Why Can't Harvard Be Free?

In the spring of his senior year of high school, Marco A. Morales had to make a choice between a number of excellent schools. One was the historically elite and notoriously expensive Harvard, with its total cost per year surpassing $41,000 in 2007. Another was the Franklin W. Olin College of Engineering, where every accepted student is offered a scholarship that completely covers tuition. Morales, whose family would have been unable to pick up the tab for four years of college without financial aid, ultimately forwent the ivy-laden gates of Harvard Yard and now—surprisingly—pays more to attend tuition-free Olin than he would have had he come to Cambridge.

For many the idea of a free private college education is a fantasy, as tuition rates around the country climb upwards at alarming speeds with no end to the rise in sight. According to “Making Harvard Modern” by Morton and Phyllis Keller, Harvard’s own tuition has skyrocketed from $2,600 in 1970 to $22,699 in 2000 and currently sits at $30,275, up 5.3 percent from last year. The 21st century has seen the introduction of several initiatives to address prohibitively high tuitions among elite institutions; some, including Harvard, have even moved to eliminate parental contributions from low-income students. But with an endowment larger than some countries’ GDPs, the question becomes: is Harvard doing enough? Why can’t Harvard be free for all students?

Mathematically speaking, it would appear that the University is more than able to provide a free college education to all undergraduates. With 6,715 students enrolled in the college last year and a tuition of $30,122, it would cost about $202 million to completely eliminate tuition for all students. The College gave away a total of about $99.7 million in financial aid awards last year, leaving a difference of about $102.3 million, a staggering sum to be sure, but a mere 0.3 percent of Harvard’s 34.9 billion endowment. Even looking at only growth from the endowment, the total cost of eliminating tuition would only be 1.8 percent of the 5.7 billion increase in the endowment in the most recent fiscal year. But even if Harvard were able to eliminate tuition, the issue remains complex. Some experts wonder if a tuition-free model would even be a good thing at a place like Harvard, and the effects of the system at tuition-free Olin aren’t what you might expect.

Freer Than Free

When Marco A. Morales began his college search, he knew very little about what to expect from the process. Morales, an excellent student and dedicated athlete, resided in Mexico and commuted across the border to his all-boys private Catholic high school in San Diego, which he attended for free on financial aid. Poring over guides to college admissions, Morales was able to compile a list of schools that seemed within his reach and that matched his interests: an urban campus with a top engineering program. To his great surprise, Harvard appeared on his list, and Morales decided to apply.

“I was like holy crap, Harvard can be on my college list,” says Morales, who was eventually accepted to Harvard, MIT, Columbia, University of Pennsylvania, University of Miami, Washington University in St. Louis, Carnegie Mellon, Worchester Polytechnic Institute, and Olin College of Engineering.

Morales was faced with a decision he had not initially anticipated, choosing between some of the best engineering programs in the country. Generous financial aid packages came back from nearly every school on his list, including Harvard. Ultimately, Morales chose Olin over Harvard because of the strength of Olin’s engineering program—not its tuition-covering scholarship. In fact, with room and board, Morales pays more at his tuition-free school than he would have at Harvard, which offered to cover his college costs through financial aid.

Taking Strides

By the time Derek C. Bok became the president of Harvard for the first time in 1971, the school had already made manifest its need-blind admissions policy, part of its commitment to the belief that no student capable of attending Harvard should be prevented from doing so by a lack of funds. According to Bok, Harvard stayed true to its need-blind policy throughout the 1970s, even as other institutions abandoned the concept. Bolstered by alumni support, Harvard stuck to its guns through years of inflation, tuition increases, and low returns on its endowment. In 1979, the Faculty of Arts and Sciences (FAS) embarked on a five-year capital campaign focusing on the College, hoping to bring in $250 million. The campaign was wildly successful, reaching its goal in three years and prompting Bok and then-FAS Dean Henry Rosovsky to raise the target to $350 million. According to Bok, the chance to broaden financial aid convinced alumni that it was fair to raise the amount solicited mid-stream.

“The argument that really convinced them was the idea that there had been lots of inflation and we had to have a lot of money to ensure that no deserving student with the proper credentials would be turned away,” he says. “It is that kind of policy that makes it harder for children of alumni to get in here, but that was never even voiced as a concern.”

But even at the end of his 20-year term, Bok was not sure that Harvard College was any more economically diverse than it had been at the beginning. This was not lost on Lawrence H. Summers, who in 2001 became Harvard’s 27th president. Efforts to recruit minorities made Harvard’s undergraduate student body more racially diverse, but aside from the institution of need-blind admissions, no similar steps had been taken to diversify along economic lines—a problem not unique to Harvard, according to Summers.

“If you look across the country, dumb rich kids are more likely to go to college than smart poor kids. The message of Harvard’s availability to low-income students was very much a shrouded and unclear one,” says Summers, who is now the Eliot University professor.

And so, in February 2004, Summers announced the creation of the Harvard Financial Aid Initiative (HFAI), which would completely eliminate parental contributions from families earning less than $40,000 annually and reduce contributions from families making between $40,000 and $60,000 annually. In addition, HFAI also intensified the recruitment of low-income students, established the Crimson Summer Academy (an intensive college-prep program for financially disadvantaged students from Boston), and launched an effort to gather information about students’ socioeconomic backgrounds using ZIP codes. In total, the initiative would increase the University’s financial aid budget by $2 million annually.

HFAI made Harvard the first school to completely eliminate parental contributions from low-income students. Other elite schools soon followed suit, with Yale eliminating contributions for families making under $45,000 the following year and Stanford doing the same a year after that.

Summers said that one higher education study found that 10 percent of students came from the lower 50 percent of the income distribution. “There was very little done to send a salient message that that was unacceptable,” Summers says. “We were not trying to gain a competitive advantage. The more people that emulated us, the better.”

In March 2006, the University expanded HFAI, eliminating parental contributions from families earning less than $60,000 per year, and significantly reducing the contributions from families with annual incomes between $60,000 and $80,000. With the expansion, the program was projected to cover 1,500 students at the College and raise the College’s financial aid budget by an additional $2.4 million annually, to be covered by the central administration, not FAS, until 2009.

Though the income threshold line was initially placed at $40,000, Summers says he pushed for it to be much higher, but was overruled by the Harvard Corporation—the highest governing body of the University–who set the threshold based on budgetary constraints. Summers says he would like to see HFAI greatly expanded, with a bottom threshold of at least $100,000, but says he encountered strong resistance within FAS to doing so.

“The reason this has not been expanded more is because the FAS leadership saw what they regarded as serious budget issues, a view that I could not understand,” he says. “I do not think this is very plausible today in light of the multibillion-dollar increases in the FAS endowment.”

The FAS endowment was valued at over $13.2 billion in 2006, showing a positive gain of $4.4 billion since 2003. According to the U.S. Census Bureau data for 2004, the median family income was $54,061—about $14,000 above the income threshold set in 2004.

While these gains in the endowment are significant, Bok says that the endowment’s limited liquidity makes it hard to channel money into the places where it is most needed, including financial aid. Donations to the endowment are frequently restricted by donors to be used only for certain purposes, and these restrictions are legally binding. Dean of Admissions and Financial Aid William R. Fitzsimmons ’67 says that there are several huge projects FAS is undertaking which will require the use of these recent gains and therefore could not be used to pursue the elimination of tuition for all students, though some of it will be channeled into HFAI.

“There is a deficit in FAS right now,” he says. “There are a lot of exciting and ambitious plans for Allston and we just completed buildings in North Yard. We have a lot of expenses facing us and I am not sure where the money [for eliminating tuition for all students] would come from.”

PATH TO FREEDOM?

With the implementation of HFAI, Larsen Professor of Public Policy at the Kennedy School of Government Christopher N. Avery ’88 says that in a sense the College is moving toward a tuition-free model for the lowest income students. Whether the model should be extended to all students rests on a larger philosophical question, Avery says: Should everyone be able to go to college for free?

“Is it really sensible to try to make college free for the children of hedge fund managers and CEOs?” he asks.

If yes, then the issue becomes simple, Avery says. The tuition-free model can be extended to all students, barring budgetary difficulties. However, if the answer is no, then the issue is more complicated, as a graduated scale and ultimately a cutoff must be devised.

While not intimately acquainted with college administration, Avery says that for many colleges, while tuition is an important source of revenue, it is definitely not the only source–colleges may even spend more per student than they charge in tuition. So it may well be feasible for colleges with large endowments—certainly those exceeding $30 billion—to operate tuition-free. But again, colleges must face the philosophical question he initially posed; Larsen himself comes down strongly on the negative side.

“College provides an important service to families and many of them can easily pay,” he says. “We have a wonderful system of public universities, so already we have guaranteed almost everyone a low-cost or zero-cost higher education option. I don’t think there is any reason private universities have an obligation to provide free services to everybody.”

Avery is not alone in his belief, as both Summers and Bok echo his sentiments.

“I don’t think the best use of university resources, with all the social problems, with all the research that needs to be done and with all disadvantaged students who want to receive a Harvard education, is to reduce tuition to zero for students from very wealthy families,” says Summers.

Bok, though firm in his belief that Harvard should continue charging its students tuition, is intimately acquainted with tuition-free models. His grandmother started the Curtis Institute of Music—one of the most prestigious music schools in the world—which has never charged tuition. But Bok says that because of the different socioeconomic demographics of each school—the Curtis Institute has very few students who are very wealthy—different tuition models are warranted.

“Should we allow the really wealthiest families in America to send their children to Harvard for free?” he asks. “I think even those families wouldn’t agree with that.”

Bok also laments the rise of merit scholarships in institutions of higher education today, albeit outside the Ivy League.

“Just because US News & World Report bases rankings on things like average SAT scores, schools are competing for phony prestige, trying to get better students, and using their financial aid to get it,” he says.

Even though these experts don’t see the tuition-free model as a positive good, not all students agree with them.

Olin sophomore Jeffery H. Moore applied and was accepted to some of the nation’s most elite colleges, including Columbia, Carnegie Mellon, Rice, and Olin. While he describes his background as upper-middle class, he says that his family could not have afforded the $40,000 price tags of the Ivy League easily, which led him to turn down Columbia, a school he was seriously considering.

“The tuition cost separated schools that were a realistic possibility versus schools where I would really have to make a sacrifice,” Moore says.

At Harvard, Fitzsimmons says that the College is trying to address the problem faced by middle-income and upper middle-income families like Moore’s with annual incomes anywhere from $60,000 or $80,000 up to $200,000. Last year, the College gave aid grants to over 1,300 undergraduates from families making over $100,000, 351 of which were making incomes of above $160,000. For families with incomes between $100,000 and $140,000, grants averaged $21,693 per family, a $4,000 increase from 2004. But still both Fitzsimmons and Summers worry that not enough is being done to offer relief to middle-income families facing financial impediments to attending Harvard.

COMMITMENT TO THE FUTURE

If Harvard’s trend of raising its financial aid threshold continues—and if Summers gets his way—families like Moore’s may not have to worry about such a sacrifice in the future.

In his 2006 Commencement address–his last as president–Summers expressed his desire for the time “when Harvard sets a standard by eliminating any financial burden for lower and middle class families and when students from these backgrounds are fully represented in every Harvard class.” In order to allow every Harvard student, regardless of background, to “choose a career that, while it may not be lucrative, serves our world,” Summers declared that Harvard could “press on to find more financial aid, more ways to support those who commit themselves to service.”

Eventually, Harvard may become practically free for most students. While budgetary constraints may have restrained Summers’ vision in the short term, it seems likely that Harvard is wealthy enough to support such a plan in the long term. But the College will likely stop there: even if Harvard is wealthy enough to fully support all of its students, it’s not likely to tear up its term bills for the children of hedge fund managers anytime soon.