Friday, September 5, 2008, 7:02AM ET - U.S. Markets open in 2 hours and 28 minutes.

Anya Kamenetz Generation Debt

Anya Kamenetz, Generation Debt

Getting an Ivy League Education -- on the Cheap

by Anya Kamenetz

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story
Very Good (259 Ratings)
3.1042472/5
Posted on Wednesday, January 30, 2008, 12:00AM

"If Your Family Earns Less Than $60,000 a Year, Harvard University Is Free."

That's what it read, in bold letters, on the poster I saw hanging on a door at New York City's Legacy High School, where I was attending a planning meeting for community members involved in public schools.

Harvard announced this decision last March, and followed up with an even more generous adjustment in December, declaring that families with incomes below $180,000 a year -- all but the top 5 percent of U.S. earners -- would pay no more than 10 percent of their income in college costs.

Yale followed suit with a similar announcement a couple of weeks ago, and Princeton, the University of Pennsylvania, Swarthmore, Haverford, Dartmouth, Duke, and Bowdoin have all lowered the expected costs for families making up to six figures, in a new acknowledgement that middle-class and even upper-middle-class families can have trouble affording college.

The Skeptical Media

Most media coverage of the change has argued that these tuition policies, while good news for a small number of families, are unlikely to sweep the nation. More than 80 percent of American college students attend public colleges that don't have the same resources to cut tuition costs even if they wanted to.

The skeptical view is that these private colleges, with their multibillion-dollar endowments, are simply trying to get out ahead of government regulation.

In the past decade, many private colleges have hired professional investment managers and made risky hedge fund investments, earning an average of 15.2 percent in 2006 -- all tax-free, of course. Harvard has grown its endowment from $7 billion to $35 billion since 1991 by pursuing this strategy.

Sen. Chuck Grassley (R-Iowa) has been scrutinizing these practices and backing a new law that would require the 76 private colleges with endowments over $1 billion to pay out at least 5 percent of the money a year, a rule that applies to charitable foundations. Small coincidence then that Harvard and Yale's new policies happen to increase their endowment payouts to right around that 5 percent line.

Price Slashing Good News for All

Whatever the private colleges' true motivation, however, these new tuition policies are good news for all families and students who are struggling to pay for a college education. The reason goes back to that poster at Legacy School.

Harvard carries a disproportionate symbolic weight. An urban public high school like Legacy may send one graduate there every other year, at most, but knowing that an Ivy League education will be free or affordable for middle-class and working-class students who qualify can motivate millions of young people. In contrast to middle-class students with college-educated parents, low-income students, especially the children of immigrants or the first in their families to attend college, are more likely to be unfamiliar with the confusing student aid applications and to be daunted by high sticker prices.

Harvard's publicizing their free-tuition policy may help high-achieving students of few resources get the message that a private college may ultimately be able to offer them more assistance than the local public or community college. And more colleges may feel motivated or pressured to show that they care just as much about affordability as the big names do.

Luke Swarthout, a higher education associate at the U.S. Public Interest Research Groups, agrees that the decisions made by certain schools can have a real impact.

Harvard and Yale Setting the Tone

"Harvard and Yale clearly set the tone," he says. "They drive the market for students and for faculty. There's a real trickle-down effect.

"To the extent that they encourage states and other institutions to focus on addressing real challenges, like access by low-income students, [Ivy League schools] can be a real force for good and progress."

The trickle-down effect has already begun. At a recent meeting of the University of California Board of Regents, a research group headed by UC Berkeley Chancellor Robert Birgeneau cited the Harvard and Yale decisions when recommending that the public university system create a $2 billion fund from private donations and tuition, and dedicate it to reducing college costs.

The University of California system is one of the largest in the world, with over 200,000 students. It also does a better job than many other large state systems at helping community college students transfer in and complete their degrees. A decision in California to redouble the resources dedicated to access would have a positive effect on a large number of students who really need the help.

The study found that within 10 years, even with existing student aid, the cost of attendance for students from families making less than $40,000 a year will average $16,700 or more, an amount that the chancellor called "unrealistic."

Guaranteeing Accessibility

"Our ultimate goal is to guarantee accessibility for the indefinite future, not only for students from the poorest families but also for those from the middle class," he said in a statement. "It is urgent that we act now to avoid a crisis of accessibility in the near future."

With tuition rising at two or three times the rate of inflation, the college accessibility "crisis" has many causes, and it will take many different types of reform to address it. The cause that's gotten the most attention of late in Congress and on the presidential campaign trail has been the role of the federal government -- the largest provider of tuition assistance -- and the need to use taxpayer resources more efficiently so we're subsidizing students, not just student loan companies.

The recent decisions by a few private colleges raise the stakes for  other educational institutions to show that they're dedicated to holding down costs for students. I believe it's now time for families and communities to push for more accountability and transparency on the part of public institutions. Colleges need to show that they can be efficient in their use of resources and do more with less. Competition and smart consumer choices by students and families will ultimately be just as important to holding down college costs as contributions from the public and private sector combined.

Find the Princeton Review's list of the Best Value colleges here and US News and World Report's list of Best Value colleges here.

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story

Rate This story

Very Good (259 Ratings)
3/5
Sign-in to rate!

82 Comments

Showing comments 1-5 of 82Next >>
Sort: first to last

  • Yahoo! Finance User - Friday, May 30, 2008, 6:13PM ET  Report Abuse

    • Overall: 4/5

    bzzpd: It's spelled 'shmuck'. If you're going to insult a whole demographic, at least use spellcheck. You schmutz. To the last poster: the fact that you would blame President Bush (Jr.? Sr.? You might want to be a bit more specific) for the financial calamity that every American faces shows the lack of proper objectivity to opine in matters such as these. If you're going to blame the financial chasm that continues to grow between the haves, almost-haves, and the 'give me! give me! give me!'s on anyone, may I suggest examining our fiscal policies from the last 60 years or so? Our current financial crisis is just a reflection of poor management from a previous era. O.T.: Great article!

  • Yahoo! Finance User - Saturday, March 22, 2008, 11:45AM ET  Report Abuse

    • Overall: 1/5

    NOBODY in this country will get rich unless they marry into the money. Unlike forty years ago, our country is now geared for the rich. If you dont already have money then it will be close to impossible for you to become rich even if you have discipline,smarts and a strong work ethic. thanks mr.bush. you have triumphed at demolishing the strongest economy in the world.

  • dkny2012 - Sunday, February 17, 2008, 5:03PM ET  Report Abuse

    • Overall: 4/5

    ivy leagues arent just for the rich! sure, most are but that is because the rich are more aware. my family makes less than 50,000 per year and i am at upenn with almost full financial aid and my sister is at yale with full financial aid...you may say that my sister and i are an exception but this is totally the opposite. most ppl here get financial aid. and the idea that ivy league is for the rich is an outdated stereotype of ignorant people who couldnt get in to an ivy and they are now choosing to blame it on their financial status

  • bzzpd - Tuesday, February 5, 2008, 12:56AM ET  Report Abuse

    • Overall: 1/5

    Let's face it....these Ivy League Colleges are for the rich to begin with. They were never meant for the poor to attend to begin with. A few poor smucks are accepted but the majority of students are from a rich mommy or daddy. This keeps the best jobs in line for the children with the prestigious Ivy League Degrees. If Harvard, Yale, or any prestigious college really wanted to accept all these qualified students, they would go on line with their schools. With the technology that we have today, there is no need for brick and mortar schools to begin with. Harvard could bring in every 4.0 student that applied and train them online. The professors sit up in a classroom full of a hundred bodies anyways. What's the difference if you watch the smuck from a computer monitor? If these colleges really wanted to lower tuition, they would be training thousands of students for each class, charging smaller tuitions, and making more money in the first place. These schools are set up for the rich elite. The degrees from these schools are set up to get the rich, the best jobs in society. They occasionally throw a bone to some poor clown to make themselves feel better about themselves. If everyone with a 4.0 went to these schools, then what would be the benefit of going there in the first place? 4.0's are a dime a dozen. These schools leave out qualified students on purpose. Everyone wants the Nike Logo.....Everyone wants the Harvard Logo on their resume. What none of these Ivy League smucks will ever tell you....is that any of the 4.0's could do the very same damn job that the idiots they graduate do. When Clinton and Bush, tell everyone that there was a surplus of money, and the deficit was being paid down under Clinton.................................................. I just have to laugh my but off! Bush gave everyone a tax cut on this lie from Clinton. There never was a surplus. The last time they paid down the deficit was in 1966. Look under Yahoo on the search engine. Search for "public debt to the penny". The Treasury Department has a history of the United States Debt from the conception of the United States. There has been a higher deficit every year since 1966. If these highly educated idiots, Clinton and Bush, and every national news magazine, can print and reprint these lies every day of the week........................... then I have to question the quality of these institutions education. Any idiot with simple math skills can tell you that we have been lied to for sixteen years. But all these highly educated mental midgets, can't figure out a simple math concept, and realize that the presidents have been lying to them for sixteen years? Greenspan.....Bernanke? Highly educated, pompous, arrogant morons, with lovely degrees from prestigious colleges. Do you really believe this dot com bubble......real estate bubble......subprime mess......bond insurer bubble.......derivitives bubble.......government bankruptcy bubble ............................................. could of been created by a bunch of butt heads from prestigious ciolleges? You'd be right. Not a one of them can count or do a friggen simple math problem. Otherwise.....they would tell you they have bankrupted the entire United States Government. That's hard for them to do though. They would have to tell you the truth for once. These college educated idiots will be the death of us all. Kiss your Social Security goodbye. It won't be worth anything after the hyper-inflation that will occur soon. Once these overseas investors figure out we can't pay them back......then the panic will begin. They will sell of dollars like they are going out of style. Send your kids to their college......they will give them a good education on how to spin a lie.....steal others money.....and how to do the art of cover up, when the house of cards comes tumbling down on their heads. So much for the college elite.

  • Yahoo! Finance User - Monday, February 4, 2008, 5:57AM ET  Report Abuse

    • Overall: 1/5

    Great heading, no content, awful writing, nice picture ... it seems that's what you get with all of Kamenetz's articles.

Showing comments 1-5 of 82Next >>

More from Anya Kamenetz

Read the Generation Debt Book

According to economics professor Laurence J. Kotlikoff, Generation Debt offers "a truly gripping account of how young Americans are being ground down by low wages, high taxes, huge student loans, sky-high housing prices, not to mention the impending retirement of their baby boomer parents." Generation Debt will inspire you to take charge of your financial future.

Read more from Anya Kamenetz here and here.

More from Yahoo! Sources

  • CNN Money
  • Consumer Reports
  • Kiplinger
  • The Motley Fool
  • Business Week
  • Wall Street Journal

Sponsored Links

Personal Finance Info
Breaking news & articles about your money and personal finances.
www.urwealthy.com
Personal Finance Courses
Sign up for a personal finance course and other courses online and earn college credits in six weeks. Becker College Center for online learning. Learn more today.
www.beckercollege.edu
Personal Finance Software
MS Excel based personal finance software. Comprehensive, but easy to use. Download now.
www.simpleplanning.net
New Report - Money, Finance, & Luck
Stop Analyzing Stocks … and Understand The "Luck Factor".
www.value-discovery.com
personal finance article
Looking For personal finance article? Find It By Location With Local.com!
Local.com
Personal Finance California
Websites, News about personal finance California.
www.ZaSource.com