Interesting FT.com column by Christopher Caldwell about Harvard’s change of strategy on student support.
This week, Harvard announced a new financial aid system that will revolutionise the economics of American undergraduate education. Henceforth, students whose families earn up to $180,000 a year will pay no more than 10 per cent of that income to Harvard. Loans will be eliminated from financial aid packages and replaced with outright grants. Home equity will not be taken into account in determining contribution levels. It is a great step forward from the Harvard I attended in the 1980s. Whether it is a step forward for American society is harder to gauge.
The money needed to get this new programme up and running – about $22m – is a drop in the bucket for Harvard. Its $35bn endowment makes it (if we compare Harvard’s assets with various gross domestic products) a mightier economic force than Syria or Bulgaria or the Dominican Republic. Last year, the Harvard portfolio earned a 23 per cent return overall. At those rates Harvard’s largesse can be paid for with about four days’ worth of interest on the interest.