Previous |
Next |
January 25, 2008, 01:34 PM ET
What Was Harvard Thinking?
It’s a good question. What was Harvard thinking? The cynics have two answers. The first is that Harvard wanted to sweep the table, making sure that only a handful of private universities could compete with it for the nation’s top high-school seniors. Though offered by Harvard as the explanation for its largess, the notion that the university needed to lower its price to attract more “moderate” income students doesn’t ring true. As Roger Lehecka and Andrew Delbanco pointed out in Tuesday’s New York Times, “surely this is not a very serious problem for a university that each year turns away hundreds of high-school valedictorians and whose yield (the percentage of admitted applicants who enroll) is around 80 percent.” Harvard may be arrogant, but it is not a bully.
Others suggest that Harvard’s true motive was to blunt Congressional calls for tougher regulations on how universities augment their endowments. My guess is that no one in Cambridge thought Congressional critics would be mollified by a $22-million token payment — that is the sum Harvard will have to spend to fund its new financial aid program.
No, my inclination is to give Harvard the benefit of the doubt — it really thought it was responding to the hue and cry about how an undergraduate education at the university was becoming unaffordable. The problem with the Harvard scheme is not its stated goal but its irrationality. Imagine the torment of the parents with one child in college whose combined family income was $185,000 — for the extra $5,000 income they are expected to pay roughly an extra $25,000 in tuition. Think about the accounting schemes and accountant bills that will result as parents in this category attempt to hide their extra income.
Instead Harvard could have decided to make truly low-cost financing available to all its families. Again, on a sliding scale, the interest rate could vary from a low of 0% to a high set equal to the underlying rate of inflation. Or, Harvard could have introduced income-contingent loans for all of its students, again using the bulge in its endowment to fund these augments to its financial-aid budget. The advantage of these two options is that the price Harvard charges would be roughly indexed by the monetary value of the degree — and Harvard’s program would have few of the disruptive effects it is now having on the rest of higher education.
So much for irrational exuberance.
Add Your Comment
Commenting is closed.