A letter from a reader: Set Princeton apart: free tuition for all

March 19, 2008:

Like many others, I grow increasingly concerned that universities and colleges in America are sadly moving toward the point where they price themselves out of the market. For the very wealthy, annual expenses for tuition, room, board, books, and travel to and from home are not a problem. The very poor but intellectually gifted readily qualify for need-based aid. Hence the expenses, which are far beyond their reach, are covered by scholarships.

Unfortunately for the great middle class, no matter how gifted the potential student, the family is "too rich to be poor, and too poor to be rich." This is a pithy way of saying that the family income is unfortunately too great to qualify for need-based scholarships, but insufficient to afford $50,000 out of an annual income of, say, $85,000 while still attempting to pay a home mortgage, operate automobiles, pay for utilities, taxes, and insurance, as well as continuing to feed and clothe the remaining members of the clan.

Recognizing the increasing squeeze of this nasty economic vise, I propose a unique solution that would immediately set Princeton apart from all other U.S. colleges and universities. The essence of the idea springs from a brief review of some numbers published in the Nov. 7 issue of PAW. Apparently Princeton's endowment has reached $15.8 billion. Also, during the past year the University's very astute economic managers achieved a return on investment of 24.7 percent. While we are all very aware of the caveat that "financial performance in any year is no guarantee of future performance," nonetheless, by simple arithmetic 0.247 x $15.8 billion = $3.9 billion. The article also notes that the annual operating budget of Princeton University was $1.2 billion, presumably for the past year. Even allowing for inflation, perhaps this might rise to $1.25 billion next year. Thus, subtracting the annual budget from the increase in endowment (neglecting for the moment the contribution due to Annual Giving) leaves a surplus of $3.9 billion - $1.25 billion = $2.65 billion. One approach is to simply increase the endowment by $2.65 billion, which moves an already remarkable number still higher. 

An alternative approach would be to then subtract the cost of tuition for all undergraduates and graduate students, or in rough terms $30,000 per student x 6,000 students = $0.18 billion. Princeton's endowment would still increase by $2.47 billion -- but every single student accepted and attending Princeton University would be on a full-tuition scholarship (the remaining expenses, in the best Puritan sense representing some measure of pain, without which we are told there is no gain).

This action would, at a stroke, set Princeton apart from virtually every other institution of higher learning in America, if not the world. I realize that the detailed economics surely are much more arcane, but the essence of the idea springs from the fact that while Princeton's endowment is not the largest, it surely is phenomenal on a per-capita basis. I also realize that some years even Princo will not achieve a 24.7 percent return on investment, but I also have not included the non-trivial input from Annual Giving. 

PAUL F. JACOBS *65
Smithfield, R.I.

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