After being subjected to the uncompelling arguments of those who think my videotaped lectures should be freely available, I thought I'd present my own wacky idea, backed up by an actual argument: that Harvard should stop charging tuition for undergraduates.
Strangely, this idea (which hit me back in '99, when I came back to Harvard, and which at least one Dean told me was unrealistic) does not seem so wacky today. Harvard has devoted significant new resources to financial aid over the last decade, so college is essentially free for families earning less than $60,000, as outlined here and here.
While some would view this in the mystical light of commitment to the educational mission, social good, etc., I'll be a bit more cynical and actually try to back up why this has been a good idea with an economic argument. More financial aid is just good business. Harvard's cost was limiting its access to the talent pool of graduating seniors; moreover, the resulting debt was at least a potential and probably real barrier to the future success of many graduates. Since Harvard's greatest asset (after its remarkably talented, and modest, faculty, and maybe also its endowment) is its reputation, losing top students because of cost or limiting their success through debt simply cannot be Harvard's optimal strategy. Increasing financial aid just makes good sense, especially given Harvard's resources -- it can take the short-term cost for the long-term good. (The fact that all this coincides with altruism is certainly fortunate, as naturally pretty much all the faculty really do have a mystical commitment to the educational mission, social good, etc.)
This argument, however, doesn't justify making Harvard free for all accepted, as I have proposed. In fact, one might think the other way -- that the rich should be soaked for as much as they can to help pay for the not-rich. My cynical but rational argument for a free Harvard undergraduate education for all is that, if tuition was free, but Harvard then encouraged people to donate what they thought their education was worth -- say, perhaps, a small percentage of their annual income for life -- in the long run, they'd more than make up the tuition loss with increased funding of the endowment (thanks to the power law that is the wealth distribution). This is not a tax, but it is based on the idea that your college education is related to your future earnings, and giving back a percentage of those earnings is an arguably fair way to pay for that education.
Harvard might not even have to wait for the long-term to get the benefit. Indeed, imagine Harvard's next fund-raising campaign beginning with the announcement that after the campaign, as long as their goals were met, Harvard would be free for all undergraduates! What PR! What kind of donations would that bring in immediately!
Longer term, I would suspect the benefit would be even more. The pay-what-you-think-is-fair approach has been tried in some restaurants (see the SAME cafe, or the One World Cafe), and many museums have no fee but "suggested donations" at least part of the time, so this approach is not entirely unprecedented. In Harvard's case, I think the mix of guilt, altruism, and competition would push wealthy alumni (and wealthy parents of students) to give much more. (So you see, I am soaking the rich -- I just think you should wait to soak people until after they are rich, and inspire them to give generously, rather than bill them for a tuition payment.)
There are all sorts of possible side-benefits. It could work out that by moving from a system of tuition to voluntary donations, there would be an immediate jump because the donations, as opposed to tuition, could be made with pre-tax instead of post-tax money. (Note: I am not a tax attorney...) Students not laden with debt may prove more entrepreneurial (which besides helping the economy might lead to bigger donations down the line), or perhaps might take on more public-service oriented employment.
I can see why this might not have been tried elsewhere -- there's a lot of up-front cost while waiting for future payoff. Even for Harvard, perhaps the risk of too many free-riders is too large, although I doubt it. Harvard could also label the plan an experiment, suggesting that after some time tuition would have to be re-instituted if donations didn't keep pace with projections, to limit the risk. Perhaps the biggest negative is if Harvard tried this unilaterally, it would be seen as an unfriendly neighbor to all the other colleges. Still, I can't help but wish this idea would be given a try. Perhaps it could change the way we talk about funding education in this country, moving increased resources to our education system. I'd like to see Harvard lead the way in this regard.