College Corner: Harvard, CalTech slash family contribution for college

Click on the post for the full article in Yahoo finance today.

Recently private colleges such as Harvard have announced----just in time to comply with proposed legislation that would require that private colleges pay out at least 5% of their endowment funds each year for current student financial aid----that they would charge middle income families no more than 10 percent of their family income to go to Harvard.

Competing colleges have spun this as just a response to the coming regulations, but the fact remains that the current battle for the best of the college crop is being waged in the financial aid arena-----and with the GAP growing between what the FAFSA determines as the family contribution and the total costs of college for the family---and the crisis in the student loan program---see the Sallie Mae saga on your daily business channel-----college bound families have a reason to be a bit skittish about their ability to meet college costs for the next four years.

The news that some colleges have been very successful in "Hedge funds" over the past couple of years, and have achieved 15% returns is tempered by the recent news that complex strategies relying on leverage of just one trader have resulted in the implosion of a French Bank and a 7 billion dollar loss. One it seems is prudent to wonder whether in a world where our colleges, our government, our banks, our corporations, etc.....are all using the financial strategies of ENRON ala Fastow to maximize results, whether these entities know any more than that lone French bank trader.

What indeed would the world do if a dozen or so traders broke up with their girlfriends? Would the result be a world crisis?

You make the call.