Moneybox

Why It Makes Sense for Harvard to Keep Charging Full Tuition

Riverside view of Harvard campus
Harvard University said Monday it would continue charging students full tuition this fall. Maddie Meyer/Getty Images

Harvard University received a good deal of online blowback Monday after announcing that it would charge full tuition this fall while only allowing 40 percent of students back to campus and teaching all of its courses online. Keeping students from packing into lecture halls may have been a perfectly sound public health decision, but charging them $49,653 to watch lectures on a laptop sounded like an obvious rip-off to many. Comedians, journalists, tech CEOs, conservative talking heads, and other assorted Twitter wags took turns whacking at the crimson piñata. Really, everyone had a go.

This sort of incredulousness is a totally understandable gut reaction to the idea of making undergraduates pay nearly $50,000 for the privilege of half-watching lectures in the glowing light of their laptops. But in the end, Harvard is probably making the correct choice. Yes, the school has more than enough financial resources to discount tuition this year if it wanted to. But doing so would mostly benefit its wealthier undergrads, and it would set a bad public precedent—potentially pressuring schools that really can’t afford to cut their prices to do the same. By making itself look absurd and Scrooge-like, Harvard is giving the rest of higher ed a little more breathing room.

The key thing to keep in mind is that universities like Harvard are probably not saving much, if any, money by moving their courses onto the internet. In theory, online instruction can help schools cut costs in a few different ways: by making students view prerecorded lectures and complete automatically graded assignments (or, in some cases, use “peer grading systems”) and by allowing more undergrads to enroll, since there’s no need to worry about the number of seats in classrooms. These were the ideas underpinning massive open online courses, or MOOCs, that became a fad about a decade ago but never really managed to take off like a lot of tech enthusiasts hoped.

But colleges such as Harvard aren’t doing those things. Instead, they’re mostly putting the same courses with the same number of students on Zoom, which—regardless of what you might think about the quality of the experience—pretty much costs the same as having class meet in Room 242 of the Arts and Sciences Building, since the administration still pays the same for the instructors’ time. (Maybe they save a few dollars on utilities, since nobody is turning on lights and heat in the lecture halls.) Given more time, schools possibly could start building more advanced online courses that do yield serious efficiencies, but we’re not there at this point.

While colleges aren’t really saving money by going “fully online,” they are losing revenues from auxiliary services that have become more important to their finances in recent years. Fewer students are paying room and board, eating at the dining halls, or paying parking or gym fees, which is part of the reason bond ratings agencies have been revising their outlooks for higher ed down over the course of this crisis. They also still have to pay other fixed expenses, like administrator salaries (or, you know, resort to layoffs). Combine all that with the budget cuts that are coming for state universities, and colleges are kind of facing financial armageddon at the moment. Some schools are offering tuition discounts. But by and large, it’s the last thing most of them want to be doing right now.

I know what you’re thinking: Harvard is filthy rich. It has a $41 billion endowment. Maybe State U. is facing financial catastrophe and needs to squeeze out every drop of tuition revenue it can out of its undergrads, but surely the world’s biggest hedge fund with a university attached could waive revenue just this once.

And sure, in theory, Harvard could. But that doesn’t mean it should. First, keep in mind that Harvard already offers some of the most generous financial aid packages in the country: Undergrads whose families earn under $65,000 pay nothing, while those making between $65,000 and $150,000 only pay up to 10 percent of their income. Even wealthier families can still get some significant aid. So, in reality, Harvard is only charging full price to students whose families make well into the six figures.

Second, it’s arguable whether Harvard students are actually getting cheated out of their money. Yes, remote learning is a drag—I have personally started and quit many a MOOC—but in the end, the main benefit of an Ivy League education isn’t really classes, fantastic as some of them might be. Schools like Harvard, Stanford, Yale, and Princeton serve as four-year networking events and outsourced HR departments for companies in finance, tech, and media. Spending a semester, or even a whole year, away from campus (only freshmen, seniors, and students who don’t have resources to learn from home will be allowed on) isn’t going to fundamentally change that long-term value proposition. If I were a parent, I might encourage my kid to take a gap year or consider a leave of absence for the fall (both still options), but it’s not clear anybody is wasting their cash by logging in to Cambridge’s Zoom U in September because they want to complete their degree within four years.

But the main point in favor of Harvard’s decision isn’t really about Harvard at all—it’s about the rest of higher education. Decisions made in Cambridge tend to have ripple effects. If Harvard were to waive its tuition entirely this year, or more steeply discount it even for rich kids, it would send a message that online education is simply not worth paying for right now, which is the last thing academia wants to be communicating at a moment when many less prestigious schools are facing a financial reckoning. It will also create pressure for other schools with fewer financial resources to follow suit. My guess is that most of America would understand that just because Harvard can afford to lower prices, doesn’t meant public colleges can do the same. But by holding the line on its own tuition, Harvard is probably making it ever so slightly easier for public schools facing real budget pressures to do the same.

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