It's worth pointing out that tuition is not necessarily the main source of income for a school, especially a well-established prestigious one. At my college, which is less than 75 years old, the number cited to me was that tuition covered only 40% of the college's cost of providing an education. Endownments, grants, foundations, and alumni donations accounts for a lot. I'm not super familiar with Rice, but I would imagine it has a decent endowment and access to other funding sources.

At the institutions, I was affiliated in fact it isn't. Most paychecks get covered by research grants. It is usually events, and perhaps minor constructions that get covered by tuition. The main input streams are from donations, fund raising and grants. For public ones, there is also the public/state expenditure, but I think that stream, can not support top institutions. Tuition can be pocket money for a lot of institutions.

Many have large endowments[1] which should cover much of their operating expenses (though I see Rice's 'measly' $5B only covers 40%[2]).

1: http://www.slate.com/articles/business/moneybox/2015/09/harv...

2: http://www.ricethresher.org/article/2016/10/5-billion-rices-...

Endowments.

Like most top universities Rice has a large endowment. It's upwards of $5 billion in their case. If we take a sub market interest rate of 5% that's $250 million a year. Their entire undergrad body is 4k. That's $62,500 per student per year on a conservative return rate. No top universities actually need tuition anymore, but even top universities are increasingly being run as businesses with growth in 'revenue' seen as a positive in and of itself, necessity aside.

And in this case, they'll likely see major returns on it anyhow. Come donation time, I expect those graduates who were able to find a better place in life thanks to a voluntarily free education are going to be quite quick to open their wallets especially knowing that those donations will in turn go to productively helping the next generation of graduates going through the same cycle.

Bingo. William Marsh Rice left his entire fortune (after a really fascinating story of his murder) to make the entity today known as Rice. Historically, tuition was free but limited to white only. As Wikipedia has it:

> The original charter of Rice Institute dictated that the university admit and educate, tuition-free, "the white inhabitants of Houston, and the state of Texas". In 1963, the governing board of Rice University filed a lawsuit to allow the university to modify its charter to admit students of all races and to charge tuition.

They also have massive amounts of real-estate and stock grants.

Roman Mars talked about this with another Ivy League where they offered free tuition. It ended up affecting a single digit amount of students.

Rice is not an Ivy League school. It is an academically great institution though!

Not technically but it's tuition surely is reaching those heights.

Where was that? Numbers from one usual suspect:

> Our program requires no contribution from Harvard families with annual incomes below $65,000. About 20% of our families have no parent contribution.

I'm sure they did the math. They aren't going to lose money.

:( Former student from Rice, and can definitely attest to this.

I received full a full tuition scholarship when I matriculated in 2008; the number of students in a similar situation was in the dozens.

Potential attendees are accepted based on SAT scores; class rank; extracurricular activities; etc.; and if the applicants make it through all of those bandpass filters, they're awarded full-tuition scholarships.

Yep. Common to other ivy league schools that also have 'free tuition'. I seem to remember Yale (or Harvard or both) making a similar announcement a few years ago.