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December 14, 2007

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I agree that the intergenerational bargain is the most important of the ways you suggest we could think about Harvard's strategy. But I think several stories can be told about this bargain.

For example, more parents now are feeling a double crunch: paying for college educations for their children while bearing responsibility for aging parents with substantial medical bills. Maybe this is a story of shifting generational burdens backward instead of forward.

Maybe it is, as you suggest, a story of investment in future gratitude. Certainly I'm grateful for my scholarship and plan to repay it and more, when I am able. But I think people can view their education as a financial transaction regardless of when they graduate or the level of financial assistance they receive. So I don't think the whole story can be told by either cynical strategies of gift-giving or obligatory gratitude.

We pay more than money for an education, and hope to receive more than we can learn by reading a book. So Harvard's move could be a story about signaling functions, taking cost off the table so that everyone can concentrate on the education itself. Perceived value is a story that can be told about any education, and any financial aid scheme.

In other words, it could be a story about a university making good on statements that its mission is to create an community of learning, not a business in which students are both product and customer but primarily a source of income.

But there you have the perspective of someone who is forking over more than $100,000 a year in college tuition bills.

Kimball Corson

This is just the beginning for Harvard, I believe. With an endowment at $35 billion and growing still, in time -- as things settle down -- Harvard will be able to pay all of its students' room, board and tuition so that money will no longer be a troubling issue for students, successful applicants or the University, at least not in the conventional way. This isssue will remain, getting in, the point on which future gratitude will hinge. Harvard is developing a tremendous competitive advantage here and I think will use it aggressively in competing for students and faculty. It has truly stepped into a new league of its own.

Anon

If Harvard & Yale are trying to reach out to more lower and middle class students, don't you think this will hurt their alumni donations? Significant wealth takes many generations to accrue for the most part; most of these students are destined to be upper-middle-class professionals. After paying for their snazzy house in a posh suburb and private school for the kiddies, how much money is really left over for most of these people to donate to their alma mater?

Kimball Corson

But with such a portfolio, alumni contributions are not as important as they once were and Harvard can reach out now to the middle and lower classes (or whereever intelligence is found)and still do well financially. Too, some money tends to accumulate around people who are bright and well educated, regardless of their backgrounds. Finally, more and more, fortunes are made in a single generation, especially in high tech (or human capital intensive areas)where ideas and not intergenerational physical capital accumulation is involved.

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