Teen Queries

A little birdie once told me that Harvard University in Cambridge, Massachusetts had decided to discontinue charging tuition for its undergraduates.  When I heard this uncorroborated concept, I nearly leaped out of my skin and shouted “Halleluiah”.  Needless to say, I am no Harvard graduate and probably will never attend Harvard, so I was chagrined in disbelief.  The concept of eliminating the tuition burden of some of America’s top students was a novel idea, but much too sinister for Harvard.

Nevertheless, what was Harvard thinking – anyway?  With nearly $30 billion sitting in their war chest earning savory interest, what foolish, blubbering university board of trustees would ever allow such a phenomenon to occur.  That birdie was wrong, or lied.  After examination, Harvard has not announced any plans to reduce or eliminate tuition costs.  On the contrary, they intend on increasing undergraduate tuition by 3.5% in 2010.

Bitter, you call me?  No, not bitter, just a tad vinegary and visibly perplexed..  Here is why: Harvard University’s endowment fund was hovering at a staggering $36.9 billion in 2008.  GASP!  As of June 30th 2009, that colossal sum was reduced to a smaller colossal sum of $26.9 billion from the recent market turmoil.  Five months later, at a measly $30 billion, The Harvard Endowment Fund continues to stand as the world’s largest university endowment bucket in the history of mankind.  Gadzuks, Batman!

That aforementioned birdie told me that with this unbelievable sum of money, Harvard cronies have decided to waive all undergraduate tuition indefinitely.  The reasoning behind this philosophy was elementary:  With this mammoth sum working for the benefit of Harvard University, they were experiencing annual earnings in excess $2.5 billion.  This is not including all of the additional mega-gifts and other financial contributions given during each year.  So what happened?  What became of this novel and magnanimous idea?  Did it go the way of the dodo bird?  Was it ever going to happen?

Harvard Management Company (HMC) president and CEO Jane L. Mendillo noted in a communication to the community, “Clearly, the last year was a difficult one for Harvard, as it was for almost all institutional investors.”  Oh, really?  I am whimpering in complete sorrow.  So it appears that the underlying cause of a tuition increase and not a tuition decrease is that you had a bad year?  Am I correct?

Let’s play with some figures, shall we?  With an approximate enrollment at Harvard sitting near 20,000 students and an approximate annual tuition of $40,000, Harvard is raking in another $800 million annually, less awards, scholarships, and other financial aid.  If not one student was awarded any aid whatsoever, Harvard would still have a handsome positive annual cash flow in excess of $1.7 billion, not including annual gifts and contributions to the Endowment Fund.

How greedy does Harvard need to be to survive?  They don’t need to be greedy at all.  If they were only to receive their current annual earnings from the Fund, charge no tuition, and then accept all gifts and contributions, Harvard would never go broke.  In fact, considering their cash flow and a simple return of 6% annually, The Harvard Endowment Fund will surpass the $50 billion mark before 2020 from today’s levels.

Then why charge any tuition at all with these discernable facts?  If you don’t know, did you pay attention to the title of my article?  I believe the HMC feels a duty to the University to regain the $13 billion loss before that question is ever answered truthfully.  Mendillio was noted as saying, “For Harvard, as for almost every investor, regaining the market value lost as a result of the global economic crisis will take time”.

With college tuition costs rising 3.5% to 6.6% nationwide, students are facing an unprecedented challenge. The challenge to find accepting schools and then find a way to make ends meet to finish valiantly and embrace the coveted degree. Inside of 4 years such a challenge may set them back nearly $250,000 in tuition alone. Where is Harvard at this time of need?

It has been proven in cultural studies in the past.  When an institution reduces the cost of a higher education, the playing field becomes more level.  When intelligent minds have the same opportunity to earn the same award regardless of affordability, the story drastically changes.  If Harvard eliminated tuition, then the best students of all walks of life and means will apply.  The picking would be vast.  No longer would the burden of tuition be a problem.  The mere fact that Harvard is a “free” university would encourage thousands of bright young minds to push the extra mile for greatness.

Is Harvard really greedy?  I will let you decide.  But I will leave you with this one note of inspiration:  If Harvard was genuinely interested in maintaining its legitimate greatness, they must abandon the attitude that the mighty buck is mightier than the minds they hold close to their bosom.  For it is those mighty minds that make the school what it is now, not the Endowment Fund.

Jason ValaVanis graduated from the University of Central Florida with a degree in Aerospace Engineering. He performed as an mechanical-optics engineer for Martin Marietta on the Cobra Helicopter and the F-16 Fighter Jet night vision systems. He maintained a DOD secret security clearance for his work on Military sensitive weaponry. From there, he was recruited to launch Atlas Rockets for General Dynamics at the Cape Canaveral Air Force Station. At KSC, he was a Systems Launch Engineer for 19 Atlas rocket launches and was a part of placing our GPS and military satellites in Geo-Stationary orbit. In 1990, his love for Financial Planning extracted him from the space program. With his math background, he attended college again where he completed his Professional Education Studies Program towards the coveted Certified Financial Planner Boards License. After passig the two-day Board Exam, he earned his Board Certification in Financial Planning from the College for Financial Planning in Denver. He formed two financial firms where he now manages over $85 million. His focus is simple and always remains the same: Preserve wealth while increasing income, reducing risk, reducing taxes, and creating the lifetime legacies for our loved ones. Jason is a local author where he has published over 60 articles on financial planning and facing life’s money challenges. He is currently writing his first book titled: The Road to Domestic Wealth; How to Turn $50,000 into $5 million in 20 years.

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