Under its former president, ex-Treasury Secretary Lawrence H. Summers, Harvard launched a new financial aid program that, today, pays the full tuition of college students whose families earn less than $60,000 a year. Partly as a consequence of this program, scholarships and awards to students nearly doubled between 2001 and 2007, from $156 million to $302 million.
Harvard is, traditionally, very conservative in its use of the endowment, but as returns grow and increasing pressure is placed on the university to put those funds to work, that may yet change.
"Harvard has changed its financial aid policies, but some people will say, 'Anybody should be able to go to Harvard for free,'" Selingo said. "Needy students there still have grants and other aid beyond Harvard. They're not giving a free ride to every single needy student there."
Harvard's money managers are also frequent targets of criticism from alumni and other observers who say investors for a private, nonprofit organization should not be paid such large salaries. For the fiscal year ending June 2005, Jack Meyer, who was, at the time, HMC's chief, earned $6 million, while the Top 2 earners received $18 million and $16.9 million.
El-Erian was compensated $2.3 million for work between his appointment in October 2005 through June 30, 2006. The highest earner during fiscal year 2006 earned $2.9 million, according to Harvard.
These salaries are, nonetheless, below-market payouts for fund managers. El-Erian countered the criticism, saying that if Harvard were to manage the money externally, it would cost twice as much, and if it wants to do it more cheaply internally, it must be willing to pay a reasonable amount.
"It costs a lot less to manage a dollar internally than it does to manage a dollar externally," said El-Erian. "It's not a question as to whether we would pay, it's a question as to whether we would pay twice as much."