My $43,000 Question

the starting point of tonight's tangent

For tonight’s post I’d like to move from away from US politics for a time and write on something closer to home. Today at the U-store, as I stared into the refrigerated case of my beloved Nantucket Nectar bottles, I went through a now very familiar internal dialogue. First, I told myself that I shouldn’t be spending 1.50 on a drink regardless of how addictive it is. Then, I compared the $1.50 to the cost of a day of Princeton classes, which comes out to (gasp) $358.33. Needless to say, as is always the case, I bought the drink.

Princeton is ridiculously expensive. Although our financial aid program is tops in the nation, its still not properly easy to pay for education here at Old Nassau. Recently, president Tilghman and co. were praised effusively for their decision to extend financial aid for upperclassmen to include eating club expenses. Certainly a step in the right direction. Set against what Princeton could have done, however, this is mere tinkering at the margins. Instead of making minor changes, it is my belief Princeton ought to have announced free tuition for all students, effective next year.

At first, this seems like a bit of wishful thinking, along the lines of calling for a monorail between Joline and the Wa (maybe next column). Yet despite the radical nature of this proposal, it actually lies well within Princeton’s current capabilities. Despite my aversion to math, I think its important to set down the rough figures behind such a plan. Today Princeton has as endowment of roughly 13 billion dollars. Over the past 10 years, this endowment has grown at an average of This endowment makes a return of 15.6 %. This means that in a typical year, PRINCO ( Princeton University Investment Company) brings in a revenue stream of 2 BILLION dollars.

Tuition, by contrast, is far less impressive. The “sticker” revenue generated by tuiton is number of undergraduates (4800) times tuition (43,000 dollars). Due to financial aid already offered, however, the actual income is closer to 80% of this. As a result, tuition annually brings in roughly 16 million dollars. In short, assuming no other sources of income than endowment and tuition, Princeton generates 1/125 of its annual income from what students actually pay. If this makes you think our tuition dollars are somewhat unnecessary, you’re not alone. In an interview with the Wall Street Journal entitled The Tiger Roars, president Tilghman is asked point blank why tuition is even necessary. When confronted, however, she evaded the question with a blandishment that half of Princeton parents “ can afford” the school anyway. Immediately after this laconic response, the interviewer and Dr. Tilghman both drop the subject and move on to other topics. That said, the notion of free tuition is one that merits more careful consideration than one line responses.


tsk tsk

By offering free tuition to all students, Princeton would overnight become the number one choice of almost every top student in America. In my mind, these students would come from two groups. The first of these would be those who choose to go elsewhere for economic reasons. Although our current aid program is generous there are still many who opt for full scholarships at other institutions rather than reduced tuition here. Making Princeton totally free would eliminate all such economic incentives. The second and larger group of students such a policy would draw, however, are those who get into Princeton and turn it down in favor of Harvard, Yale, Stanford, MIT, or other institutions. This group is particularly important because they were qualified enough to get into multiple top schools, reflecting remarkable promise and potential. Each year, 50% of admitted Regular Decision students choose to go elsewhere, with most ending up at the aforementioned schools. Yet although many clearly hold express preferences for our peer institutions, I doubt that any of the value this preference at $160,000 dollars. As a result, at least initially, Princeton would have its pick of the top students in the nation.

Of course, getting the best of everyone means that the academic, athletic, cultural and social life of campus would all be markedly improved. On these grounds alone, free tuition is probably worth the cost. That said, over time such a policy would likely pay for itself. It is difficult to imagine a scenario in which a class consisting of such “super applicants” would not contribute an extra 16 million dollars a year, and thus the cost of free tuition would in time be turned into an additional revenue stream. As such, Princeton’s better class would come at almost no cost to the institution.



Long term, of course, the other top schools would be forced to play catch up. As a result, free tuition may well begin here and extend to Cambridge, New Haven, and then throughout the nation. Ultimately, the defining feature of the Ivy League could change from elitism to tuition free education. Obviously, this means that at least some of the gains in class strength would fade overtime. Yet should Princeton’s decision leave us with a set of top schools free to all, it would have changed the fabric of our society in spectacular fashion. Our university has diligently sought a commitment to equality of opportunity in this nation and in the world; this is reflected in everything from our institutional commitment to social justice to our decision to end Early Decision admissions. By offering free tuition, however, Princeton can use 1/125 of its income to profoundly change the culture of education, dramatically advance equality of opportunity and make America a far better place. And if nothing else, 43,000 extra dollars a year would cover some 30,000 extra Nantucket Nectars for yours truly. Keep on truckin’, DER