Reply to FA shouldn't go to people with 1 million dollar houses

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[quote=Anonymous]I think there is a fundamental misunderstanding about financial aid here. It is not charity. It is a discount to help maximize revenues. You aren't getting charity when you buy a new outfit on sale at Saks. You're giving Saks revenue that might not earn at all.

Financial aid is a way for schools to meet a variety of strategic needs. Yes, it is a tool to help them have more economic and racial diversity. Just like they use tools like lower admission standards for very wealthy donors. If they are well managed, it is also a way for schools to strengthen their finances. Like any other organization, schools need to maximize total revenue to keep their doors open. But, it is nearly impossible for them to fill their schools with the kids they want from families paying full tuition.  So whenever they can get another student paying anything over the marginal cost for that child, the better off they are financially.

A simplified way to look at it is to say a school can reliably fill 10 seats in a classroom with families paying full tuition. But, another 5 kids in the class could actually improve social and education factors, despite the larger class size. So if the school takes in those 5 students and offers their families a 50% discount on tuition, it will earn another $50,000 without having to hire another teacher or build another classroom. If it didn't offer the financial aid, it would earn $50,000 less and maybe have to cut back on a language section or art elective. [/quote]

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