DOCUMENT RESUME ED 067 012 HE 003 310 TITLE The Yale Tuition Postponement Seminar. INSTITUTION Yale Univ., New Haven, Conn. PUB DATE [72] NOTE 175p.; Proceedings of the seminar on tuition postponement, Yale University (2nd, November 22-23, 1971) EDRS PRICE MF-$0.65 HC-$6.58 DESCRIPTORS *Educational Finance; Financial Support; *Higher Education; Scholarship Loans; *Student Costs; *Student Loan Programs; *Tuition ABSTRACT The quality of American higher education is being seriously threatened by economic pressures that are unlikely to be relieved in the near future. As undesirable as it may be, it appears that more and more of the costs of education will have to be borne by the college and university students. The Yale University Tuition Postponement Option Plan was created to help relieve both the student and the university of some of their financial problems. The central characteristic of the Yale plan is that it links the student's educational costs to his ability to pay for that education over a working career. To the extent that the burden of repayments varies with income, the Plan relieves the student borrower of the necessity to alter his work or study plans in favor of remunerative careers. The proceedings of the second seminar on the Plan are presented in this document to share with other institutions Yale's work in the development of this kind of student financing.(Author/HS) (Ni tsa THE YALE TUITION POSTPONEMENT SEMINAR U S OEPARTMENTOF HEALTH EOUCATION& THIS OFFICE OF WELFARE DOCUMENTEOUCATION DUCED HAS BEEN EXACTLY AS REPRO THE PERSONOR RECEIVED INATING IT FROM POINTSORGANIZATION OF ORIG IONS STATED VIEW OR DO NOT OPIN REPRESENT CATION OFFICIAL NECESSARILY POSITION OROFFICE OFEDU POLICY '17; ry ttx ETA NOVEMBER 22-23, 1971 SECOND TUITION POSTPONEMENT SEMINAR Sponsored by Yale University in New Haven, Connecticut on November 22 and 23, 1971 TUITION POSTPONEMENT OFFICE 451 College Street New Haven, Connecticut 06520 TABLE OF CONTENTS Preface i Words of Welcome 1 Introduction and Background 3 Economic Considerations in Tuition Postponement 11 Panel on Economic Research 29 Panel on Finances 69 Contingent Repayment Plan - Yale Graduate School 87 The Duke Plan 101 Alternative Approaches to TPO 109 Legal Problems 145 Attendees 171 Postscript 175 Appendix I 176 Blank pages intentionally appear instead of pp. 10, 28, 100, 108, 144,170. 3 PREFACE The quality of American higher education is being seriously threat- ened by economic pressures that are unlikely to be relieved in the near term. As undesirable as it may be, it appears that more and more of the costs of education will have to be borne by the college and univer- sity students who, along with society generally, are the beneficiaries of that education. The Yale University Tuition Postponement Option Plan was created to help relieve both the student and the University of some of their respec- tive financial problems. The central characteristic of the Yale Plan is that it links the student's educational costs to his ability topay for that education over a working career. To the extent that the burden of repayments varies with income, the Plan relieves the student borrower of the necessity to alter his work or study plans in favor of remunera- tive careers. The intention to initiate this problem was first announced by Yale President Kingman Brewster, Jr. on February 6, 1971. Sensing a strong interest in the Plan, Yale committed itself to give full and continuing publicity to the study which had gone into its birth.With this commit- ment, the first Tuition Postponement Seminar was held on April 5-6, 1971. The proceedings of this second seminar, held at Yale on November 27-28, 1971, are presented to share with other institutions Yale's work in the development of this kind of student financing. The analysis and findings presented in the April seminar have been updated to show recent developments in educational lending, including the actual results of the first year of Tuition Postponement at Yale. While one of the early proponents of new and expanded form of educational financing, Yale does not pretend to have the ideal method for all schools. Tuition Postponement is an experiment in which Yale hopes to learn, along with others, how to deal effectively with some of the serious problems that face higher education today. 4 WORDS OF WELCOME Albert W. Buesking Associate Treasurer for Financial Management and Comptroller Yale University Charles H. Taylor, Jr. Provost and Acting President Yale University (Mr. Buesking) Good morning. I want to welcome you to our two day seminar. The auditorium is large, but others had higher educational prior:s.ties, namely, student activities. You will have to bear with u: en the size. If you have difficulty hearing, we would ask that you move forward. This is the second of two seminars at Yale. We had one in the spring when we weren't sure exactly where we were going, but we shared what informa- tion we did have on the subject of deferred tuition. We will spend the next two days listening to people who have had intimate participation in the thing, as well as those who did not, and try to conduct a series of panels, Our work has been broken into four parts: economic, financial, legal, and educational research. We have organized in that fashion for these panels. The people on the panels are those who have had heavy participation in the study and development of the plan at Yale as well as elsewhere. We would like to open our session this morning by having Mr, Charles Taylor, the Provost and Acting President, speak with us briefly. President Brewster is on sabbatical leave in London, and will return in January, Charlie has had the joint responsibility of both the Provost's office as well as the President's office this fall. (Mr, Charles Taylor) Well, that is something of an exaggeration. At least I have had essential help in the Provost's Office from my associate, George Langdon, who has acted as Provost as much as I have acted as President in Kingman Brewster's absence. I am here simply to welcome you, and to welcome you on behalf of Presi- dent Brewster, because the plan that you are here to discuss is one in which he has had a long interest dating back over many years, the idea of an inc:-,me contingent repayment plan in relation to the needs of higher education- I should also emphasize that the plan now in operation here would simply not have happened without the energetic support of Yale's trustees and their willingness to go forward, even though we were finally unable to do so as a part of a larger group. Nevertheless, we continue to be deeply interested in pursuing the develop- ment of the idea and encouraging others to experiment with it, either in models 1 S like our own, or perhaps, not exactly like our own, as each institution's circumstances are particular. I know that I speak for President Brewster when I express our appre- ciation of your interest in the subject, and your willingness to come here to share our experience. We do not pretend that the specific version of the plan which we have in operation here is the only way to do it. Exactly how to design a similar plan and what choices to make in relation to particular questions will differ for other institutions with different populations and different situations. We do know, from a national point of view, that in the long run an experiment by one or two institutions alone may not be a convincing demon- stration. We were disappointed that it was impossible for a larger group to go forward in the present year. We hope that a variety of programs will be offered next year. Unless a considerable number of institutions move along in directions that are analogous to this one, the chances for national success of the plan over the longer run are limited. The national government is in the best position to invest in such a plan in a reasonable way, spread over the entire college population. The prospect of interesting the federal government in doing that depends very much on a greater variety of institutions having shown the potential of the plan than is presently the case. So we are very grateful for your interest, just as we do think we already have some results of our experiment which are worth sharing with you, including clear evidence of the acceptability of the basic idea by students and their families. I will turn the meeting back to Mr. Buesking. 2 INTRODUCTION AND BACKGROUND Albert W. Buesking Ya'..o University (Mr. Buesking) Thank you, Charlie. I would like to mention a few logistical points. You all should have a registration package. It should contain an agenda, a copy of the Yale plan, which you may want to refer to at a later point in time, and the contract. There is a pamphlet which is a layman's description of the plan. There is a Question and Answer form, a pamphlet like a social security question and answer brochure; and there is a map of Yale to help you get around the campus. There is also a reprint of Jim Tobin's article about the economic basis of the plan, as well as an excellent bibliography listing everything, of which we have any knowledge, written on the subject. I would like to spend some time with you at the outset discussing a little background of Yale's plan and how we are proceeding.