According to today’s New York Times , Stanford is waiving its $36,030 tuition for families earning under $100,000 a year, and waiving the $11,182 room and board fee for families earning under $60,000 as well. Last summer Stanfordwith over $17 billion, the third-largest university endowment in Americaincreased its endowment spending to 5.5%, more than Harvard, Yale, and other schools in its class. With the new fee reductions announced today, Stanford is now spending $114 million on financial aid every year.
On one hand, Stanford’s announcement could be interpreted as a sign of success for those who want Congress to force universities to spend more of their endowments. After all, this announcement has come after saber-rattling from the Senate Finance Committee. But Stanford had already been spending more than the 5% of its endowment that the Finance Committee demanded, so it is unlikely that its increase in aid is a desire to preempt any governmental regulations.
Instead, Stanford’s increase in endowment spending and financial aid can be attributed to one thing: the desire to compete with its peers for the best students. Which goes to show that the government need not micromanage the budgets of universities in order to get them to lower their tuition. The free market of education can take care of itself just fine.