Graduate stipends and tuition - a bold move by Princeton

I will write more about actual physics soon, but it has been a very busy period with other commitments.  In the meantime....

Princeton did something remarkable this week.  They raised their graduate stipends across the board to $40K/10 months, roughly a 25% increase.  That's already quite impressive, but the really wild change is less readily apparent.

It's important to understand how graduate students are paid on research grants in the US.  Grants pay for the stipend + indirect costs ("overhead") on the stipend + tuition remission.  "Tuition remission" is some effective graduate tuition rate.  Indirect costs ("overhead") go to the university and are meant to pay for things like keeping the lights on and the buildings air conditioned and the cost of running the office that does the financial reporting, etc.  Indirect cost rates are set by negotiations between the university and the US government.  Rice's indirect cost rate right now for on-campus research is 56.5%.   

Tuition is trickier.  These are funds meant to cover the university's cost of graduate education.  Different universities do different things with that money they take in on grants for tuition remission - usually it covers things like support for first-year grad students, part of the TA salary pool, etc.  In STEM doctoral programs in the US, students do not pay tuition out of pocket.  It is either waived by the university (for incoming students supported on fellowship or TA, for example) or paid through research grants for students supported by external funding.  (Note that this is money that doctoral students never actually see - that's why it's dumb that every few years (here is the 2017 example) someone in Congress tries to argue it should be taxed.)  It's unclear what a true fair value is for doctoral tuition; grad students are much more independent than undergrads, and when they are doing purely thesis research it's not clear how to think about their educational costs.  Rice has a "tuition remission rate" of 38.5%, rather than a fixed dollar amount, with the idea that this strikes a balance between beginning students taking a lot of courses and later students working only on their thesis.   That means that if our graduate stipend is $S, then on a federal grant the total cost of a doctoral student at Rice is \( (1.565 + 0.385)\times\) $S.   

Anyway, along with raising stipends drastically, Princeton also cut their graduate tuition rate to zero (!).  That means that a graduate student at Princeton will cost less on a grant now than before, even though they have jumped up stipends by 25%.  

This is pretty radical.  The university is going to take in many millions of dollars less on grants to do this, but given their roughly $38B endowment, they can afford it.  Even if they took a $40K hit per grad student per year, the $100M of "lost" income would only be 5% of their operating budget.  I assume that this also plays well against the criticism that elite institutions don't spend enough of their resources.  No idea what the implication is for, e.g., their professional masters degrees in engineering, where they surely charge students (or their employers) substantial graduate tuition.

The long-term effect of this will be interesting and complicated.  I would think that STEM faculty at other comparably wealthy universities will turn to their administrations and ask why students are so much cheaper on grants for Princeton faculty.  This zero doctoral tuition approach would require wholesale restructuring of financial models at most US universities.

Update:  President Eisgruber has publicly announced the tuition change here in his state-of-the-university address.