Stocks vs. Tuition

To the Editors of the Crimson:

The recent student demonstrations against Harvard financial ownings in South Africa-affiliated companies only touch a symptom of a more profound problem. That is, is it justifiable for a university with a $1.6 billion endowment to invest most of that enormous endowment in stocks, while continuing to charge students ever-increasing tuition fees?

It is frequently said that students' tuition fees do not cover the price of a Harvard education, and that therefore students shouldn't complain about having to pay $4000 or $5000 per year. But this argument ignores the fact that the Harvard Corporation could use more of its enormous endowment to offset the costs of students' educations, thus lowering tuition fees. Why is it necessary to invest so much money in stocks, instead of paying for education? A university, being a non-profit organization, should be more concerned with providing quality service to its students, than with earning dividends.

The argument that endowment money must be kept distinct from tuition costs seems unsound. There is no inherent necessity for this, nor has it been adequately explained why over a billion dollars must be invested. It would seem that the Corporation could easily cut tuition costs by using its endowment appropriately, if it chose to do so.

The rising costs of tuition here are rapidly making this university an unthinkable investment for many poor and even middle class families, thus effectively restricting access to the children of the well-to-do. As Caroline Bird has argued in The Case Against College, more and more families are questioning the worth of a private college education, in light of the ever-rising tuition costs, in this Age of Inflation.

State universities, by contrast, typically charge annual tuition fees in mere hundreds of dollars. Can there be that much of a difference in the quality of education at such schools, versus that at private schools such as Harvard? While it is true that state schools receive grants from state governments to defray tuition costs, it is most questionable whether the amount of such grants even rivals the amount of Harvard's enormous endowment. If state schools can lower their tuition prices charged students, why can't private universities do likewise? It is one thing for a tiny private university in Schenectady Junction to "have to" charge $4500 in tuition per year, since it has a moderate endowment. But it is quite another matter for a university with a $1.6 billion endowment to claim that it also "has to" charge $4500. The figures somehow don't make sense.

Another argument frequently used by certain private schools to defend their financial policies is that some of the students' tuition fees are used to support research and laboratory work in another part of the University unrelated to the students' own field. For example, undergrads' fees may be used to help defray the extra cost of a medical student's education, or a laboratory worker's research. The question is, why should undergrads' fees be used to support this activity extraneous to their own education, when in fact the University in question could use part of its own endowment to pay for these medical and lab activities?

Because students' tuition fees are used to pay for something which could have been paid for by endowment funds, (thus freeing endowment funds to buy stock in South African-affiliated companies), the University is in effect using students' tuition fees to invest in these South Africa affiliated companies.

Therefore, it would seem that if the University does divest itself of its South African holdings, it should use this freed money to defray tuition costs, thus lowering or stabilizing tuition, rather than reinvesting it in different company stock. Stanley Hilton   Harvard Business School Student