The reverberations from Harvard’s stunning announcement that it had redefined middle income status to include families making up to $180,000 a year are just now coming into focus. To understand what Harvard has done to the rest of higher education it helps to first consider two sets of numbers. The first is reported growth in the value of the Harvard endowment from $14.3-billion in 1999 to 34.9-billion in 2007 — more than a doubling during a period of historically low inflation. In terms of funds available to be spent on education and research, that increase of more than $20-billion yields, at Harvard’s current 4.6% spending rate, $920-million per year.
The second set of numbers to consider are those associated with the cost to Harvard of its new financial aid scheme. According to the Chronicle’s writeup of the new Harvard plan, the university’s student aid budget will increase to $120-million from its current $98-million — in sum, a $22-million increase or 2.4% of the extra funds the increase in endowment annually supplies the Harvard budget. That $22-million dollars is also less than one half of one percent of the increase in the value of the Harvard endowment between 2006 and 2007.
For a mere $22-million Harvard has thumbed its nose at its public competitors, made certain that it has less than a half dozen competitors among private colleges and universities, and created truly nightmare conditions for the rest of private higher education. That’s what a $35-billion dollar endowment buys these days.
Next up — looking at the Harvard scheme from the perspective of a moderately endowed college or university.
