Berea College in Kentucky is one of the three colleges mentioned in Daniel Golden's fascinating book, The Price of Admission, as not charging any college tuition. (It is interesting how you can work in academia and not see any of the behaviors detailed in the book, but some parents really might do crazy things to get their kids into an Ivy League school.) It was profiled in the New York Times recently; it focuses on low-income students. The article discusses the staggering endowments of some famous universities, which keep increasing tuition costs although they could easily offset those by dipping into the alumni donation pot.
While not everybody should go to college for free (wealthy alumni who have achieved their fortune through hard work might be reluctant to contribute if their dollars go to a student who could afford tuition costs anyway), and while endowments are also used to pay for, you would have guessed it, multi-year endowed professorships, I am often left wondering what the bulk of it is used for. According to the article, "Harvard's $35 billion endowment, Yale's $23 billion, Stanford’s $17 billion and Princeton’s $16 billion put them among the world’s richest institutions." I guess the real issue is that admission yields are relatively insensitive to the price tag (people apply to schools they have a remote chance of being able to afford), and colleges will charge what they can get away with. We recently had a tuition increase in graduate student credits at Lehigh (from $990 to $1,100 per credit; grad students on research assistantships typically register for nine credits a semester), and I am curious what the point is, since that just means that I have to ask funding agencies for more money (to fund my students) to do the same work, and that decreases Lehigh's ability to compete with other schools.
What I find most interesting is that the eye-popping endowment numbers mean that a lot of alumni donations do not go into financial aid or new buildings or new computers or even a new gym at all - they are simply invested. They sit in the ether of the online account of some financial institution. With all the talk about "what are endowments for?" and parents' perspective and the difficulty to pay for college, I find it curious that nobody has bothered to think about the small donors (the big donors are the ones with leverage enough to get their name on buildings) and point out the money is not being used, and might not be for another thirty or fifty years. Small donations make alumni offices happy because they can say a lot of people participate to the funding campaigns, but in terms of impact, donating $50 to an Ivy League college will have as much of an impact as stuffing it under a mattress. In contrast, local community colleges rarely have wealthy alumni (in Harvard's or Yale's eyes), but a small donation will make a much bigger difference. It is time alumni started answering "With an endowment like that, you really don't need my money" when phonathon volunteers call them asking for donations.