What Joe Helped Me See
In the wake of Joe’s passing last year, I wrote the following:
Joe was one of the brightest people I had ever met. He was one of those rare people whose speech and manner oozed the examined life. Joe struck me as a role model, and even inspired me to write for Dartblog. He never led with his many palmarés even when he could have. He was more interested in the quality of the thoughts and the ideas of those around him…His passion and zeal often led to conflict. To paraphrase John Bernard Shaw’s famous quote, Joe was the kind of unreasonable man that much progress depends upon.
Occasionally, a College press release reminds me of how Joe saw things.
This innocuous Dartmouth News press release from March is an artifact that, to Joe’s eye, would reveal so much more about the state of the College. “Increases” and a new “record” are for financial aid. Tuition, you say? Tuition is merely set. What a relief.
As Joe would have done, let us do some math. Dartmouth announced $5.4M in new financial aid expenditures versus the prior year budget. While this exceeds the increase in tuition on a percentage basis, is that what we really care about?
Put another way, is the College strengthening its competitive position by offering more scholarship assistance or reducing its costs, all else being equal? I believe the answer is no.
Let us do some back-of-the-envelope calculations. An annual tuition increase of $2,109 (notwithstanding other increased charges in fees, room, and board) multiplied by 4,417 undergraduates results in tuition revenues of $9.32M. Since 48% of Dartmouth’s students receive need-based financial aid, we must account for some nuance. Some will still pay this tuition later, with interest, through need-based loans. Others will receive financial aid in the form of grants to cover the full cost. Even if we assume that these 48% pay *none* of the increased tuition, we are left with a guaranteed $4.84M tuition revenue hike (which offsets most of the $5.4M in newly announced financial aid).
The press release tells us that 245 members of the Class of 2022 will receive the free tuition scholarships allocated to those with family incomes below $100K. This suggests that the remaining 285 members of the Class of 2022 who qualify for financial aid will pay the tuition hike, either now or later. With the generous assumption that the socioeconomic profile and Dartmouth’s generosity with aid are consistent across the student body, we can conclude that 1,140 financial-aid eligible students will pay for the tuition hike, either now or later. That’s an additional $2.4M in tuition revenue.
Taken together, it appears that almost half of our new and record-setting financial aid expenditure increase is effectively swallowed up by tuition hikes on financial-aid eligible students, likely those from middle-class families who make just north of $100K. When you include the tuition hike on wealthier families, we are simply raising prices to capture more revenue.
If you assume that Dartmouth’s underlying quality is unchanged, this is a direct value transfer from students to the College, with some internal redistribution to 22% of the student body which leaves 78% of Dartmouth students worse off than they were before.
Let us look again with fresh eyes at the press release:
Board members affirmed the importance of affordability and access for all students through the continuation of Dartmouth’s generous financial aid program, noting that:
The expansion of financial aid exceeds the growth of tuition for the third consecutive year.
The average scholarship awarded to students receiving financial aid in the Class of 2022 was more than $51,000.
Free tuition is provided for students from families with total incomes of $100,000 or less and possessing typical assets. In the Class of 2022, 245 students are benefitting from this initiative.
15.2 percent of students in the Class of 2022 are PELL grant recipients.
At a time when students and families are increasingly concerned about the cost of a college education, Dartmouth continues to be recognized for the exceptional value it offers and for the low debt load carried by graduates. In its 2019 rankings, U.S. News & World Report ranked Dartmouth №10 in its “Great Schools, Great Price” category.
“Attracting the very best talent — whether it’s students, faculty, or staff — is our top priority and the key to enduring excellence,” Board Chair Laurel Richie ’81 said at the meeting. “Dartmouth’s generous financial aid program ensures that the transformative power of a liberal arts education and our dynamic teacher-scholar model are available to promising students from all backgrounds and perspectives.”
Do you now feel informed or misled? Do you feel that our budgetary decisions reflect “affordability and access” as opposed to maximizing the College’s value capture? Are we stronger or weaker compared to our peers who are also competing for the best and brightest students and faculty? Do you think the Board of Trustees or the Office of Communications knows? Do they care?
Joe, thank you for helping me see. Requiescat in pace.
