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Financial Aid: Worst in Show

TierOne Athletics.jpgEach Ivy school has a Financial Aid Calculator: a web-based method for people to roughly estimate what college attendance will cost after institutions’ need-based financial aid contributions have been taken into account (here is Dartmouth’s). You start with the overall annual cost of each school, subtract the financial aid that is offered, and you end up with the required family contribution. I’ll bet that a lot of families use it for comparison shopping, especially those with in-demand high school seniors.

Over at TierOne Athletics, Kevin Sauer, head coach of the 2012 NCAA Champion UVA Cavaliers women’s rowing team, took the time to plug in the same fictional family data into all of the Ivy aid calculators:

— Married with two kids, oldest starting college and younger sibling is 15
— They live in a $400k home in Virginia and have $80k in equity
— Both parents work, earning a combined income of $150K and $5K in interest income
— They had an adjusted gross income of $135K and paid $26K in Federal taxes
— They contributed $15K to their 401K last year
— They have $10K in cash and $80K in non-retirement investments
— The prospective student has $5k in savings and earned $2.5k last year
— No other real estate, businesses or farms

The result is ugly. For the above family, Dartmouth is the most expensive Ivy League school, bar none. Columbia is nominally the costliest Ivy — its total tuition, room and board, and fees makes it the only Ivy school more costly than the College — but when a middle class family looks at the real affordability of going to school in Manhattan or Hanover, Columbia comes out ahead due to its superior financial aid. In fact, supposedly pricey Columbia offers more annual aid than Dartmouth, Brown and Cornell:

Ivy Family Contribution.jpg

The net cost difference between Dartmouth and the other Ivies can be significant. For our middle class family, four years at the College runs $69,000-$78,000 more than four years at Harvard, Yale or Princeton. The only school that is close to us in cost is Brown, but then Brown has to compensate for having the lowest endowment in the Ivies. Dartmouth’s endowment per student is almost double Brown’s (here and here), yet it costs more for a middle class family to go to Dartmouth than to Brown. What bad management by the College.

Of course, some people take solace in the fact that even though Brown has 38% more students than Dartmouth, we provide high-paying jobs to 3% more non-faculty staff members. I sure don’t. In fact, despite its many additional students, Brown’s total annual budget is almost 12% less than Dartmouth’s. The reason for the College’s high cost is simple: we have too many staffers and we pay them too much in wages and benefits.

Addendum: A devoted alumnus sent in the above story, along with an incisive comment:

Admittedly, this calculation only presents one hypothetical family and I have not “run the numbers” myself. If, however, it is close to being accurate, it reinforces the notion that Dartmouth costs significantly more than many of its peers. It also explains why, in the district for which I am DED, we regularly lose admitted students, not only to other Ivies, but to other pretty respectable schools that offer merit scholarships (e.g., Wash U, Duke, Vanderbilt.). To the hypothetical middle class family in the article, it would be very, very difficult to justify their paying $46,745 for their daughter to attend Dartmouth when, if she was a really outstanding student, they might pay little or nothing for her to go to Duke.

Unfortunately, because of its cost, Dartmouth is increasingly becoming non-competitive for top students from middle class families and few in the administration seem to care. Maybe the College needs another dean to investigate this.

Addendum: USNews ranks us fifth in 2013 among the Top 10 Best Value Schools. Take the earnings of College alumni, compare them to Dartmouth’s official annual cost, and we look pretty good. But the two figures are not linked: the high cost of a Dartmouth education is not a part of the quality education that the faculty offers. In 1999 we had 40% fewer bureaucrats, and we were ranked 7th in the nation (we’re tied for 10th today). The more people that the administration hires, the lower our ranking drops. If the College were well run, we could cut tuition considerably, certainly enough to rise to #1 in this USNews ranking.

Addendum: In the 2014 USNews ranking of the Top 10 Best Value Schools, we dropped to #8.

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