schools. The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates.
- Wowfunhappy 4y ago
  I don't know, NYU Medical School went tuition-free and it doesn't seem to have hurt their prestige--quite the opposite, in fact.
- jandrese 4y ago
  The flipside of this is that we are talking about goddamn Harvard. They don't need high prices to signal that they are an elite school, they have a reputation that literally goes back centuries. Besides, the reputation of a school isn't built on its tuition, it is built on the alumni. The only "positive" signal from a high tuition is that it is a filter to reduce the number of poor students that your child might have to interact with and increase their chances of falling in with some other elite rich kids to fast track their way up to the C suite or some lucrative board seats.
  - bluGill 4y ago
    Remember though that if you are a smart poor person (here poor means not filthy rich) Harvard will give you a discount on tuition. I'm not sure how much or how it works, but I'm under the impression that only a tiny minority actually pay the full price.
    - dehrmann 4y ago
      Some pay more than the full price. Look up the "Dean's Interest List."
      - jandrese 4y ago
        I'm not sure I'd spin this as a good thing. Smells a lot like "kid get surprisingly good grades after parents buy a new wing on the law building".
        dehrmann 4y ago
        It's only a good thing if the school's goal is connecting the smartest with the richest.
        OkayPhysicist 4y ago
        It subsidizes everyone else's tuition, and is a critical piece of the value proposition for privates schools: access. By subsidizing the the poor-but-outstanding with money from the still-accepted rich-but-dumb, they maintain the opportunity for those two groups to intermingle, granting access to networks that that poorer students would be able to break into otherwise, which the rich also benefit from in the form of having known-competent individuals in their network. That's the primary reason to go to private school. That's what justifies the 2-4x price gap with public universities. All the niceties (not having to enter into a bi-yearly battle royal for seats in limited space classes, not having to put up with overly impacted class sizes, other little luxuries) are just there to maintain the appearance of prestige. The actual value comes from the admissions department.
- perfecthjrjth 4y ago
  There are people out there who don't mind paying $200k per annum to get admitted to Harvard (for undergrad, of course). So, it is not about their prices, but their exclusivity. People go to Harvard, because Harvard recruits kids of uber wealthy, kids of powerful politicians--basically kids of the power, of the uber wealth. It is a self-perpetuating machine, which creates misery of everyone, because this machine produces the elite and the secretaries for the elite--thereby colluding among each other to the detriment of everyone else.
- noahtallen 4y ago
  Yeah, and their financial aid goes pretty far. I remember when I applied maybe 10 years ago or so, it would have cost around $5k/yr or even less. Coming from a middle-class family in the Midwest. They seem to make it possible for anyone to afford to go there. (They’re just very selective about who can.) So I would never say they’re overpriced or expensive. Maybe it costs a lot if you come from a rich family, but for them, the price doesn’t matter. And for those of us who aren’t rich, it wouldn’t be expensive. This is very abnormal for non-elite private schools. If I’d gotten in to any of the elite schools, I think they would have been the cheapest options by far… even compared to state schools.
- chrisseaton 4y ago
  > The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates. Good professors, students, and networking makes a good education though, so yes it is really going to a better education.
  - dehrmann 4y ago
    Nit: big name professors aren't necessarily good professors, especially if they got got their name through research.
  - zdragnar 4y ago
    Nah, that's just nepotism. What you learn (i.e. what is on the syllabus) is very much a secondary factor in terms of the actual value you get out of it, at least compared to a decent state school. Some of the best professors I've had in terms of actually learning things were in tiny departments that had no networking capabilities worth speaking of in terms of post-graduation economic success.
    - deleted 4y ago
      [deleted]
kjkjadksj 4y ago
The argument for high tuition private school is to not leave money on the table from rich people who can afford to pay full price. Middle class people pay a big discount, while working class people don’t pay anything. For a state school, you can have a billionaire’s kid enrolled but you are only getting the $14k in state tuition from them and therefore might not be able to support many students at the bottom since you are giving a discount to anyone in state.
- SQueeeeeL 4y ago
  The notion that there is "money on the table" is fundamentally flawed. Why are we building every single system essentially to catch whales with a cacophony of bureaucratic stop gaps to help "the poor" navigate this hellscape process, it just leads to an endless cycle of more and more loopholes being topped onto each other. You're basically forcing anyone not rich to do a boatload of extra labor. A streamlined process that doesn't endless sticker shock people and force them to grind for scholarships and financial aid while charging a fair price is easier on the psychology of all involved
  - NovemberWhiskey 4y ago
    Again - a problem at places other than Harvard, which operates a need-blind approach where students will all automatically receive 100% of their demonstrated financial aid requirements.
    - alistairSH 4y ago
      The thing is, Harvard could very likely fully-fund everybody's tuition from endowment, while continuing to allow the endowment to grow. I can't remember where I read that, I'll try to find a reference this evening.
      - NovemberWhiskey 4y ago
        It's completely impossible for an outsider to know that - you have no idea what constraints are placed on the gifts that make up the endowment - it's not one big fund you can draw down on as needed; it's like 14,000 different funds each of which may be allocated to a specific purpose (like a particular professorial chair or to a library or whatever).
BitwiseFool 4y ago
I'm struggling to find the article, mainly because Google is fixating on the generic terms of my search. But, university endowments are effectively hedge funds with a non-profit status. A lawsuit sometime either in the late 80's or early 90's challenged this, and the university successfully argued that because of how much scholarship money they issue they should continue to be considered a non-profit. In particular, the ratio of students on tuition assistance was cited as justification. That established a precedent where universities are incentivized to continually raise tuition while simultaneously appearing to give out more financial aid. Be warned, though, I may be misremembering. So please do correct me if I am wrong.
- alistairSH 4y ago
  If we remove non-profit status for unis, can we do the same for religious enterprises?
- cmh89 4y ago
  If you think that's bad, look into 'non-profit' hospitals. They make money like its going out of style and get amazing tax breaks
- nemothekid 4y ago
  I remember this article as well, it was probably on HN, and I can't find it. I think the university in question was MIT and the complaint that was even though MIT gave very generous scholarships due to this ruling they had to increase tuition every year to balance out the numbers. Funnily enough I've also been looking for that article for years now.
- nonameiguess 4y ago
  As long as it is used to fund the school and individual people don't own the money and withdraw funds into their personal accounts, it is a non-profit. Not all non-profits need to have a charitable purpose to qualify. PACs, campaigns, and political parties themselves are non-profits. University athletic departments are non-profits. The NCAA and all other amateur sports leagues are non-profits. I'm not at all arguing in favor of this or saying it is moral that these organizations should be tax-exempt, but this is the current status of American tax law. This is particularly bad when you consider that it is entirely legal for, say, a political campaign to spend most of its money buying a candidate's books that nobody else buys in order to hand them out for free at rallies, or a church to spend most of its money buying a mansion and private jet fleet for the pastor.
alistairSH 4y ago
The sticker price for Harvard (or any top-tier, high-endowment uni) is not representative of what most students will pay. 70% have aid of some sort, those with parents earning less than $65k/yaer generally pay very little, and majority pay the same or less as they would have in-state.[1] 1 - https://www.cnbc.com/2019/04/05/it-costs-78200-to-go-to-harvardheres-what-students-actually-pay.html https://www.cnbc.com/2019/04/05/it-costs-78200-to-go-to-harv...
- nverno 4y ago
  > 70% have aid of some sort And this is real reason tuition has sky-rocketed. It takes all of 5 minutes to fill out and qualify for a government loan. There is very little downward pressure on tuition, and the subsequent proliferation of administrators.
etempleton 4y ago
Harvard has a pretty steep discount rate these days. People love to point to tuition and compare it to 30 years ago. The way college is priced has changed. Very few people pay full sticker price at Harvard anymore.
paxys 4y ago
Harvard is need-blind (like all other Ivy League schools). If you are admitted and can't pay the tuition they will cover it 100%. In that sense a higher tuition is a good thing, since the elite will pay it no problem and it will be used to subsidize those who cannot.
- robocat 4y ago
  It looks like only 20% of Harvard income comes from tuition: https://finance.harvard.edu/financial-overview https://finance.harvard.edu/financial-overview That puts a bit of a dent in your argument.
  - thfuran 4y ago
    How does that put a dent in their argument?
    - robocat 4y ago
      To illustrate why the argument might be invalid, let me put down some assumptions: • Harvard gets 20% of its income from students, and the other 80% comes from investments and other sources (matches what link previously posted implies). • There are two cohorts of students (A) wealthy but undeserving students, and (B) poor but deserving meritorious students. • The argument made was that we are better off if wealthy undeserving students subsidise the poor but deserving students (paraphrasing). • I'm going to pick a number that every student costs the university $100k per annum (incorrect, and assuming zero variability between students . . . I'm just picking this number so I can make my point clearly. Edit: actually $100k matches a back-of-the-envelope calculation from other figures). Then: Any wealthy undeserving student paying between $20k[1] to $100k actually reduces the number of deserving students. Said another way: wealthy undeserving students need to be paying more than 5[1] times what their fair prorated fees would be before it helps the poor deserving students. Also the article is talking about excessive overhead costs - maybe Harvard could trim 20% of administrative costs, and then concentrate 100% on teaching those that merit it the most, regardless of their background. Edit: Let us assume it is okay to buy your way into Harvard if you also pay for one other deserving student (that can't afford it), then with my hypothetical University costs of $100k for a student for a year, the fees for the rich student would need to be $1 million to meet that 1:1 ratio, and that ratio implies (in the limit) that 50% of students are undeserving rich students!!! Also note that 98% of Harvard students graduate: https://college.harvard.edu/resources/faq/what-harvards-graduation-rate https://college.harvard.edu/resources/faq/what-harvards-grad... [1] Edit 2: low value of $20k here is incorrect. Although 20% of income comes from students, a large percentage of expenses are for research and other non-teaching expenses. See my other comment, with an analysis from a different direction: https://news.ycombinator.com/item?id=33838700 https://news.ycombinator.com/item?id=33838700
jp57 4y ago
But in fact, every student pays a different amount. The very high sticker price of tuition exists to let the schools charge each student a customized price by applying discounts (e.g. scholarships and aid) as they choose. They can compete for students this way. The most desirable students (by whatever criteria the school has chosen) are offered more discounts. This system operates at every level. A student of medium-high desirability, say a well-off white kid with good-but-not-great grades, might be offered discounts from a less well known regional school, but not from a nationally recognized school, even if her family can afford to pay full fare anywhere.
- adolph 4y ago
  Wow, very similar to healthcare. Sounds like efficient price discrimination suitable for well educated consumers. It's a mystery student loan forgiveness was a thing if nobody pays sticker.
n4r9 4y ago
Why is the author focusing only on the supply aspect? I would guess that Harvard is charging the amount that they think will maximise their profit. Or at least factoring that in. Isn't that what happens in a free market?
- janalsncm 4y ago
  In that case, wouldn’t cutting administration only increase Harvard’s profits?
  - n4r9 4y ago
    I'm not arguing that Harvard is a hyper-efficient money-making scheme, just that it may be considering total revenue when setting fees.
carom 4y ago
>The common refrain about higher education costs is state governments have cut back on subsidies I have only ever heard that it was the availability of non dismissible loans that inflated the price.

zdragnar 4y ago

Harvard's status as a premium product might be harder to maintain if they didn't inflate their prices to stay above their "standard" competitors (state schools). They can maintain their elite status while heavily discounting tuition to those with financial need, since the very image of "premium product" means that there will always be people willing to pay for it. It is essentially a self-fulfilling idea. I recall visiting Harvard during a high school debate tournament, and being utterly unimpressed with the facilities compared to what I had seen at non-ivy-league schools. The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates.

Wowfunhappy 4y ago
I don't know, NYU Medical School went tuition-free and it doesn't seem to have hurt their prestige--quite the opposite, in fact.
jandrese 4y ago
The flipside of this is that we are talking about goddamn Harvard. They don't need high prices to signal that they are an elite school, they have a reputation that literally goes back centuries. Besides, the reputation of a school isn't built on its tuition, it is built on the alumni. The only "positive" signal from a high tuition is that it is a filter to reduce the number of poor students that your child might have to interact with and increase their chances of falling in with some other elite rich kids to fast track their way up to the C suite or some lucrative board seats.
- bluGill 4y ago
  Remember though that if you are a smart poor person (here poor means not filthy rich) Harvard will give you a discount on tuition. I'm not sure how much or how it works, but I'm under the impression that only a tiny minority actually pay the full price.
  - dehrmann 4y ago
    Some pay more than the full price. Look up the "Dean's Interest List."
    - jandrese 4y ago
      I'm not sure I'd spin this as a good thing. Smells a lot like "kid get surprisingly good grades after parents buy a new wing on the law building".
      - dehrmann 4y ago
        It's only a good thing if the school's goal is connecting the smartest with the richest.
      - OkayPhysicist 4y ago
        It subsidizes everyone else's tuition, and is a critical piece of the value proposition for privates schools: access. By subsidizing the the poor-but-outstanding with money from the still-accepted rich-but-dumb, they maintain the opportunity for those two groups to intermingle, granting access to networks that that poorer students would be able to break into otherwise, which the rich also benefit from in the form of having known-competent individuals in their network. That's the primary reason to go to private school. That's what justifies the 2-4x price gap with public universities. All the niceties (not having to enter into a bi-yearly battle royal for seats in limited space classes, not having to put up with overly impacted class sizes, other little luxuries) are just there to maintain the appearance of prestige. The actual value comes from the admissions department.
perfecthjrjth 4y ago
There are people out there who don't mind paying $200k per annum to get admitted to Harvard (for undergrad, of course). So, it is not about their prices, but their exclusivity. People go to Harvard, because Harvard recruits kids of uber wealthy, kids of powerful politicians--basically kids of the power, of the uber wealth. It is a self-perpetuating machine, which creates misery of everyone, because this machine produces the elite and the secretaries for the elite--thereby colluding among each other to the detriment of everyone else.
noahtallen 4y ago
Yeah, and their financial aid goes pretty far. I remember when I applied maybe 10 years ago or so, it would have cost around $5k/yr or even less. Coming from a middle-class family in the Midwest. They seem to make it possible for anyone to afford to go there. (They’re just very selective about who can.) So I would never say they’re overpriced or expensive. Maybe it costs a lot if you come from a rich family, but for them, the price doesn’t matter. And for those of us who aren’t rich, it wouldn’t be expensive. This is very abnormal for non-elite private schools. If I’d gotten in to any of the elite schools, I think they would have been the cheapest options by far… even compared to state schools.
chrisseaton 4y ago
> The money you pay for tuition really isn't going into a better education, it's maintaining the illusion that draws big names as both students and professors, and all the networking opportunities that then manifest as better outcomes for graduates. Good professors, students, and networking makes a good education though, so yes it is really going to a better education.
- dehrmann 4y ago
  Nit: big name professors aren't necessarily good professors, especially if they got got their name through research.
- zdragnar 4y ago
  Nah, that's just nepotism. What you learn (i.e. what is on the syllabus) is very much a secondary factor in terms of the actual value you get out of it, at least compared to a decent state school. Some of the best professors I've had in terms of actually learning things were in tiny departments that had no networking capabilities worth speaking of in terms of post-graduation economic success.
  - deleted 4y ago
    [deleted]

kjkjadksj 4y ago

The argument for high tuition private school is to not leave money on the table from rich people who can afford to pay full price. Middle class people pay a big discount, while working class people don’t pay anything. For a state school, you can have a billionaire’s kid enrolled but you are only getting the $14k in state tuition from them and therefore might not be able to support many students at the bottom since you are giving a discount to anyone in state.

SQueeeeeL 4y ago
The notion that there is "money on the table" is fundamentally flawed. Why are we building every single system essentially to catch whales with a cacophony of bureaucratic stop gaps to help "the poor" navigate this hellscape process, it just leads to an endless cycle of more and more loopholes being topped onto each other. You're basically forcing anyone not rich to do a boatload of extra labor. A streamlined process that doesn't endless sticker shock people and force them to grind for scholarships and financial aid while charging a fair price is easier on the psychology of all involved
- NovemberWhiskey 4y ago
  Again - a problem at places other than Harvard, which operates a need-blind approach where students will all automatically receive 100% of their demonstrated financial aid requirements.
  - alistairSH 4y ago
    The thing is, Harvard could very likely fully-fund everybody's tuition from endowment, while continuing to allow the endowment to grow. I can't remember where I read that, I'll try to find a reference this evening.
    - NovemberWhiskey 4y ago
      It's completely impossible for an outsider to know that - you have no idea what constraints are placed on the gifts that make up the endowment - it's not one big fund you can draw down on as needed; it's like 14,000 different funds each of which may be allocated to a specific purpose (like a particular professorial chair or to a library or whatever).

BitwiseFool 4y ago

I'm struggling to find the article, mainly because Google is fixating on the generic terms of my search. But, university endowments are effectively hedge funds with a non-profit status. A lawsuit sometime either in the late 80's or early 90's challenged this, and the university successfully argued that because of how much scholarship money they issue they should continue to be considered a non-profit. In particular, the ratio of students on tuition assistance was cited as justification. That established a precedent where universities are incentivized to continually raise tuition while simultaneously appearing to give out more financial aid. Be warned, though, I may be misremembering. So please do correct me if I am wrong.

alistairSH 4y ago
If we remove non-profit status for unis, can we do the same for religious enterprises?
cmh89 4y ago
If you think that's bad, look into 'non-profit' hospitals. They make money like its going out of style and get amazing tax breaks
nemothekid 4y ago
I remember this article as well, it was probably on HN, and I can't find it. I think the university in question was MIT and the complaint that was even though MIT gave very generous scholarships due to this ruling they had to increase tuition every year to balance out the numbers. Funnily enough I've also been looking for that article for years now.
nonameiguess 4y ago
As long as it is used to fund the school and individual people don't own the money and withdraw funds into their personal accounts, it is a non-profit. Not all non-profits need to have a charitable purpose to qualify. PACs, campaigns, and political parties themselves are non-profits. University athletic departments are non-profits. The NCAA and all other amateur sports leagues are non-profits. I'm not at all arguing in favor of this or saying it is moral that these organizations should be tax-exempt, but this is the current status of American tax law. This is particularly bad when you consider that it is entirely legal for, say, a political campaign to spend most of its money buying a candidate's books that nobody else buys in order to hand them out for free at rallies, or a church to spend most of its money buying a mansion and private jet fleet for the pastor.

alistairSH 4y ago

The sticker price for Harvard (or any top-tier, high-endowment uni) is not representative of what most students will pay. 70% have aid of some sort, those with parents earning less than $65k/yaer generally pay very little, and majority pay the same or less as they would have in-state.[1] 1 - https://www.cnbc.com/2019/04/05/it-costs-78200-to-go-to-harvardheres-what-students-actually-pay.html https://www.cnbc.com/2019/04/05/it-costs-78200-to-go-to-harv...

nverno 4y ago
> 70% have aid of some sort And this is real reason tuition has sky-rocketed. It takes all of 5 minutes to fill out and qualify for a government loan. There is very little downward pressure on tuition, and the subsequent proliferation of administrators.

etempleton 4y ago

Harvard has a pretty steep discount rate these days. People love to point to tuition and compare it to 30 years ago. The way college is priced has changed. Very few people pay full sticker price at Harvard anymore.

paxys 4y ago

Harvard is need-blind (like all other Ivy League schools). If you are admitted and can't pay the tuition they will cover it 100%. In that sense a higher tuition is a good thing, since the elite will pay it no problem and it will be used to subsidize those who cannot.

robocat 4y ago
It looks like only 20% of Harvard income comes from tuition: https://finance.harvard.edu/financial-overview https://finance.harvard.edu/financial-overview That puts a bit of a dent in your argument.
- thfuran 4y ago
  How does that put a dent in their argument?
  - robocat 4y ago
    To illustrate why the argument might be invalid, let me put down some assumptions: • Harvard gets 20% of its income from students, and the other 80% comes from investments and other sources (matches what link previously posted implies). • There are two cohorts of students (A) wealthy but undeserving students, and (B) poor but deserving meritorious students. • The argument made was that we are better off if wealthy undeserving students subsidise the poor but deserving students (paraphrasing). • I'm going to pick a number that every student costs the university $100k per annum (incorrect, and assuming zero variability between students . . . I'm just picking this number so I can make my point clearly. Edit: actually $100k matches a back-of-the-envelope calculation from other figures). Then: Any wealthy undeserving student paying between $20k[1] to $100k actually reduces the number of deserving students. Said another way: wealthy undeserving students need to be paying more than 5[1] times what their fair prorated fees would be before it helps the poor deserving students. Also the article is talking about excessive overhead costs - maybe Harvard could trim 20% of administrative costs, and then concentrate 100% on teaching those that merit it the most, regardless of their background. Edit: Let us assume it is okay to buy your way into Harvard if you also pay for one other deserving student (that can't afford it), then with my hypothetical University costs of $100k for a student for a year, the fees for the rich student would need to be $1 million to meet that 1:1 ratio, and that ratio implies (in the limit) that 50% of students are undeserving rich students!!! Also note that 98% of Harvard students graduate: https://college.harvard.edu/resources/faq/what-harvards-graduation-rate https://college.harvard.edu/resources/faq/what-harvards-grad... [1] Edit 2: low value of $20k here is incorrect. Although 20% of income comes from students, a large percentage of expenses are for research and other non-teaching expenses. See my other comment, with an analysis from a different direction: https://news.ycombinator.com/item?id=33838700 https://news.ycombinator.com/item?id=33838700

jp57 4y ago

But in fact, every student pays a different amount. The very high sticker price of tuition exists to let the schools charge each student a customized price by applying discounts (e.g. scholarships and aid) as they choose. They can compete for students this way. The most desirable students (by whatever criteria the school has chosen) are offered more discounts. This system operates at every level. A student of medium-high desirability, say a well-off white kid with good-but-not-great grades, might be offered discounts from a less well known regional school, but not from a nationally recognized school, even if her family can afford to pay full fare anywhere.

adolph 4y ago
Wow, very similar to healthcare. Sounds like efficient price discrimination suitable for well educated consumers. It's a mystery student loan forgiveness was a thing if nobody pays sticker.

n4r9 4y ago

Why is the author focusing only on the supply aspect? I would guess that Harvard is charging the amount that they think will maximise their profit. Or at least factoring that in. Isn't that what happens in a free market?

janalsncm 4y ago
In that case, wouldn’t cutting administration only increase Harvard’s profits?
- n4r9 4y ago
  I'm not arguing that Harvard is a hyper-efficient money-making scheme, just that it may be considering total revenue when setting fees.

carom 4y ago

>The common refrain about higher education costs is state governments have cut back on subsidies I have only ever heard that it was the availability of non dismissible loans that inflated the price.