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Competition Among the Ivies

Competition Among the Ivies. By GREG WINTER Published: March 4, 2005. http://www.nytimes.com/2005/03/04/education/04yale.html. Yale Cuts Expenses for Poor.

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Competition Among the Ivies

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  1. Competition Among the Ivies By GREG WINTER Published: March 4, 2005 http://www.nytimes.com/2005/03/04/education/04yale.html

  2. Yale Cuts Expenses for Poor • In an effort to outdo its rivals, Yale University said yesterday that it would no longer require parents earning less than $45,000 a year to pay anything toward their children's educations. • Harvard announced a similar program last year, freeing parents who earn $40,000 or less from paying anything, and the change helped raise its applications to record levels. • Several of Yale's other competitors, including Princeton, have taken a slightly different approach by no longer requiring loans for low-income students, and they also believe the move helped increase applications.

  3. Yale’s Change • Yale's change comes after its students demanded financial relief, and is arguably more generous than many of the financial aid overhauls at other schools, public and private universities alike. The University of North Carolina, for instance, no longer requires students from families of four earning about $37,000 or less to take out any loans to cover school expenses. Rice did the same but set the income bar at $30,000. • Only about 15% of Yale students' families earn little enough to benefit from the changes, but that is precisely the point, President Richard C. Levin said yesterday. The hope is that once low-income students know that going to Yale will not financially burden their families, more will apply. Longer-range hopes are for a more diverse Ivy League and a more equitable society.

  4. Competition with Harvard • "Harvard got great value from what they did," Mr. Levin said of Harvard's gain in applications from low-income students. "We said at the time that we were going to watch and see what happens. Well, we're convinced.“ • That could mean a semester abroad but could also include summer internships in countries like China or fellowships for overseas research. For those on aid, who often spend their summers making money to pay tuition, Mr. Levin said grants would be made available so that they can go, too. • Taken together, the changes in financial aid and foreign study should cost Yale an extra $3 million in the first year, Mr. Levin said, and probably significantly more in the future if more low-income students enroll and more undergraduates travel abroad. Mr. Levin said the university's endowment - which, at about $12.7 billion, is the nation's second-largest - is probably the biggest single factor in making the changes possible.

  5. Sample Tuitions • These include: • Tuition • Room and Board • Books

  6. The Economics • Universities are not strictly profit maximizing firms … but • They are obviously seeking more students. • Viewpoint is that application and/or enrollment is negatively related to price. • Also, in a given year, most of the University’s costs are FIXED costs. Marginal costs of a small amount of additional students are relatively small. • Note, they are targeting the price changes. Not giving them to ALL!

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