Yahoo Finance Yale president: Yale is more affordable than you think
In 2016, brand-new US college grads who carried student debt owed an average of $37,172, according to an estimate from a prominent financial-aid expert.
So it’s tempting to think Yale University contributed to Americans’ ballooning student debt loads when it hiked its cost of attendance last year 3.9% from $62,200 to $64,650. That’s a few thousand dollars more a year than the average high school teacher makes, and more than $258,000 for a four-year education.
But Yale’s hefty sticker price can be deceiving, Yale University President Peter Salovey told Yahoo Finance’s Alexis Christoforous at the World Economic Forum in Davos, Switzerland, on Wednesday.
“I think it’s very important to look at what students actually pay to be at Yale,” Salovey said, acknowledging, “Yes, the sticker price might be shocking.”
Hefty financial aid packages and low debt loads
The reality is that the vast majority of Yale’s undergrads don’t pay that sticker price because the school has a so-called need-blind admissions policy and will pay 100% of students’ demonstrated financial need. In fact, half of Yale’s students get some form of financial aid package, Salovey said, and the average need-based package for 2015-2016 was $43,989.
As a result, 83% of Yale’s students graduated with zero debt in 2015. Those who do have debt carry only $12,000 or $13,000, according to Salovey, who noted that’s about “half of a car.”
That’s also far less debt than the average recent college grad carries, and Yale is not the only elite school whose graduates receive a six-figure education for five figures or less. Indeed, Princeton was No. 2 on a US News & World Report list last year of 10 colleges whose graduates accrue the least debt. (The average debt load for Princeton’s class of 2014 was $6,600.)
‘Coming to places like Yale is an option’
This kind of assistance is possible, in part, because America’s best schools like Yale and Princeton often have hefty endowments — respectively, $25.4 billion and $22.7 billion — which can fund these generous financial aid packages.
If you look at US News & World Report’s list of graduates with the most debt, it’s filled with less-known, lower-ranked schools than Yale. The highest debt load came from MacMurray College, which has an endowment of roughly $12 million. That school’s 2014 grads had an average debt load of roughly $50,000, even though its tuition and room and board is just $33,620 for the current academic year.
Given that the advertised tuition of Ivy League schools like Yale is so much higher than other colleges’ tuition, it’s understandable that lower-income students might think elite schools are out of reach. Paradoxically, it’s students from those backgrounds who will likely end up paying nothing to go to Yale.
“The big problem we have is people don’t know that, and if you’re from rural America, or if you’re from the inner city, or if you’re from just a place where nobody in your high school ever went to a place like Yale … you see that sticker number, that top line, and you think you can’t come,” Salovey told Yahoo Finance at Davos.
That’s why Yale has been working with other universities on the American Talent Initiative, which works to educate talented, lower-income students about their college options. As Salovey said, that initiative is working hard to help talented students know that “coming to places like Yale is an option for them.”
More from Davos:
Salesforce CEO: I’m not changing how I run my business under Trump
Princeton president: I hope Congress doesn’t tax our endowment
Why your ‘hair is on fire’ if you’re a European at Davos this year
Trump should expect no honeymoon and plenty of impatience: EY CEO
