---
title: "Why college is so expensive in America"
url: https://modern-mba.com/case/colleges
sector: "Services"
sector_url: https://modern-mba.com/sector/services
aired: 2026-08-30
published: 2026-08-30
updated: 2026-08-30
reading_time_minutes: 16
charts: 20
video: https://www.youtube.com/watch?v=mLW0STRZHR4
author: "Yishan Lin"
author_url: https://www.linkedin.com/in/yishanlin/
publisher: Modern MBA
license: "© Modern MBA, all rights reserved. Quote and cite with credit and a link; republishing needs written permission."
---

# Why college is so expensive in America

Harvard sits on $57 billion — more cash than Boeing, Nike, Coca-Cola, McDonald's, and Disney combined — while charging $82,866 a year and paying almost no tax. Princeton's endowment covers 70% of its academic operating costs, so tuition is not the business. This case study reads the audited statements and IRS filings of seven elite universities to explain what the business actually is: a multigenerational donation harvest, where the undergraduate is not the customer but the seed.

## Key figures

- **$57B** — Harvard's endowment, against $9.2B of cash at Nike
- **70%** — Share of Princeton's academic operating costs paid by its endowment
- **37.3%** — Share of alumni donations from the class of 1974 and earlier

## The argument

America's elite universities are luxury houses, and they are run like them. Demand has multiplied by orders of magnitude and enrollment has not moved — Harvard's freshman class went from 1,660 in 2005 to 1,675 in 2025 — because the scarcity is the product. They measure themselves on how many people they turn away, and they have never produced evidence that their teaching or job outcomes are materially better. The diploma is the same piece of paper everyone else gets.

Tuition is not the business. Princeton's endowment covers 70% of its academic operating costs and hands students $1,847 million against $142 million of net tuition — thirteen dollars in for every dollar out. The business is a donation harvest with a fifty-year lag: the undergraduate years are the most formative of a life, so the school inserts itself into them, subsidizes housing and athletics that lose money on purpose, engineers tribal bonds, and spends the next half-century collecting. Classes of 1974 and earlier still supply 37.3% of alumni donations nationally; the classes of 2020–2025 supply 0.6%.

Every apparent contradiction resolves once you see that. They are non-profits holding more cash than Boeing, Nike, Coca-Cola, McDonald's, and Disney combined. They pay endowment managers three times what they pay presidents, because the endowment is the business and the president's job is closing nine-figure donors — which is why no student meets one. And the endowments have been beaten by an index fund, 8.2% at Harvard against 15.4% for VOO. The real return is the oldest one: Harvard has had 390 years of harvests and Stanford has had 141.

## Charts

### Seven independent institutions, one price

Annual cost of attendance including tuition, room, and fees, 2025. A $16,000 spread across the entire tier.

|  | US dollars |
| --- | --- |
| Yale | $98,900 |
| Stanford | $97,545 |
| Penn | $95,612 |
| Columbia University | $93,417 |
| Princeton | $90,574 |
| MIT | $89,334 |
| Harvard | $82,866 |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-1 · Sources: https://modern-mba.com/case/colleges#sources

### Twenty years of demand, and the supply never moved

Size of the freshman class. Applications multiplied over the same period. The scarcity is the product.

|  | 2005 | 2025 |
| --- | --- | --- |
| Penn | 2,410 | 2,395 |
| Harvard | 1,660 | 1,675 |
| Stanford | 1,635 | 1,840 |
| Yale | 1,320 | 1,635 |
| Princeton | 1,230 | 1,410 |
| MIT | 995 | 1,155 |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-2 · Sources: https://modern-mba.com/case/colleges#sources

### Non-profits with more cash than the S&P

University endowments against the cash reserves of leading corporations, in billions of dollars.

|  | US dollars |
| --- | --- |
| Harvard | $56.9B |
| Yale | $44.1B |
| Stanford | $40.8B |
| Princeton | $35.7B |
| Boeing | $29.4B |
| MIT | $27.4B |
| Coca-Cola | $13.9B |
| Nike | $9.2B |
| Disney | $5.7B |
| McDonald's | $0.8B |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-3 · Sources: https://modern-mba.com/case/colleges#sources

### And they get richer every single year

Annual value of the endowment in billions of dollars. Every one of these institutions roughly quadrupled in fifteen years.

|  | 2010 | 2025 |
| --- | --- | --- |
| Harvard | $28B | $57B |
| Yale | $17B | $44B |
| Stanford | $14B | $41B |
| Princeton | $14B | $36B |
| MIT | $8B | $28B |
| Penn | $6B | $25B |
| Columbia University | $7B | $16B |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-4 · Sources: https://modern-mba.com/case/colleges#sources

### Charities running commercial margins

Operating margins of elite universities. Harvard and Stanford are the two that spent hardest in 2025.

|  | 2015 | 2025 |
| --- | --- | --- |
| Columbia University | 5% | 6% |
| Yale | 6% | 6% |
| Penn | 6% | 5% |
| MIT | 2% | 5% |
| Princeton | 5% | 4% |
| Stanford | 6% | −1% |
| Harvard | 0% | −2% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-5 · Sources: https://modern-mba.com/case/colleges#sources

### The endowment gives students more than tuition takes

Endowment distribution against net tuition revenue in 2025, in millions of dollars. Princeton hands over thirteen dollars for every one it keeps.

|  | Endowment distribution | Net tuition revenue |
| --- | --- | --- |
| Harvard | $2,498M | $1,438M |
| Yale | $2,080M | $498M |
| Stanford | $1,946M | $845M |
| Princeton | $1,847M | $142M |
| MIT | $1,230M | $436M |
| Columbia University | $825M | $1,577M |
| Dartmouth | $453M | $249M |
| Brown | $352M | $444M |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-6 · Sources: https://modern-mba.com/case/colleges#sources

### So the endowment is the school

Endowment payout as a percentage of academic operating costs. At Princeton, seven dollars in ten come from the pile rather than the classroom.

|  | Percentages |
| --- | --- |
| Princeton | 70% |
| Yale | 60% |
| Harvard | 50% |
| MIT | 50% |
| Dartmouth | 45% |
| Stanford | 38% |
| Brown | 32% |
| Columbia University | 25% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-7 · Sources: https://modern-mba.com/case/colleges#sources

### The endowment manager out-earns the president

Annual compensation of university leaders. The president's job is closing whales, which is why no undergraduate meets one.

|  | Endowment manager | President |
| --- | --- | --- |
| Penn | $7.8M | $2.6M |
| Princeton | $6.6M | $1.4M |
| Harvard | $6.4M | $1.6M |
| Stanford | $6.3M | $1.1M |
| Columbia University | $3.9M | $1.2M |
| MIT | $3.8M | $1.8M |
| Yale | $2.3M | $2.3M |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-8 · Sources: https://modern-mba.com/case/colleges#sources

### The whales are worth the president's whole calendar

Largest single gifts to American universities since 2021, in millions of dollars.

|  | US dollars |
| --- | --- |
| Phil Knight 2025 | $2,000M |
| John Doerr 2022 | $1,100M |
| Mike Bloomberg 2024 | $1,000M |
| Anonymous 2021 | $550M |
| Mark Zuckerberg 2021 | $500M |
| David Duffield 2026 | $372M |
| Ken Griffin 2023 | $300M |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-9 · Sources: https://modern-mba.com/case/colleges#sources

### The harvest runs on a fifty-year lag

National share of alumni donations by graduating class. Everyone who graduated this decade contributes 0.6% between them.

|  | Percentages |
| --- | --- |
| 1974 & earlier | 37.3% |
| 1975– 1984 | 22.0% |
| 1985– 1994 | 21.4% |
| 1995– 2004 | 8.7% |
| 2005– 2014 | 4.5% |
| 2015– 2019 | 0.9% |
| 2020– 2025 | 0.6% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-10 · Sources: https://modern-mba.com/case/colleges#sources

### Which makes age the only real moat

Years since founding, as of 2026. Harvard has had 249 more harvests than Stanford.

|  | Counts |
| --- | --- |
| Harvard | 390 |
| Yale | 325 |
| Penn | 286 |
| Princeton | 280 |
| Columbia University | 272 |
| Brown | 262 |
| Dartmouth | 257 |
| MIT | 165 |
| Cornell | 161 |
| Stanford | 141 |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-11 · Sources: https://modern-mba.com/case/colleges#sources

### And participation five times the national rate

Share of undergraduate alumni that donate. Princeton's advancement runs on unpaid alumni volunteers soliciting their own classmates.

|  | Percentages |
| --- | --- |
| Princeton | 44% |
| Dartmouth | 37% |
| Harvard | 33% |
| Yale | 26% |
| Stanford | 24% |
| Penn | 22% |
| MIT | 19% |
| Cornell | 15% |
| Columbia University | 14% |
| National average | 8% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-12 · Sources: https://modern-mba.com/case/colleges#sources

### The bond is manufactured, and it costs money

Percentage of undergraduates who live on campus. The elites house nearly all of theirs for all four years, at a loss.

|  | Percentages |
| --- | --- |
| Harvard | 97% |
| Stanford | 96% |
| Princeton | 95% |
| MIT | 92% |
| Columbia University | 90% |
| Yale | 75% |
| UCLA | 58% |
| Michigan State | 41% |
| USC | 36% |
| Wisconsin | 25% |
| Texas A&M | 18% |
| UCF | 12% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-13 · Sources: https://modern-mba.com/case/colleges#sources

### One varsity team for every 137 students

Undergraduates per varsity sports team, 2024. Ivy League athletic scholarships have been banned for over seventy years.

|  | Counts |
| --- | --- |
| UCF | 3,730 |
| Texas A&M | 3,040 |
| Wisconsin | 1,480 |
| Michigan State | 1,422 |
| UCLA | 1,339 |
| USC | 897 |
| Columbia University | 287 |
| Stanford | 220 |
| Yale | 195 |
| Harvard | 168 |
| Princeton | 157 |
| MIT | 137 |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-14 · Sources: https://modern-mba.com/case/colleges#sources

### Because their athletics are not a business

Revenue of the athletics department in millions of dollars, 2024. The elites run theirs at a loss for school spirit.

|  | US dollars |
| --- | --- |
| Texas A&M | $236M |
| USC | $234M |
| Wisconsin | $191M |
| UCLA | $173M |
| Michigan State | $161M |
| Stanford | $158M |
| UCF | $80M |
| Princeton | $50M |
| Yale | $48M |
| Harvard | $43M |
| Columbia University | $10M |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-15 · Sources: https://modern-mba.com/case/colleges#sources

### An index fund beat all of them

Ten-year annualized returns net of fees, against Vanguard's S&P 500 and total market funds.

|  | Percentages |
| --- | --- |
| $VOO | 15.4% |
| $VTI | 14.9% |
| Brown | 11.4% |
| MIT | 10.7% |
| Dartmouth | 9.7% |
| Stanford | 9.4% |
| Yale | 9.4% |
| Princeton | 9.0% |
| Harvard | 8.2% |
| Columbia University | 7.4% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-16 · Sources: https://modern-mba.com/case/colleges#sources

### And most of the pile cannot be touched

Restricted against unrestricted endowment, in billions of dollars. Donors attach conditions, so the balance is bigger than the freedom it buys.

|  | Restricted | Unrestricted |
| --- | --- | --- |
| Harvard | $47B | $10B |
| Yale | $36B | $8B |
| Stanford | $23B | $18B |
| MIT | $20B | $8B |
| Princeton | $20B | $16B |
| Columbia University | $11B | $5B |
| Penn | $11B | $14B |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-17 · Sources: https://modern-mba.com/case/colleges#sources

### American universities stopped hiring tenured faculty

How American universities staff by faculty type. Part-time appointments without benefits or tenure are more than double the tenured total.

|  | Part-time, no tenure | Full-time tenured |
| --- | --- | --- |
| 2004 | 502,885 | 257,880 |
| 2009 | 585,155 | 272,815 |
| 2014 | 612,510 | 284,115 |
| 2019 | 606,945 | 279,902 |
| 2024 | 580,436 | 270,606 |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-18 · Sources: https://modern-mba.com/case/colleges#sources

### So tenure is rationed

Composition of professors by tenure track. Columbia runs three non-tenured faculty for every tenured one.

|  | Non-tenured | Tenured |
| --- | --- | --- |
| Columbia University | 2,826 | 843 |
| USC | 2,501 | 927 |
| NYU | 1,583 | 1,172 |
| Michigan State | 1,078 | 1,268 |
| MIT | 1,013 | 839 |
| Yale | 1,018 | 722 |
| Harvard | 822 | 906 |
| Stanford | 750 | 897 |
| Princeton | 377 | 687 |
| Penn | 351 | 872 |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-19 · Sources: https://modern-mba.com/case/colleges#sources

### Everyone who gets in, goes

Percentage of accepted undergraduates who actually enroll. Yield is the number these schools care about most, and it only goes up.

|  | 2005 | 2025 |
| --- | --- | --- |
| MIT | 67% | 86% |
| Harvard | 79% | 84% |
| Stanford | 67% | 80% |
| Princeton | 68% | 75% |
| Dartmouth | 50% | 71% |
| Yale | 70% | 68% |
| Cornell | 47% | 63% |

Source: Modern MBA, “Why college is so expensive in America”, aired August 2026. Chart: https://modern-mba.com/case/colleges#chart-20 · Sources: https://modern-mba.com/case/colleges#sources


## Takeaways

1. The sticker price is a cartel price. Annual cost of attendance runs **$98,900** at **Yale**, **$97,545** at **Stanford**, **$95,612** at **Penn**, **$93,417** at **Columbia**, **$90,574** at **Princeton**, **$89,334** at **MIT**, and **$82,866** at **Harvard** — a spread of $16,000 across seven independent institutions.
2. And the supply has not moved in twenty years. Freshman classes went from **1,660** to **1,675** at **Harvard**, **1,635** to **1,840** at **Stanford**, **1,230** to **1,410** at **Princeton**, and **2,410** to **2,395** at **Penn** — while applications multiplied. The scarcity is the product.
3. These are non-profits with more cash than the S&P. **Harvard** holds **$56.9B**, **Yale** **$44.1B**, **Stanford** **$40.8B**, **Princeton** **$35.7B** — against **$29.4B** at **Boeing**, **$13.9B** at **Coca-Cola**, **$9.2B** at **Nike**, **$5.7B** at **Disney**, and **$0.8B** at **McDonald's**.
4. The endowments have quadrupled in fifteen years: **Harvard** **$28B** to **$57B**, **Yale** **$17B** to **$44B**, **Stanford** **$14B** to **$41B**, **MIT** **$8B** to **$28B**, **Penn** **$6B** to **$25B**. They are charities that get richer every year.
5. They also run like businesses. Operating margins in 2025: **6%** at **Columbia** and **Yale**, **5%** at **MIT** and **Penn**, **4%** at **Princeton** — and **−2%** at **Harvard** and **−1%** at **Stanford**, the two that spent hardest.
6. Tuition is not what pays for it. In 2025 endowment distributions ran **$2,498M** at **Harvard**, **$2,080M** at **Yale**, **$1,946M** at **Stanford**, and **$1,847M** at **Princeton** — against net tuition revenue of **$1,438M**, **$498M**, **$845M**, and **$142M**. Princeton's endowment gives students thirteen dollars for every dollar of tuition it keeps.
7. That distribution covers **70%** of academic operating costs at **Princeton**, **60%** at **Yale**, **50%** at **Harvard** and **MIT**, **45%** at **Dartmouth**, **38%** at **Stanford**, **32%** at **Brown**, and **25%** at **Columbia**. The school is the endowment. The classroom is the storefront.
8. The endowment is also the job that pays. Endowment managers earn **$7.8M** at **Penn**, **$6.6M** at **Princeton**, **$6.4M** at **Harvard**, and **$6.3M** at **Stanford** — against presidents on **$2.6M**, **$1.4M**, **$1.6M**, and **$1.1M**. The president's actual job is closing whales, which is why no undergraduate ever meets one.
9. And the whales are worth meeting: **$2,000M** from Phil Knight in 2025, **$1,100M** from John Doerr in 2022, **$1,000M** from Mike Bloomberg in 2024, **$550M** anonymous in 2021, **$500M** from Mark Zuckerberg in 2021, **$372M** from David Duffield, and **$300M** from Ken Griffin.
10. But the reliable money is old money. The classes of **1974 and earlier** supply **37.3%** of all alumni donations nationally, 1975–1984 supply **22.0%**, and 1985–1994 **21.4%** — while the classes of **2020–2025** supply **0.6%**. The harvest runs on a fifty-year lag, which is why age is the moat: **390** years at **Harvard** against **141** at **Stanford**.
11. Participation is the other half. **44%** of **Princeton** undergraduate alumni donate, **37%** at **Dartmouth**, **33%** at **Harvard**, **26%** at **Yale** — against a **8%** national average. Princeton's advancement runs on unpaid alumni volunteers soliciting their own classmates, so the cost of collection is near zero.
12. The bond is manufactured deliberately, and it is expensive. **97%** of **Harvard** undergrads live on campus, **96%** at **Stanford**, **95%** at **Princeton**, **92%** at **MIT** — against **36%** at **USC**, **25%** at **Wisconsin**, **18%** at **Texas A&M**, and **12%** at **UCF**.
13. So are the sports. **MIT** fields one varsity team per **137** undergrads, **Princeton** per **157**, **Harvard** per **168** — against **3,730** at **UCF** and **3,040** at **Texas A&M**. Athletic scholarships have been banned in the Ivy League for over 70 years and the departments run at a loss on purpose: **$43M** of revenue at **Harvard** and **$10M** at **Columbia** against **$236M** at **Texas A&M** and **$234M** at **USC**.
14. None of it works at scale, which is why the classes stay small. **Harvard** has **6,738** undergraduates and **Princeton** **5,916**, against **61,442** at **Texas A&M**, **59,649** at **UCF**, and **41,234** at **Michigan State**. The Ivy League average is **8,092**.
15. For all the sophistication, an index fund beat them. Ten-year annualized returns net of fees: **11.4%** at **Brown**, **10.7%** at **MIT**, **9.7%** at **Dartmouth**, **9.4%** at **Stanford** and **Yale**, **9.0%** at **Princeton**, **8.2%** at **Harvard**, and **7.4%** at **Columbia** — against **15.4%** for **$VOO** and **14.9%** for **$VTI**.
16. And most of the pile cannot be touched. Of **Harvard's** endowment, **$47B** is restricted and **$10B** is not; **$36B** against **$8B** at **Yale**, **$23B** against **$18B** at **Stanford**. The one flexible dollar comes from annual giving — **$70M** of unrestricted money at **Harvard** against **$1,059M** of restricted gifts.

## Common questions

### Why is Harvard so rich?

Because it has been harvesting donations for 390 years and never spends the principal. Its endowment is $56.9 billion — more cash than Boeing, Coca-Cola, Nike, Disney, and McDonald's hold between them — and it grew from $28 billion in 2010. The money comes from alumni giving compounded across generations, not from tuition: the classes of 1974 and earlier still supply 37.3% of all alumni donations nationally. Harvard pays out roughly 5% of the endowment a year, which covers about half of its academic operating costs, and as a non-profit it pays little to no tax on the rest. Age is the actual advantage — Stanford, founded 249 years later, holds $40.8 billion.

### Do elite universities make money on tuition?

No, and several lose heavily on it by design. In 2025 Princeton's endowment distributed $1,847 million to support students while net tuition revenue was $142 million — thirteen dollars given for every dollar collected. Harvard distributed $2,498 million against $1,438 million, Yale $2,080 million against $498 million, Stanford $1,946 million against $845 million. The endowment payout covers 70% of academic operating costs at Princeton, 60% at Yale, 50% at Harvard and MIT. Tuition is a filter and a signal, not a revenue line. The revenue line is the endowment and the advancement office.

### How do universities actually make money from students?

By treating them as seeds rather than customers. The years from eighteen to twenty-two are the most formative of a person's life, so the school inserts itself into that window and spends heavily to make the experience intense and tribal — 97% of Harvard undergrads live on campus for four years, MIT fields a varsity team for every 137 students, and residential colleges, houses, and eating clubs fragment already small classes into smaller ones. All of that loses money now, and pays back decades later: 44% of Princeton undergraduate alumni donate against an 8% national average. Graduate alumni, whose relationship with the school is transactional, donate substantially less.

### Why do universities pay endowment managers more than presidents?

Because the endowment is the business. Penn pays its endowment manager $7.8 million against $2.6 million for its president; Princeton pays $6.6 million against $1.4 million; Harvard $6.4 million against $1.6 million; Stanford $6.3 million against $1.1 million. The president's role is not academic administration in any sense a student would recognize — it is closing eight- and nine-figure donors, which is why every president's time goes to trustees and whales rather than undergraduates who are decades away from writing a check. In exchange, the children and relatives of the largest donors get guaranteed admission.

### Are university endowments well managed?

By the only test that matters, no. Over ten years, net of fees, Harvard returned 8.2% annually and Columbia 7.4%, against 15.4% for Vanguard's S&P 500 fund and 14.9% for its total market fund. Brown at 11.4% and MIT at 10.7% did best among the elites and still trailed the index badly. These are portfolios heavy in private equity and hedge funds — Princeton runs 39% private equity, Harvard 33% hedge funds — which carry high fees and long lock-ups for returns an index fund beat. The endowments still grow because the inflows are enormous and the payout is capped at around 5% a year.

### Why compare elite universities to strategy games?

Because the contradictions resolve once you read the university as a player in a long game rather than a school selling classes. In **StarCraft**, **Civilization**, and **Age of Empires** you win by massing units, compounding an economy, raising wonders, and planting seeds that pay off many turns later — while paying maintenance on every decision already made. The units are celebrated researchers, whose discoveries are given away free because the prestige returned is worth more than the licensing. The economy is the endowment: Harvard's **$56.9 billion**, and at Princeton enough to cover **70%** of academic operating costs, which is what makes tuition a rounding error. The seeds are undergraduates on a fifty-year lag — classes of **1974** and earlier still supply **37.3%** of alumni donations against **0.6%** from **2020–2025**. The maintenance runs **390 years** deep. Quarter to quarter none of it makes sense; measured in generations, all of it does.

### Why don't elite colleges just admit more students?

Because enrollment is the scarcity that the entire brand rests on, and because the model does not scale. Harvard's freshman class went from 1,660 in 2005 to 1,675 in 2025 while applications multiplied — the school measures itself on how many people it turns away. The deeper reason is economic: the donation harvest depends on manufacturing a tight tribal bond with each student, which requires housing almost all of them for four years, fielding a varsity team per 150 undergrads, and fragmenting classes into residential colleges and eating clubs. A public flagship enrolling 40,000 to 60,000 cannot do that, which is why its alumni participation looks nothing like Princeton's 44%.

## Discussion

- Harvard's freshman class went from 1,660 in 2005 to 1,675 in 2025 while demand multiplied by orders of magnitude, because the scarcity is the product. What other institutions measure success by how many people they refuse?
- They have never produced evidence that teaching or job outcomes are materially better, and the diploma is the same paper everyone else gets. What is actually being purchased?
- Princeton's endowment covers 70% of academic operating costs. If tuition is not the business, what is — and who is the customer?
- These institutions are described as luxury houses run like luxury houses. Push that comparison: where does it hold, and where does it break?
- You are asked to expand access without damaging the brand. Is that possible, and what would you have to give up to try?

## Sources

Endowment values, operating margins, endowment distributions, net tuition revenue, payout ratios, restricted and unrestricted balances, staff salary costs, and depreciation from each university's audited financial statements and endowment reports, FY2025; president and endowment manager compensation from IRS Form 990; class size, enrollment, on-campus housing, and yield from the Common Data Set and IPEDS Fall 2024; alumni giving participation from U.S. News & World Report; donation share by class year from the CASE Voluntary Support of Education survey; athletics revenue and team counts from the NCAA Equity in Athletics Data Analysis, 2024; research spending by department and funding source from the NSF HERD survey; faculty composition from the American Association of University Professors; degrees awarded from the NCES Digest of Education Statistics

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From [Modern MBA](https://modern-mba.com/). Read this case in full at [https://modern-mba.com/case/colleges](https://modern-mba.com/case/colleges), or watch the episode at https://www.youtube.com/watch?v=mLW0STRZHR4.