When you think of Harvard University, your mind probably conjures up images of beautiful historic
buildings, illustrious professors pacing the hallowed halls, and preppy students lounging
on manicured lawns. Sure, a degree from Harvard is valuable, but is it really worth the cost?
Why is Harvard so expensive anyways, and what exactly do you get for all that tuition money?
We can’t talk about the outrageous cost of an elite Harvard education without first taking
a look at why a college degree is so expensive in general these days. For the 2018-2019 school year,
students at private 4-year colleges paid an average of $35,830 per year for tuition alone,
meaning a typical 4-year degree costs nearly $150,000! Add in other costs like books and
supplies, room and board, and you’re looking at a whopping $48,510 per year,
or nearly $200,000 for an undergraduate degree. The good news is that scholarships
and financial aid do help to ease the burden on students - when these programs are factored in,
the average tuition cost is actually more like $14,610 - still not cheap, but it helps!
The bad news, though, is that the cost of a college education has more than
doubled since the 1980s, and the trend shows no sign of slowing down.
More Americans are pursuing higher education these days than ever before,
thanks in large part to generous government aid programs, and schools are struggling to meet
this surge in demand, especially as state funding fails to keep up with enrollment.
Oddly enough, the very programs that are meant to make education more accessible may actually
be a big part of the problem of skyrocketing tuition costs. It’s not a new idea - back in 1987,
then Education Secretary William J. Bennett first ventured the theory that government programs like
Pell grants and subsidized student loans actually incentivize schools to raise tuition fees
and further fuel the rise in tuition costs. The Bennett Hypothesis, as it’s now known,
holds that schools, knowing that the students have access to vast amounts of funds through
these programs, raise prices to capitalize on available funds; rising tuition costs trigger
further increases to financial aid, and on and on the cycle goes. It’s no wonder, then,
that in 2018, Americans owed more than 1.5 trillion dollars in student debt.
To accommodate more students - and capitalize on aid programs - schools have to account for
increased faculty needs and be continually expanding their facilities. And since schools
are competing for students - and tuition dollars - these new facilities need to be
state of the art. Students today expect the best research facilities, the most comfortable dorms,
and the most modern recreation facilities to consider parting
with their (usually borrowed) tuition dollars.
As if that weren’t enough, today’s students expect an ever-increasing
array of services from their college in exchange for their tuition dollars,
too. Between campus health care programs, academic and personal counselling services, and of course,
thriving campus social amenities, operating costs continue to climb as fast as tuition costs.
Worst of all, as the cost of an education continues to soar,
a college degree is less valuable now than it was even just 10 years ago. Simply having a
degree no longer gives you an edge. With more and more people pursuing higher education,
a degree has become a standard requirement for most entry level jobs and competition is fierce.
Now more than ever, where your degree is from can make all the difference.
This is where the country’s elite institutions of higher learning come in.
The Ivy League is an exclusive group of 8 of the country’s most elite colleges: Brown, Columbia,
Cornell, Dartmouth, Harvard, Princeton, Yale and the University of Pennsylvania. These institutions
had been around for generations before the term Ivy League was coined in the 1950s,
and you might be surprised to learn that the nickname had
nothing to do with the elite schools’ exclusivity or academic prowess. No,
the Ivy League was initially an NCAA (Narrator: pronounced “N-C-double-A”) athletic conference.
Nowadays the term has less to do with sports and more to do with prestige and high admission
standards. And while it’s true that the “Ivies” have rich academic histories, high standards and
consistently rank in the top 20 of the country’s colleges, that doesn’t mean they don’t face stiff
competition from outside their ranks - Stanford University and MIT both beat out the Ivies to take
the top 2 spots. Still, rankings aside, a degree from an Ivy League school carries a certain caché,
and may provide some real-world benefits too - studies show that Ivy League grads can expect
to make 15 to 50% more in their first year out of school than the average graduate.
Even among the elite Ivy League schools, there is one that stands out as the most
prestigious of them all. Founded in 1636, Harvard University is the country’s oldest
institution of higher education. Harvard’s historic 5,400-acre campus in Cambridge,
Massechusets is home to 14 museums filled with priceless art, artifacts and specimens;
it hosts the world’s largest academic library with more than 20 million volumes;
and, the campus boasts some truly stunning examples of historic architecture - like
Harvard Hall, the oldest surviving building on campus dating back to 1720.
In addition to an historic campus and an idyllic academic lifestyle, there are plenty of solid
reasons why Harvard is so elite - and therefore so expensive. Harvard is currently the 3rd
highest-ranked college in the country, and the highest-ranking Ivy League school. Of course,
to attract the top students, Harvard needs to have the best professors and academics - and
pay them Ivy League salaries. From the more than 40,000 applications received each year,
less than 2,000 are admitted, meaning Harvard sends out 19 rejection letters for every 1
acceptance letter. Harvard has fewer than 7,000 undergraduate students and only 13,000
graduate students. The highly selective nature of Harvard’s admissions process and
the small class sizes mean that students get more one-on-one time with their world-class professors.
The prestige of having a Harvard degree on your resume alone may be enough to beat out
the competition for most jobs, but the true value of a Harvard education comes from the connections
students make while they’re at school. There are more than 371,000 living Harvard alumni,
many of whom remain connected to the school for life. Harvard has turned out 49 Nobel laureates,
32 heads of state, and 48 Pulitzer Prize winners,
so students are in good company, to say the least. It should come as no surprise, then,
that the average mid-career salary for someone with a Harvard undergraduate degree is $142,600.
After learning how much the average college education costs,
and how prestigious a Harvard degree is, you’re probably anxious to learn
how expensive a degree from Harvard is. Well, prepare to be shocked.
On their website, Harvard claims that, for 90% of their students,
attending Harvard is actually less expensive than attending state school would be.
If that sounds unbelievable to you, stick with us and you’ll soon see how that’s possible.
Plus, when you find out what the other 10% pays, you’ll be in a whole different kind of disbelief.
Attending Harvard may indeed be “less expensive than state school” for 90% of its students,
but you can’t just “decide” to go to Harvard because it’s cheaper. Admissions are incredibly
competitive, and only the best of the best are granted admission to this most exclusive school.
Nevertheless, if you’re some kind of genius or prodigy and manage to be one of the very
few people granted admission to the prestigious Harvard University, their
generous financial aid truly can make Harvard more affordable than your local state school.
Harvard claims that their admissions process is needs-blind, and that low-income students
have the same chance of acceptance as students from wealthier families.
That very well may be true once the applications are in,
but that doesn’t mean that low-income students have the same opportunities
to earn the grades and extracurriculars needed apply to Harvard in the first place.
The fact is, Harvard is undoubtedly an elitist school. The median family income of Harvard
students is $168,800. 67% of Harvard students come from households in the highest 20% of earnings;
15% of students come from households in the top 1%. Researcher Raj Chetty - from Harvard,
no less - has found that students from families in the top 1% are 77 times more likely to apply,
be admitted to, and attend an Ivy League school
than students from families with an annual income of less than $30,000.
For those lucky few who do gain acceptance, Harvard has a generous geared-to-income
financial aid program in which tuition fees are adjusted based on your family’s income.
If your family makes less than $100,000 a year, you might only have to pay about 10%
or less of your family’s total income for tuition. So, if your parents earn $100,000,
you could go to Harvard for just $10,000 a year. But it gets better. If your family makes less
than $65,000 a year, your tuition is absolutely free. That’s right, 100% free tuition. Of course,
you still have to factor in room and board, living expenses, and textbooks and supplies,
but we can see how Harvard can be a “cheaper” option for some lucky brainiacs.
For the “unfortunate” 10% who don’t qualify for Harvard’s tuition reduction program, a degree from
Harvard definitely doesn’t come cheap - although we have a feeling that most of them can afford it…
For the 2018-2019 school year, standard tuition at Harvard University was $46,430 for tuition fees
alone - that’s 30% higher than the national average of just over $35,000. With room and
board in the campus’ historic dorm facilities, you’re looking at a cost of $67,580 a year,
and once you add in books and living expenses, the average annual cost to attend Harvard University
is a whopping $78,200 a year. A 4-year degree from Harvard will cost you
$185,720 for tuition alone, and you’re looking at $312,800 all-in. Ouch...
If you thought that was steep, Harvard isn’t even the most expensive school in the U.S.! That honor
goes to Columbia University, where annual tuition alone will cost you more than $57,000 dollars a
year, and that’s not even taking into account the high cost of living in New York City.
And just for a little perspective, it would cost an American student only $30,000 a year to attend
England’s most prestigious institution, historic Oxford University. Tuition for
British students is just over $11,000 per year. Maybe the Brits are onto something...
Now that you know how expensive Harvard is - and how many students get deeply
discounted or even free tuition - you might have some questions. Like,
how can they afford to give out free tuition? Where does all the money come from?
Harvard earns an income of nearly $5 billion dollars a year, but their operating expenses
are at least equal to that amount, so they require alternative sources of income to keep the school
thriving. Thanks to exorbitant donations by alumni and wealthy benefactors, Harvard has amassed a $39
billion dollar fortune in its endowment fund. Harvard spends less than 5% of the endowment
funds per year on campus improvements and tuition reduction programs, and the rest of the fund
is reinvested and expertly managed to keep it growing for the future. Harvard is not the only
school with such a fund - there are more than $600 billion dollars in endowment funds in the U.S.,
although most of the wealth rests with a handful of the country’s wealthiest schools.
Between cutthroat competition for admissions, a prestigious reputation and some of the most
successful alumni in the world, it’s easy to see why Harvard is so expensive. Generous financial
aid programs may make a Harvard education cheaper for low-income students, but for the rest,
be prepared to pay a high price for the honor of calling yourself a Harvard grad.
If you thought this video was eye-opening, be sure and check out our other videos, like this video
called “Why Is Caviar So Expensive?”; or, you might like this other video instead.