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Students in the Red


By Roger M. Klein

HARVARD MAY HAVE the dubious distinction of being the most expensive Ivy League college next year when tuition, room and board fees will total a whopping $7000. The administration claims that fee increases are necessary to keep up with the galloping price rises that a University, like any other consumer, faces. To a certain extent their claims are valid; prices are unquestionably rising. But a closer examination of the relevant facts proves that placing the blame for increasing college costs wholly on OPEC, government grant cutbacks and inflation is the easy way out for the administration. A University committed, as Harvard claims it is, to seeking a diverse student body should strive to limit the economic barriers facing many students.

In the past decade, tuition payments and related fees have constituted an ever-increasing proportion of the University's revenue. A decade ago, student fees provided Harvard with a fifth of its annual income. By 1975-76 students were footing 28 per cent of the bill. Students in the College and Graduate School of Arts and Sciences (GSAS) now pay fully one-third of the school's operating costs.

Financial officials attempt to justify shifting the University's financial burden onto students, claiming that other income sources have been drying up. The Nixon and Ford administrations slashed HEW grants and other government contracts; on the other hand, Harvard last year received more money from the government, corporations and other givers than any university in the country. The depressed stock market of 1973-74 put a dent in the University's endowment, but with the recovery last year Harvard's endowment regained its position as the nation's highest. At $1.48 billion the endowment is at its historical peak.

The administration's persistence in directly linking inflation and tuition increases deserves closer scrutiny. Inflation over the last five years averaged about 6 per cent annually, while student fees have seen an average annual increase of nearly 8 per cent since 1973. (The 8 per cent Massachusetts meal tax was implemented during this period, but it contributed only slightly to the increase.)

Financial officers cannot stem inflation, nor can they control federal grants or guarantee a high level of alumni giving. The only sources left for them to draw on are student fees and the endowment. Harvard's financial strategy takes into account not just the Class of 1980 but the Class of 2080 as well. As a result, the administration tends to treat the endowment as a sacred cow: in accordance with classic accounting principles, college financial officers avoid dipping into the principal of the endowment.

But Harvard's budget managers have gone one step further, and refrain even from spending all of the interest on the endowment. If capital gains are included, the University's endowment produced income equal to 11.8 per cent of its total value last year. But only 5 per cent of the income went to defray Harvard's operating costs. The rest of the interest was reinvested to safeguard Harvard's solvency for centuries to come.

Since each school within the University manages its finances separately, one school's surplus is not used to ease another's deficit. The Business School, for example, incurred surpluses even during the worst inflation of the '70s while the College and GSAS, in their worst year, wound up with a $1.4 million deficit. The University refuses to transfer income from the profitable schools to these with shortfalls.

Harvard administrators speak of setting college prices at the level "the market will bear." But consumers of Harvard educations are an atypical group. Even the roughly 40 per cent of Harvard's undergraduates who receive financial aid come from families with an average income of $18,000--roughly $5,000 more than that of the average American family.

Despite the continuing upward trend in college costs, the applicant pool for the Class of 1981 is the largest in Harvard history. Obviously there are students whose parents are willing and able to pay for the Harvard mystique. But in spite of the University's lipservice to the ideal of diversity, the trend may transform the student body into more of an economic elite than it already is.

Last year administrators took one step towards a more economically balanced student body. After the number of students in the $20,000 to $35,000 income range declined, Harvard instituted a parent loan plan. The plan enables students who do not qualify for financial aid to stretch out tuition payments over an eight year period, paying an interest rate on the loans below the 12 per cent commercial rate.

But in spite of existing financial aid options, there are undoubtedly numerous qualified students who are forced to transfer or don't even bother to apply because of the constraints that inadequate financial aid programs impose. When Dean Rosovsky announced the forthcoming tuition hike he promised to "generate certain prospects and plans" to further relieve the burden of college costs. But when Robert E. Kaufman '62, assistant dean for financial affairs was questioned about these proposals he offered no concrete plans, adding that the administration's programs would "not necessarily be forthcoming within the next couple of months."

Administrators have not been lax in their search for budget-trimming measures. Stephen S.J. Hall, Harvard's former whizkid efficiency expert, dreamed up budget-slashers ranging from turning off the heat in Harvard bathrooms to using one color of ink on all University letterheads, envelopes and business cards. But officials have yet to take a hard look at many of the frills of a Harvard education. Rooms are frequently overheated; sherry consumption could be curtailed. Administrators could also examine the possibility of offering a ten or 14 meal board option, in addition to the present 20 meal plan. Food Services currently computes board fees on the assumption that students consume an average of about 14 meals per week; there is no reason for non-breakfast eaters to subsidize students with heartier appetites.

MOST budget cut suggestions from undergraduates may be no more than stabs in the dark, since students know almost nothing of the University's budgeting procedures. House representatives on the Committee on Houses and Undergraduate Life budget subcommittee have complained that they never received the financial data food services administrators promised them and thus could offer few substantive criticisms of next year's tuition hike.

By contrast with Harvard's unilateral budgeting process, six Princeton undergraduate and graduate students and one worker representative sit on that university's priorities subcommittee. The six-year-old, 16-member group makes recommendations on student fees, teaching, salaries, and departmental expenditure levels to university officers, who have never altered the subcommittee's recommendations. Although students form a minority of the sub-committee, they have full access to financial data, and administrators are usually willing to compromise on tuition hikes and cutbacks.

Harvard students are admittedly not alone in their financial blues. Other Ivies have yet to break the $7000 figure although they are trailing close behind. The IRS classifies Harvard as a non-profit institution but budget officials have managed to tuck away a tidy proportion of the University's income in the name of fiscal conservatism. But the debt-ridden graduates of the '70s can be glad they're not 20 years younger--experts predict that by 1995 four years of college will cost over $80,000.

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