Snarky Behavior

An Innovative Approach to Financial Aid

July 17, 2008 · 2 Comments

As I await resolution to The Great Fellowship Debacle of Ought-Eight (current status: 1 call, 3 e-mails, zero response), I’ve found an interesting idea via Tyler Cowenmatching donors directly with students, thus cutting out the middle-man of the Financial Aid Office.

The organization that arranges the matching is called, and the guiding principle is that a direct matching process is more transparent, accountable and efficient than the current system schools have in place.

Their blog links to an article in the Princeton Weekly which discusses the distortionary pressures large endowment-subsidized tuitions can create in the competitive marketplace of higher education.  While Princeton might make be making education “universal” for its own students, the subsidy places tremendous upward price pressure on student tuitions across the board at other schools (especially Columbia).  As DiscoverScholar observes:

…historically elite learning institutions have much greater endowments and other financial resources at their fingertips.  These resources allow them to offer a better product and cheaper tuition to prospective students (which they will compensate for through interest on their endowments and subsequent alumni donations over coming years).  As a result, students accepted to a Princeton or Harvard face virtually no quality vs. price trade-off.

As I’ve written before, while SIPA has a $30 million endowment to support about 1200 students, the Woodrow Wilson School at Princeton boasts a $558 million (endowment) for 200 students. As a result, not only is SIPA’s “percentage of revenue generated via tuition” double that of Princeton’s, but we have more inter-program competition for jobs and higher student-to-faculty ratios, including in the career services office.  (This does not even mention the fact that WWS offers tuition reimbursement for public sector committments, something SIPA could not even dream of doing).

As I’ve also written before, both here and for the Morningside Post, amassing student debt prohibits the student’s decision to enter the public sector.  The Review article mentions that a 2007 study co-authored by Princeton professors Cecilia Rouse and Jesse Rothstein found that even an extra $10,000 in debt greatly diminishes the odds that a graduate will take a public-service or other lower-paying job.

The sad part is that Columbia’s program for International Affairs is incongruently structured to allow students to pursue those jobs.  You have a situation where a bunch of former Peace Corps volunteers are looking to get more formal training in economic development or non-profit management, and they’re expected to pay $40,000 in tuition and fees per year out of pocket?  Seriously?  (Note:  I swear to God I will CACKLE into the phone if Columbia ever has the nerve to call me up for alumni donations).

Anyway, it would be nice to really compete competitively for financial aid based on a transparent matching process than to play the pray and hope and wait (based on misleading information) smokey-room system Columbia currently subscribes to.  (Still angry).

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