Harvard's new aid plan

Honestly, it sounds great.

One always wonders about these "magic" cutoff points, though. What's so different between the family with an "income level" of $180,001 that gets to pay $30,360 in tuition and that with a level of $180,000 that gets to pay $17,500? I would find a way to chop a few bucks off the ol' income pretty fast. Basically, if a sliding scale was OK for $60,000 to $120,000, why wasn't it good for above $180,000? I'll never understand those types of discontinuities. (Don't even get me started on the idea of tax "brackets," a completely outmoded concept for the computer age.)

But, yeah, otherwise, it looks like Harvard is going to be stealing a lot more students who will pay a lot less for college away from the Michigans (and the Cornells) of the world. Looks like a good plan for Harvard and those students. The publics likely cannot respond: can Cornell? I wouldn't think so. Let's hope that Cornell grads of the 50s and 60s made boatloads of money and are willing to part with it.

(Completely offhand: isn't this all a bit reminiscent of, I don't know, Reagan and Russia in the 80s? Talk about an Evil Empire...)

Scersk '97
But, yeah, otherwise, it looks like Harvard is going to be stealing a lot more students who will pay a lot less for college away from the Michigans (and the Cornells) of the world. Looks like a good plan for Harvard and those students. The publics likely cannot respond: can Cornell? I wouldn't think so. Let's hope that Cornell grads of the 50s and 60s made boatloads of money and are willing to part with it.

Well, I gather that's one of the key goals of the current enormous fundraising campaign at Cornell - student aid endowment, to increase Cornell's capacity to provide grants instead of loans, and to keep tuition increases as low as possible. It's been getting better for years, but in baby steps.

One of the great difficulties is that a much higher percentage of Cornellians than other Ivies' alumni were first in their family to go to college (particularly CALS alums), and may not recognize the importance of giving back, or even feel they're capable of giving back. But there's no question it would help if more of the people who are capable of giving back did so. My tuition was about 60% of what it would've been if alumni hadn't been giving at the time, so I try to do my part for the current students, and maybe they'll step up when it's their turn, too.

</shillmodeoff>

Cornell would never do that. They like money too much as they nickel and dime us for everything. I especially love the $29 charge per hour if you are in the dorm after 2pm Dec 15.

jdonofrio
Cornell would never do that. They like money too much as they nickel and dime us for everything. I especially love the $29 charge per hour if you are in the dorm after 2pm Dec 15.

And they couldn't possibly have a legitimate reason for that, right? Liability insurance on unsupervised residents, perhaps?

Beeeej

jdonofrio
Cornell would never do that. They like money too much as they nickel and dime us for everything. I especially love the $29 charge per hour if you are in the dorm after 2pm Dec 15.

And they couldn't possibly have a legitimate reason for that, right? Liability insurance on unsupervised residents, perhaps?

Well - legitimate is in the eye of the beholder... <insert snarky frivolous lawsuit comment here>

Beeeej
One of the great difficulties is that a much higher percentage of Cornellians than other Ivies' alumni were first in their family to go to college (particularly CALS alums), and may not recognize the importance of giving back, or even feel they're capable of giving back.

I wonder if some of them also feel that they went to a "state" school, so giving isn't as important. Are there publicly available breakdowns of donation numbers (% participating, total dollars, etc) by colllege? I'm guessing not.

Scersk '97
One always wonders about these "magic" cutoff points, though. What's so different between the family with an "income level" of $180,001 that gets to pay $30,360 in tuition and that with a level of $180,000 that gets to pay $17,500? I would find a way to chop a few bucks off the ol' income pretty fast.

You're making an assumption that at $180K all aid ends. The article does not say such a thing. It doesn't address the issue, but it certainly doesn't say that. I would think Harvard would be aware that a big jump at $1 difference would cause all sorts of games and fudging. I'd have to imagine that the sliding scale continues, just not at the 10% rate.

(Don't even get me started on the idea of tax "brackets," a completely outmoded concept for the computer age.)

Hmmm? Tax brackets don't have the discontinuities that you were speaking of. Its only the amount above that bracket's threshold that gets the higher rate, so its a continuous function. Or are you talking about the discontinuities in the rates themselves (and not the dollars paid)? While it is the computer age, many people still do file by hand, and the last thing needed is to make taxes even less understandable for people.

DeltaOne81
Hmmm? Tax brackets don't have the discontinuities that you were speaking of. Its only the amount above that bracket's threshold that gets the higher rate, so its a continuous function.

Well, sure, but it's not continuously differentiable, and that has clearly led to no end of confusion for the average taxpayer!

(yes, I know you said the same thing. I just wanted to say "continuously differentiable." )

Beeeej
</shillmodeoff>

Doesn't that turn 'shill mode' on?

Beeeej
And they couldn't possibly have a legitimate reason for that, right? Liability insurance on unsupervised residents, perhaps?

QED.

Scersk '97
Basically, if a sliding scale was OK for $60,000 to $120,000, why wasn't it good for above $180,000? I'll never understand those types of discontinuities. (Don't even get me started on the idea of tax "brackets," a completely outmoded concept for the computer age.)

See also: Every discussion of the PWR that has ever taken place.

Robb

Beeeej
One of the great difficulties is that a much higher percentage of Cornellians than other Ivies' alumni were first in their family to go to college (particularly CALS alums), and may not recognize the importance of giving back, or even feel they're capable of giving back.

I wonder if some of them also feel that they went to a "state" school, so giving isn't as important. Are there publicly available breakdowns of donation numbers (% participating, total dollars, etc) by colllege? I'm guessing not.

I actually think it probably is publicly available. But I can tell you right now, there's no mystery to it, the state-assisted undergraduate colleges do have a significantly lower participation rate. I don't recall whether that also translates into lower dollars per gift, but I believe it translates into lower total dollars.

Beeeej

Robb

Beeeej
One of the great difficulties is that a much higher percentage of Cornellians than other Ivies' alumni were first in their family to go to college (particularly CALS alums), and may not recognize the importance of giving back, or even feel they're capable of giving back.

I wonder if some of them also feel that they went to a "state" school, so giving isn't as important. Are there publicly available breakdowns of donation numbers (% participating, total dollars, etc) by colllege? I'm guessing not.

I actually think it probably is publicly available. But I can tell you right now, there's no mystery to it, the state-assisted undergraduate colleges do have a significantly lower participation rate. I don't recall whether that also translates into lower dollars per gift, but I believe it translates into lower total dollars.

Well then lets kick out those CALS bums!!! They don't contribute anyway!!! Oh wait, we need to at least keep AgEc for the hockey players.... .

Robb

DeltaOne81
Hmmm? Tax brackets don't have the discontinuities that you were speaking of. Its only the amount above that bracket's threshold that gets the higher rate, so its a continuous function.

Well, sure, but it's not continuously differentiable, and that has clearly led to no end of confusion for the average taxpayer!

(yes, I know you said the same thing. I just wanted to say "continuously differentiable." )

Well, no, continuous and continuously differentiable aren't the same thing. I do want smooth functions... We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

Why don't we just choose some nice exponential function and be done with it...

Scersk '97

Robb

DeltaOne81
Hmmm? Tax brackets don't have the discontinuities that you were speaking of. Its only the amount above that bracket's threshold that gets the higher rate, so its a continuous function.

Well, sure, but it's not continuously differentiable, and that has clearly led to no end of confusion for the average taxpayer!

(yes, I know you said the same thing. I just wanted to say "continuously differentiable." )

Well, no, continuous and continuously differentiable aren't the same thing. I do want smooth functions... We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

Why don't we just choose some nice exponential function and be done with it...

I know they're not the same thing. That's why I said "Sure (meaning I agreed with DeltaOne's statement that it was a continuous function), but (meaning in contrast) it's not continuously differentiable."

When I said that DeltaOne and I had said the same thing, I was referring to his comment that the rates were discontinuous, which is the same thing as saying the function isn't continuously differentiable.

The key thing is that net income remains a monotonic function of gross income.

Scersk '97
We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

That's right... lets simplify people's taxes by going from 6 tax brackets to 37. That'll make people happy! Or better yet, make it so people can't even begin to calculate their rate, with math they haven't ever seen, nevermind the dollars they owe.

While I wouldn't generally defend the tax system, the number of brackets is probably in the right ballpark. Its the complex, numerous, counterintuitive, and contradictory rules on deductions, credits, and penalties that are the issue. Lets leave well enough alone on the one part that's least screwed up.

Scersk '97
Well, no, continuous and continuously differentiable aren't the same thing. I do want smooth functions... We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

Why don't we just choose some nice exponential function and be done with it...

How about we go with one bracket? That has the virtue the simplest thing you're going to come up with and also treating everyone fairly. Unless, of course, you define fair as "let's soak the rich to pay for everything we want".

KeithK
How about we go with one bracket? That has the virtue the simplest thing you're going to come up with and also treating everyone fairly. Unless, of course, you define fair as "let's soak the rich to pay for everything we want".

Fair in taxes is a meaningless term. It is entirely of personal opinion, values, and priorities.

Is it 'fair' that someone who can barely afford to feed and house their kids on their retail salary be taxed away part of the money needed to feed their kids? And someone who's deciding which yatch to buy next be taxed much less than current? You may think I'm saying its not, but I could see how some would think that an even rate is fair. Indeed that's one definition. But its not the only definition.

About the only thing even vaguely measure is level of simplicity or confusion.

People can argue fair or day and night, but its an argument of opinion, to which there is no one answer.

DeltaOne81

Scersk '97
We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

That's right... lets simplify people's taxes by going from 6 tax brackets to 37. That'll make people happy! Or better yet, make it so people can't even begin to calculate their rate, with math they haven't ever seen, nevermind the dollars they owe.

But the vast majority of people don't calculate their federal taxes; they use tax tables.

jtwcornell91

DeltaOne81

Scersk '97
We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

That's right... lets simplify people's taxes by going from 6 tax brackets to 37. That'll make people happy! Or better yet, make it so people can't even begin to calculate their rate, with math they haven't ever seen, nevermind the dollars they owe.

But the vast majority of people don't calculate their federal taxes; they use tax tables.

I didn't say calculate their taxes, I said calculate their tax rate. For instance knowing you're in the 25% tax bracket so for every $1000 you send on mortage interest and real estate taxes, you get $250 back (insert all sorts of disclaimers here which means that number is really anything from $0 to $250). Or that a $100 charitable deduction will save you $25 in taxes (ditto). Or that for ever $20 of interest you earn you'll pay $5 in taxes. Etc.

DeltaOne81

KeithK
How about we go with one bracket? That has the virtue the simplest thing you're going to come up with and also treating everyone fairly. Unless, of course, you define fair as "let's soak the rich to pay for everything we want".

Fair in taxes is a meaningless term. It is entirely of personal opinion, values, and priorities.

Is it 'fair' that someone who can barely afford to feed and house their kids on their retail salary be taxed away part of the money needed to feed their kids? And someone who's deciding which yatch to buy next be taxed much less than current? You may think I'm saying its not, but I could see how some would think that an even rate is fair. Indeed that's one definition. But its not the only definition.

About the only thing even vaguely measure is level of simplicity or confusion.

People can argue fair or day and night, but its an argument of opinion, to which there is no one answer.

fair:
6 a: marked by impartiality and honesty : free from self-interest, prejudice, or favoritism

That's the definition of fair that I use in this context (source: m-w.com). A progressive tax system is by definition not impartial ("treating or affecting all equally". It says that we need to favor those at the lower end of the spectrum with lower taxes. It's based on a subjective determination of how much a tax payer can afford to pay given his income.

When people say (and many do) that a tax system needs to tax the wealthy at higher rates in order to be fair they are either using a different definition of fair (e.g. "pleasing to the eye or mind" or they are really thinking of the net results. But the fact that someone may have trouble paying their bills on a retail salary is the fault of life, which certainly is not fair. You can't make it so no matter how hard you try. Better to have institutions that do in fact treat everyone equally.

Keith, in your comments there - as intelligent as they are - you quoted 3 different definitions of fair - each of which has a different perspective and leads to a different result. And I could probably pick another 3 or 4 from that page which could also apply:
[www.m-w.com]

So I feel you've made my point wonderfully

Why not argue that everyone pay the same dollar amount? After all, that would be "fair".

DeltaOne81
Keith, in your comments there - as intelligent as they are - you quoted 3 different definitions of fair - each of which has a different perspective and leads to a different result. And I could probably pick another 3 or 4 from that page which could also apply:
[www.m-w.com]

So I feel you've made my point wonderfully

I quoted two, one that I used (6a) and one that I rejected (1). The other quote was from the definition of impartial. I'm arguing that the other definitions are not appropriate in this context.

If all we can really measure is simplicity then we really should have a flat tax with no exemptions or deductions. It's hard to come up with anything simpler.

jtwcornell91
Why not argue that everyone pay the same dollar amount? After all, that would be "fair".

A constant tax would in fact be fair and impartial. It wouldn't necessarily be desirable. Current receipts of $2.4 trillion split among 300 million people would mean $8000 tax per capita, which would certainly be ruinous.

Fair and impartial doesn't necessarily equate to good. But it's hard for government action to be good when it isn't fair and impartial.

Robb

Scersk '97
Well, no, continuous and continuously differentiable aren't the same thing. I do want smooth functions... We've got, what, six tax brackets now? I guess that's a bit smoother than three, but it still seems screwy to me.

Why don't we just choose some nice exponential function and be done with it...

I know they're not the same thing. That's why I said "Sure (meaning I agreed with DeltaOne's statement that it was a continuous function), but (meaning in contrast) it's not continuously differentiable."

When I said that DeltaOne and I had said the same thing, I was referring to his comment that the rates were discontinuous, which is the same thing as saying the function isn't continuously differentiable.

Well, now that you've explained to which parts of the previous message you were referring, sure, I get that it was a "joke" rather than just ambiguity.

KeithK
I quoted two, one that I used (6a) and one that I rejected (1). The other quote was from the definition of impartial. I'm arguing that the other definitions are not appropriate in this context.

Well then, the one you rejected was of "fair" as in "fair skies" or "fair beauty".

So let me point out some other that are...
How about the other half of 6a for starters? "free from self-interest, prejudice, or favoritism". By that interest, no taxation proposal can ever be fair, as everyone has a distinct self-interest and that colors everyone's view.

How about 6b? "(2): consonant with merit or importance : due <a fair share>". That's pretty wide open, and seems to have plenty of option for one person's fair share to be a higher percentage than another, right? Especially if what we aim to truly tax is not total income, but discretionary income. Income not needed to be used for things like housing, clothing, food, basic transportation, and the like. In that case, it makes perfect fair, impartial sense that the same percentage of discretionary income is your fair share - and that's not the same thing as a flat percentage of total income.

I understand your point and priorities, Keith, but you're trying to make things into fact ('what is fair') that are only opinion.

If all we can really measure is simplicity then we really should have a flat tax with no exemptions or deductions. It's hard to come up with anything simpler.

I said its all we can measure (not measure exactly, but roughly). I didn't say its the only goal/point/consideration.

A constant tax would in fact be fair and impartial. It wouldn't necessarily be desirable. Current receipts of $2.4 trillion split among 300 million people would mean $8000 tax per capita, which would certainly be ruinous.

I think this says a lot. A flat tax (rate) would be pretty ruinous too, for those on the lower end of the income scale. If you were going to keep a revenue neutral route, the dollars lost by the people at the top end dropping from 35% to ~25% would need to be made up at the bottom. Why is that not important for a flat tax rate, but it deserve mentioning for a flat tax dollar amount?

No way they could match Harvard and Yale obviously but it's something:
[cornellsun.com]

I'm not sure I'm in love with the idea of capping loans for families making 120k and under and passing that loss on to families making more with more tuition hikes. Seems like fuzzy math.

Chris '03
No way they could match Harvard and Yale obviously but it's something:
[cornellsun.com]

I'm not sure I'm in love with the idea of capping loans for families making 120k and under and passing that loss on to families making more with more tuition hikes. Seems like fuzzy math.

It's not fuzzy math. It's welfare, pure and simple. You can debate the merits or lack thereof of such policies, but call a spade a spade.

Robb

Chris '03
No way they could match Harvard and Yale obviously but it's something:
[cornellsun.com]

I'm not sure I'm in love with the idea of capping loans for families making 120k and under and passing that loss on to families making more with more tuition hikes. Seems like fuzzy math.

It's not fuzzy math. It's welfare, pure and simple. You can debate the merits or lack thereof of such policies, but call a spade a spade.

Yep, Ironically, our expensive private universities end up providing progressive pricing with a de facto sliding scale of tuition actually paid. Personally, I don't have a problem with students fortunate enough to be born into wealthy families underwriting those of more limited means. It aids socioeconomic mobility and is IMO preferable to a system where only the aristocracy can afford higher education.

As one whose annual parental tuition contribution topped out at about $100, I applaud this move. It does take years to pay off loans and having them capped makes it possible for financially needy students to work off their educations in a reasonable time.

Even with a Regents scholarship, federal grants and maxed out on loans, I still needed a healthy chunk of Cornell scholarship money to handle my 4 years' costs. I think CU is doing a very good thing.

Hail, all hail, Cornell.

Karl '77

Chris '03
No way they could match Harvard and Yale obviously but it's something: [cornellsun.com]

Hopefully this will help athletic recruiting as well. Maybe not so much against HYP, but certainly against Brown, Dartmouth, and Penn.

Robb

Chris '03
No way they could match Harvard and Yale obviously but it's something:
[cornellsun.com]

I'm not sure I'm in love with the idea of capping loans for families making 120k and under and passing that loss on to families making more with more tuition hikes. Seems like fuzzy math.

It's not fuzzy math. It's welfare, pure and simple. You can debate the merits or lack thereof of such policies, but call a spade a spade.

And you could say that farming out production of my iPod to China or wherever, is a form of welfare for me. I get to spend "my hard earned money" on what I want, without regard of whether some slob here doesn't have a job producing it. Welfare comes in all shapes and sizes. If you really want to lay out all the different perks different groups get we'd be here till the end of time. It's just that when they go to help someone less fortunate we have to start calling it welfare. At least some people do acknowledge "corporate welfare".

Jim Hyla
And you could say that farming out production of my iPod to China or wherever, is a form of welfare for me.

Not by the accepted understanding of "welfare," which is wealth transfer paid for through coercion, e.g., taxation or tariffs.

As you indicated, you have every right to (indirectly) pay your money to the slobs in China to produce your iPod rather than to the slobs in the US, and given the reality of wages for low-skill jobs, Apple wouldn't do much business if its products were 100% made in America.

Helping the less fortunate isn't what makes it welfare. Forcing Peter to (indirectly) pay Paul, outside of the agreed terms of a voluntary exchange, is welfare. This is why corporate welfare is also rightly-named, because you don't have much choice but to pay it. (Or move to Cameroon, as I'm sure Charles will suggest.)

And, FWIW, Cornell has every right to charge what it wants to each individual, and they are free not to pay it if they don't wish to. Therefore, it's not welfare either: there's no coercion involved, as people are free to choose institutions of higher education that don't offer financial aid. (I'm of course factoring out the grant money that comes to Cornell from taxes, but that just muddies things unnecessarily.)

Kyle

krose
Not by the accepted understanding of "welfare," which is wealth transfer paid for through coercion, e.g., taxation or tariffs.

That's not my accepted understanding of welfare.

Welfare transfers do not have to be through explicit "coercion". Consider a child who grows up next to a polluting factory and suffers from asthma for the rest of her life. She never voluntarily agreed to incur expensive health problems to benefit the factory's shareholders. As such, she will have incurred a negative wealth transfer.

Taking these thoughts to an extreme argument that I wouldn't necessarily agree with, one could even speculate that Cornell's new financial aid policies amount to further corporate welfare. Wealthy individuals (Cornell's trustees) entice high aptitude, lower-income students to attend their institution under the guise of discounted tuition, and in doing so, educate and indoctrinate these students to be keen, intelligent, and productive entities in their military-industrial machinery, acting against what some people may consider to be their own inherent class interests.

(And whoever said taxes or tariffs were coercion to begin with? You're certainly free to move to other states or countries of the world if you feel that their tax policies, political culture, and economic climate are more suitable to your desired ends.)

metaezra
(And whoever said taxes or tariffs were coercion to begin with? You're certainly free to move to other states or countries of the world if you feel that their tax policies, political culture, and economic climate are more suitable to your desired ends.)

Oh come on. Of course taxes involve coercion. The government collects money from citizens backed by the threat of force. That's coercion. Now, it's a type of coercion that most people have implicitly accepted (at least the fact of it if not the amounts) because it's part of the social contract of government. But don't pretend that paying taxes isn't something that you are forced to do.

krose

Jim Hyla
And you could say that farming out production of my iPod to China or wherever, is a form of welfare for me.

Not by the accepted understanding of "welfare," which is wealth transfer paid for through coercion, e.g., taxation or tariffs.

As you indicated, you have every right to (indirectly) pay your money to the slobs in China to produce your iPod rather than to the slobs in the US, and given the reality of wages for low-skill jobs, Apple wouldn't do much business if its products were 100% made in America.

Helping the less fortunate isn't what makes it welfare. Forcing Peter to (indirectly) pay Paul, outside of the agreed terms of a voluntary exchange, is welfare. This is why corporate welfare is also rightly-named, because you don't have much choice but to pay it. (Or move to Cameroon, as I'm sure Charles will suggest.)

And, FWIW, Cornell has every right to charge what it wants to each individual, and they are free not to pay it if they don't wish to. Therefore, it's not welfare either: there's no coercion involved, as people are free to choose institutions of higher education that don't offer financial aid. (I'm of course factoring out the grant money that comes to Cornell from taxes, but that just muddies things unnecessarily.)

WHY DON'T YOU MOVE TO CAMEROON!

ugarte

krose

Jim Hyla
And you could say that farming out production of my iPod to China or wherever, is a form of welfare for me.

Not by the accepted understanding of "welfare," which is wealth transfer paid for through coercion, e.g., taxation or tariffs.

As you indicated, you have every right to (indirectly) pay your money to the slobs in China to produce your iPod rather than to the slobs in the US, and given the reality of wages for low-skill jobs, Apple wouldn't do much business if its products were 100% made in America.

Helping the less fortunate isn't what makes it welfare. Forcing Peter to (indirectly) pay Paul, outside of the agreed terms of a voluntary exchange, is welfare. This is why corporate welfare is also rightly-named, because you don't have much choice but to pay it. (Or move to Cameroon, as I'm sure Charles will suggest.)

And, FWIW, Cornell has every right to charge what it wants to each individual, and they are free not to pay it if they don't wish to. Therefore, it's not welfare either: there's no coercion involved, as people are free to choose institutions of higher education that don't offer financial aid. (I'm of course factoring out the grant money that comes to Cornell from taxes, but that just muddies things unnecessarily.)

WHY DON'T YOU MOVE TO CAMEROON!

Because it's already full of Chadian refugees. They're driving down the property values!

This seemed like the best place to ask the question, even through the thread contains my dithering on up above to no great purpose.

What kind of campaign would it take for Cornell to offer the kind of programs that the other Ivies are offering? What about free tuition? Are these pie-in-the-sky numbers or achievable goals (if not by the current alumni, then by future generations)?

Brown is on the bus...

Scersk '97
This seemed like the best place to ask the question, even through the thread contains my dithering on up above to no great purpose.

What kind of campaign would it take for Cornell to offer the kind of programs that the other Ivies are offering? What about free tuition? Are these pie-in-the-sky numbers or achievable goals (if not by the current alumni, then by future generations)?

Let's take some rough numbers aiming for an estimate within a factor of two. I'll let someone with more financial acumen refine the calculation.

Cornell aims for an on-campus undergraduate population of 13,000. [www.dpb.cornell.edu] Let's call the average undergraduate tuition $30,000, assuming 15-20% of undergraduates pay in-state, statutory college rates. [www.news.cornell.edu]
So, we need $390 million per year to pay all undergraduate tuition. Add another $12,000 per year for room, board, and mandatory fees. Now we're up to $546 million per year.
Last year Cornell seems to have spent about $69 million on direct grants to undergraduates. [www.dpb.cornell.edu] (page 21)
So, we need another $477 million per year in income.
I've left out external sources of financial aid. But I also think that the 13,000 leaves out about 500 students studying abroad each year. [www.cuabroad.cornell.edu]

How conservative do you want to be with your endowment, remembering that as investment manager or trustee you have a fiduciary duty to the institution and its long-term health? Suppose educational costs rise a little bit faster than inflation because you run a labor-intensive operation where increasing worker productivity by increasing class size is not a competitive option. Your investments have to cover both the inflationary growth in costs and the income they are supposed to be generating. Let's say you can beat general inflation by 5% in the long haul, but are only willing to spend 4% of your income as you try to ensure that you keep up with your costs. In round numbers, we need another $12 billion in the endowment.
For reference, the current major fund drive is aiming for $4 billion over five years or so, some of which is targeted to undergraduate financial aid. We have along way to go before we can offer free tuition to everyone.

I think that the fuzziest number here is assumption of spending at the rate of 4% the endowment each year.

everyone probably already saw it, but in case you didn't, brown got in on the action too:

[www.nytimes.com]

Last year Cornell spent around $115 million on undergraduate aid... around $40 million from the endowment and dedicated gifts and another $70 million (this is the $69 million Harding refers to) in "general fund" expenses (read: from other student's tuition dollars).

The math here is a little fuzzy, but hear me out:

I think to reach a Harvard or Princeton no tuition policy, Cornell would need to spend another $50-$75 million or so on financial aid. Basically, right now Cornell is spending around $10,000 a student, whereas the more generous schools are spending over $15,000 a student. The thing that clouds this number is you really have no idea about the distribution of family incomes at the different schools, except we know in the general sense that Cornell tends to educate more lower income and middle income students than the other Ivies. The data is just not publicly available.

So my back of the envelope calculation would be that Cornell would need at least an additional $1 billion endowment strictly dedicated to financial aid (assuming a 5% payout) to pay the extra $50 million a year in financial aid.

I have written a lot more about this on my blog: www.metaezra.com

metaezra
The thing that clouds this number is you really have no idea about the distribution of family incomes at the different schools, except we know in the general sense that Cornell tends to educate more lower income and middle income students than the other Ivies. The data is just not publicly available.

There is some data. Although not giving all the specific data, this recent article in the Syracuse Post-Standard quotes Simeon Moss, press officer director at CU, as saying CU has the second highest percentage, 14.1%, of Pell Grants in the Ivy League. The part about Pell Grants is at the end of the article.

The Pell Grant figures are pretty widely distributed. The big question is the distribution of students from families with incomes between $50k and $150k at these schools.

metaezra
The Pell Grant figures are pretty widely distributed. The big question is the distribution of students from families with incomes between $50k and $150k at these schools.

I guess your definition of lower income is different than mine. $50k to $150k seems mid to high to me.

Jim Hyla

metaezra
The Pell Grant figures are pretty widely distributed. The big question is the distribution of students from families with incomes between $50k and $150k at these schools.

I guess your definition of lower income is different than mine. $50k to $150k seems mid to high to me.

Depends where you live. $150K is not all that much family income in the SF Bay Area if you've got a couple kids. I'd call it solidly middle class here. That same amount of money in rural Alabama is very different.

KeithK

Jim Hyla

metaezra
The Pell Grant figures are pretty widely distributed. The big question is the distribution of students from families with incomes between $50k and $150k at these schools.

I guess your definition of lower income is different than mine. $50k to $150k seems mid to high to me.

Depends where you live. $150K is not all that much family income in the SF Bay Area if you've got a couple kids. I'd call it solidly middle class here. That same amount of money in rural Alabama is very different.

But I thought we were talking nation wide in reference to aid figures.

I think if you limit your population to households with college-aged children, $50k is a pretty good threshold for "lower income" and $50-150k works as middle income. $50k happens to be the rough threshold for students on Pell Grants.

Typically, at all of the top private schools you would be hard pressed to find any "lower income" students paying more than $5k out of pocket. The bigger issue is how you treat students in the "middle income" categories, and how many students fall into this category. This is where a sizable amount of recent aid money is flowing. And it's unclear as to how Cornell compares with a school like Dartmouth or Penn in this regard. Conventional wisdom would suggest that as Cornell has a higher percentage of students on Pell Grants, it would also have a higher percentage of students in this bracket as well -- speculation that would be reinforced by Cornell's character, reputation, history, and institutional purpose.

What's particularly telling at top schools is the number of students who don't even bother to apply for financial aid. If Harvard and Princeton are now awarding significant price breaks to students with family incomes as high as $200k, and 50% of students still aren't applying for financial aid, well, that tells you something.

Thanks to both David and Metaezra for the calculation attempts.

This is a link [www.news.cornell.edu] to aCornell Chronicle article on a 25-page financial report [www.cornell.edu] that was Skorton's response to questions from the US Senate Committee on Finance. It has lots of numbers to fuel any calculations that people might want to make. I won't have time for a couple of weeks to think about it any more, myself, but I would welcome further analysis by others.