The day before Janice D’Souza was scheduled to begin her freshman year at Berea College, her father handed her two plane tickets. One was from her home in India to the United States on August 20, 2010; the other was a return ticket for the following day. “He thought the college was a scam,” D’Souza told me, explaining her father’s seemingly bizarre purchase. “He just couldn’t believe it could be free.”
Berea is not a scam, but it is free. Located south of Lexington, Kentucky, the liberal arts college has about 1,600 students, each of whom is awarded a four-year full-tuition scholarship. In exchange, students take part in a work program, through which they do everything from gardening to preparing meals to editing the Pinnacle, Berea’s campus newspaper, to crafting the college’s signature handmade brooms.
D’Souza, an international student, not only qualified for fully subsidized tuition, but also for free room and board, a free laptop, and even money to buy a winter coat. “I couldn’t have afforded school in India let alone the United States,” she said. “I got in to Princeton, but it wasn’t nearly as affordable as Berea.”
Founded in 1869 to educate freed slaves and “poor white mountaineers,” Berea accepts applicants only if they demonstrate financial need. Students’ average family income is about 26,000 dollars per year. And because wealthy alumni cannot send their children to Berea, the school has no natural base of donors with degrees stretching back generations.
“Our goal is that our graduates won’t even qualify to send their kids here,” said Jeff Amburgey, Berea’s vice president for finance. “If we’re successful, we’re kind of shooting ourselves in the foot.”
Yet thanks to robust and creative fundraising, Berea has one of the highest endowment-per-student ratios in the country. The school’s AAA credit rating from Moody’s is the same as Yale’s, and the percent of accepted applicants who chose to enroll has been consistently higher than that of every Ivy League school except Harvard’s. “They actually call Berea the Harvard of the south,” said Kenneth McQueen, Berea’s sophomore class president, before remembering which school I was calling from, and offering a quick apology. “I don’t know how I would have afforded college without it.”
Every student I talked to pointed to an energy and a passion Berea students and faculty members, I couldn’t help but wonder what Yale would be like if it too were free.
This notion, that Yale could, or should, cost nothing never occurred to me until early this month, when my brother Scott Stern, BR ’15, wrote an op-ed in the Yale Daily News declaring—or demanding, as Scott tends to do—“Make Yale free.” That college is many families’ single largest investment is such an ingrained part of our culture, like America’s aversion to the metric system, that I didn’t realize an alternative could exist. Scott’s column made me curious. Yale already doles out tremendous student aid, I knew, but could it be even more accessible and affordable? And would a free Yale be a better university?
“Berea’s model is absolutely a replicable one,” Lyle Roelofs, the president of Berea, told me. “Schools like Yale already follow the model for part of their student body, and they could certainly expand that if that is what they chose their mission to be.”
***
It’s first worth addressing whether it would even be financially feasible for Yale to offer a free education to its students. In a word: Yes. In a phrase: Yes, if administrators were motivated and very, very careful.
Of the 10 economists and education policy experts outside Yale with whom I spoke, not one dismissed the notion of a free Yale out of hand. Several questioned the logistics of such a hypothetical, but each acknowledged that it is theoretically possible. “They could afford to make it free. They could afford to do that if they really thought it would help,” said Sara Goldrick-Rab, a professor of educational policy at the University of Wisconsin-Madison.
“Yale has one of the most generous financial aid programs in the country,” Ronald Ehrenberg, an economics professor and director of Cornell’s Higher Education Research Institute, told me. “Could they afford to be even more generous? Sure, if they were comfortable spending more of the endowment.”
As of June 30, 2014, Yale’s endowment was worth 23.9 billion dollars, a figure that does not include the 1.1 billion dollars committed to cover Yale’s operating budget for the 2015 fiscal year. This 25 billion dollar nest egg, the second largest of any university in the world, is bigger than the GDP of Estonia or El Salvador. It is enough to buy every undergrad a pumpkin spice latte each day for the next 2,562 years.
According to the University’s latest financial report, tuition, room, and board totaled 518.8 million dollars in 2013. About 54.9 percent of eligible Yale College students received some sort of University-administered aid, as did 98.3 percent of students in the graduate school and 82.6 percent in the professional schools. Overall, net tuition, room, and board accounted for 272 million dollars (or 9 percent) of the University’s operating budget in fiscal 2013.
This 272 million—a little less than 1.1 percent of the current endowment—is the difference between the kitty forked over by current Yale students and a completely free education.
Of course, it is only fair to factor in the 800 pupils Yale is expected to gain once the two new residential colleges are built. Given the total cost of attendance and the current financial aid numbers, these additional students would pay the University 33.4 million dollars each year. (As tuition goes up, so too would this sum.) This would bring the overall cost of free attendance to 305.4 million dollars, or 1.22 percent of the endowment, which is about 20 times smaller than the percent of Americans that approved of Nixon during Watergate.
A 1.22 percent increase would push endowment spending to around 5.6 percent, a figure above the 5.25 percent limit set by the Corporation. Several of the outside experts maintained that even this spending hike would be reasonable for a school as financially secure as Yale. Most universities spend between 4 and 6 percent of their endowment’s assets each year to fund operations. Those with larger endowments, like Yale, tend to cluster at the higher end of this spectrum. Historical endowment performance is between 10 and 11 percent at most universities, and excess earnings are reinvested to compensate for economic downturns and inflation. If roughly 5.6 percent is devoted to funding operations, as I said, and maybe 3 percent is needed to keep pace with inflation, then most schools’ endowments finish with an inflation-adjusted growth of at least 1.4 percent each year.
The financial markets are finicky, and it is possible that schools won’t consistently achieve this level of growth. But over the past two decades, Yale has had the Usain Bolt of endowment performances, generating returns of 13.9 percent per annum, on average, despite the burst of the dotcom bubble and the 2008 recession. While the cost of undergraduate attendance has grown by 239 percent since 1994, the size of Yale’s endowment has increased by 677 percent.
“Institutions like Yale have these huge endowments and it’s unclear what exactly they spend the money on,” said Robert Samuels, the author of Why Public Higher Education Should Be Free. “They could clearly spend more to help their students.”
***
Whereas outside experts told me tentatively that Yale could afford to make itself free, University administrators pushed back strongly against this notion. “When you examine the sources and shares of operating revenue for the University, including tuition and the endowment, it is evident that Yale is not in a financial position to eliminate student charges, or to spend hundreds of millions of dollars on any new initiative in the operating budget,” University Press Secretary Tom Conroy told me via email.
A source inside the Yale Investments Office also dismissed the suggestion of free attendance. Yale is already more reliant on endowment income (as opposed to other sources of revenue like grants and tuition) than nearly any other major research university. An additional 1 percent expenditure would have to come from the portion of the endowment that is unrestricted by donors, which accounts for 25 percent of the fund. (Three quarters of endowment monies can be used only for specific purposes. For example, a donor might endow a certain teaching position, like a Sterling professorship, or she might require that her gift funds scholarships for, say, Native American students.)
According to the source in the Investments Office, an additional 1 percent expenditure each year would exhaust those unrestricted funds within decades, assuming no new gifts or program cuts. Still, in addition to the 25 percent of the endowment that is unrestricted, 17 percent is for scholarships, fellowships, and prizes, and 3 percent is for books, according to the Investments’ Office annual report. This totals 45 percent of overall endowment, or a cool $11.25 billion, all of which could conceivably be directed toward making Yale free.
While administrators maintain that fully subsidized attendance would prove unsustainable in the long run, such a radical move would undoubtedly garner attention and perhaps even other sources of revenue. It could spur increased contributions from appreciative alumni, or attract new donors. “Do you think Yale graduates would be more generous?” Sam Chauncey, DC ’57, former Secretary of the University, asked me. “That’s an important argument, because clearly the financial burden to Yale of doing this would be enormous.”
Yale’s going free would create “a wonderful mess in higher education,” said Wick Sloane, SOM ’84, a columnist for the website Inside Higher Ed. Fully underwriting Yale’s student costs would likely put pressure on the University’s peer institutions, similarly well-endowed private schools, to follow suit. A 2008 report from the Center for College Affordability and Productivity concluded that several of America’s elite colleges could finance free tuition with an additional percent or two of endowment funds—and another 32 schools could cut tuition in half with 3 percent.
“Only if the top 20 or so would agree to make that move could any one institution consider it,” said David Breneman, a University of Virginia professor of education and public policy. The logistics (to say nothing of the legality) of such a coordinated move were questioned by many of the experts I spoke with. But as we’ve seen in recent years, changes in higher education policies—from need-blind admissions to organic food and Greek yogurt in dining halls—can provoke a quick domino effect.
“When Princeton went loan-free, a lot of other colleges followed. This would at least force a discussion about what the net costs are at these places,” said Sloane. “You could reset the clock if Yale, Harvard, Princeton, Williams, Amherst, and Pomona all decided to be free. Nothing would ever be the same again in higher education.”
***
Regardless of whether Yale administrators could afford to make the University completely free, should they?
Already, Yale’s financial assistance is extremely generous, and light-years better than it was even a decade ago. Only 15 percent of Yale College’s 2014 graduates borrowed money to cover the cost of attendance, compared with 39 percent in 2004. Today, juniors and seniors on aid must work to contribute 3,350 dollars to their education; in 2004, upperclassmen ponied up 8,500 dollars. Yale’s financial aid website assures applicants that it meets “100% of demonstrated need for all students.”
Nevertheless, many of the students that administrators claim are attending for free are most definitely not. The costs of attendance, of course, are not fully subsumed by neat little categories like tuition, room, board, and books. Additional expenses—a new laptop charger, clothes to cope with New Haven winters, that boozy birthday dinner at Miya’s where we can all just split the check, right?—quickly pile up.
Cristobal Trujillo, SY ’16, is on full financial aid, but even that is not enough to defray Yale’s total costs. “I have to work to make up the extra money, or my parents have to put in money they really can’t afford to put in,” he said. “This takes away from my academics. This takes away from my opportunities.”
Several of the experts I spoke with said that graduating Yale several thousand dollars in debt is a reasonable price to pay for a world-class education and that working for one’s education can also make a person value it even more. “Frankly, the fact that some students have to work or take out some loans doesn’t bother me at all,” said Roger Kaufman, a Smith College economics professor. “College is an incredible investment, and if someone has to graduate with 20,000, 30,000, 40,000 dollars in debt, I don’t see a problem with that.”
Ehrenberg, the Cornell economist, further assured me that Yale’s financial aid program is now so comprehensive that making the University free would mostly just benefit the students that don’t need it. “Eliminating tuition wouldn’t much affect students from the poorest families, but it would clearly help the rich,” he said. “Why should students from the wealthiest families get the best education in the world for free?
Jeremiah Quinlan, MC ’03, Yale’s Dean of Admissions, agreed. “Many students at Yale can afford to pay the full price, and if they can pay, then we shouldn’t stop them,” he said. Making the school free could expand Yale’s pool of applicants, but “that’s not a goal Yale should aspire to,” Quinlan said. “We already have an incredible applicant pool and we can only accept 6 percent. The admissions office’s goal is not to expand for the sake of expanding.”
Even the students who receive no assistance do not pay the full price of a Yale education. The true cost to the University of undergraduate instruction is estimated to be about twice the sticker price. “Thanks to the endowment and other gifts, the education of every Yale student is subsidized, whether the student receives financial aid or not,” Conroy said.
Nevertheless, it is likely that slapping a massive “FREE” sign across Phelps Gate would appeal to more low-income students, a group that Yale has struggled to attract. A Yale Daily News survey of the college’s Class of 2018 found that just 11 percent of freshmen came from families earning less than 40,000 dollars per year. Despite the easy availability of tuition calculators online, many parents incorrectly estimate college to cost two to three times the actual price, according to one 2006 study.
“My family came to Yale for the first time in October of my senior year of high school,” said Elizabeth Spenst, MC ’18. “After [a financial aid] seminar, my mom said to me, ‘I had no idea we could afford this.’ People don’t know college can be affordable. They hear financial aid and they think loans—they think of something that is unreachable.” She added, “Financial aid here definitely isn’t perfect, but at least it means college is within reach.
The cost of a Yale education continues to be a daunting unknown for low-income applicants and their families unless there’s a clear guarantee it will be completely free, said Morley Winograd, President of Redeeming America’s Promise and a former senior policy advisor to Al Gore. “Free tuition is a much clearer promise than, ‘We’ll work it out if you’re accepted.’” Winograd told me that making Yale free would expand both the socioeconomic and geographic diversity of the school’s student body.
Which is to say nothing of the impact free attendance would have on the substantial portion of Yale’s student body from middle-income backgrounds. Even families whose Thanksgiving dinners have their fair share of doctors and lawyers at the table often struggle to afford a university education. Many parents now begin college savings accounts before their children are born, and even that is sometimes not enough.
No educational institution was free when America was founded, Winograd pointed out. “We made primary school free in the nineteenth century, and high school free in the twentieth, and now our economy has evolved to require this,” he said. “Free college is the next step. Education is a fundamental part of making democracy work.”
***
Jacob Hemingway, Yale’s first student, paid just 30 shillings to attend the fledgling college in 1701. Into the late eighteenth century, when the school also accepted payment in “wheat, Indian corn, Beef & Pork,” Yale relied almost entirely on student tuition. Yale’s first Treasurer’s Report, in 1831, revealed that the University’s endowment amounted to 30,856 dollars, less than double the operating budget. By 1914, the cost of attending Yale College had grown to 495 dollars (which compared favorably to Princeton’s 519 dollar sticker price), and tuition, room, and board provided roughly a third of the University’s net income. This proportion continued to fall as the twentieth century progressed, and gifts from donors with names like Sterling, Harkness, and Whitney began to swell Yale’s coffers. In recent years, the endowment—as well as the cost of attending the University—has grown like a force-fed chicken.
Just as the U.S. now leads the world in gun ownership and Housewives-themed TV series, the cost of American higher education has raced ahead of those of other developed nations. Annual per capita income covers only 52 percent of the average cost of a four-year college in America, compared to 22 percent in Canada, 21 percent in the UK, and 4 percent in France; higher education is free in most of the European Union. Just this month, the last German state to charge college tuition eliminated it.
Even within the United States, a handful of colleges are free. Aside from Berea, a small but significant number of schools—other work colleges, like Deep Springs in California and Alice Lloyd in Kentucky, and specialized institutions, like the Curtis Institute of Music in Pennsylvania—offer their degrees without charge. Elsewhere in the U.S., there are signs of movement toward free higher education. The governor of Tennessee signed a measure in May to make the state’s community colleges completely free, while Oregon legislators unanimously passed a Pay It Forward plan, through which students attend state universities for free and agree to contribute a part of their future income.
This model is actually based on a program developed at Yale by economist James Tobin in the 1970s. Tobin helped the University launch the Tuition Postponement Option (TPO), which allowed students to attend Yale for free, as long as they agreed to pay .04 percent of their earnings for the next 35 years (or until the debt was repaid, whichever came first). TPO was “enormously popular with students,” Chauncey, Yale’s former Secretary, told me, and was available to all students, irrespective of family income. A combination of inflation, tax law changes, and other factors ultimately rendered the program an economic failure. Regardless, it was a radical move by Yale to improve financial aid and appeal to a more diverse field of applicants.
Yale similarly does not consider family income for the full-tuition scholarships it offers each student in the School of Music. This policy, the result of a 100 million dollar gift from Stephen Adams, DC ’59, in 2005, has had a “completely positive” effect on the school, said Jeanne Kazzi, a senior administrative assistant in the School of Music’s admissions office. “We’ve had more students apply, a more diverse population that applies from around the world,” she said.
The University has also contributed millions to fund the New Haven Promise program, an initiative that underwrites the post-secondary costs of New Haven public school students. According to Patricia Melton, PC ’82, the executive director of NHP, the scholarship does not depend on socioeconomic background, simply whether applicants graduated New Haven schools and can meet certain academic requirements.
As generations of students have come and gone and Yale’s coffers have steadily filled, the University has repeatedly demonstrated a willingness to lessen the cost of attendance in careful, incremental ways. Its TPO experiment, its elimination of tuition at the School of Music, and its support of NHP, to say nothing of its substantial financial assistance programs, all seem to reflect an implicit understanding that a free education is ideal. What exactly stands between Yale’s current policies and more dramatic, more holistic steps in this direction is not clear.
***
Of course, it is impossible to know precisely OF COURSE, how free attendance would impact Yale, its applicants, its enrollment, and its culture. Cooper Union, a private college in New York City, waived tuition for its first 155 years of existence; in 2014, longstanding financial problems forced the school to grant incoming students only a half-tuition scholarship. Yet according to Justin Harmon, Cooper Union’s vice president for communications, revenue from partial tuition has allowed the college to increase its need-based financial aid, thus appealing to a more diverse pool of applicants. On average, 15.7 percent of students who entered Cooper Union between 2010 and 2013 were eligible for Pell Grants. For the most recent class, that number climbed to 22.4 percent.
Most Cooper Union students are still opposed to the school charging tuition. Kristof Toth, GRD ’19, who graduated Cooper Union in 2014, told me the free model meant that students were not weighed down by economic concerns when choosing their academic and professional pursuits. “Their education was something they fought for, and not a burden on their parents or their future selves,” he said.
The day before Cooper Union voted to begin charging tuition, in January 2013, alumni trustee Kevin Slavin wrote an essay titled, “Free is Not Nothing.” Slavin argued, “If you paid for your education, you’re likely to understand education in transactional terms. In straightforward economic terms, it means that if you charge some money, you can have some stuff. With more money comes more stuff, higher quality stuff. But ‘free’ is something different than ‘less.’ And free is not less than cheap. It’s something else entirely.”
Slavin continued, “Instead of education, try thinking about love. There are people who pay for love. Some pay a lot, some pay a little. But let’s be honest: everyone knows that the moment you start paying anything, it’s not just love plus money. It’s something else entirely, and the problems in paying aren’t solved by paying less than others. … We went [to Cooper Union] not because of the financial value of free—that is, zero tuition—but rather, because of the academic value of free. Free for everyone meant that the students who were there were beholden to nothing (nothing!) except their passion, talent, hard work, and brilliance.”
Free, I agree, is different, and it’s unique. Next to every other price in the world—one hundred dollars, one penny, 14.99 plus tax—free stands out. Anyone who has seen the line outside Ben and Jerry’s on Free Cone Day knows that the difference between “free” and just a few bucks for ice cream can be astonishing.
Would free education work for Yale? The very nature of free renders the answer to this question unknowable. One thing, however, is for certain: maintaining the status quo, or abiding the easy rhythm of inertia, is not a sustainable course for a dynamic institution like Yale. The University must continue to innovate, to try new schemes and appeal to more students, to improve the experience of the students already living these shortest, gladdest years of life.
“I have no crystal ball. Progressive people will get together and try to come up with some plan that they want to work on,” said Charles Schwartz, a UC Berkeley professor who has spent decades studying university finances. “One can only find out if a particular plan will succeed by trying it. Failure is very likely. The only sure thing is that no attempts will produce no results.”