Still, the average price students pay to attend Harvard is higher than at Rice, but Harvard officials said that the product Harvard provides cost more than what students pay-regardless how high the price.

"An analysis a few years ago indicated that even before financial aid is taken into account, the tuition covers only about half the cost of an education here-the rest is covered by annual giving and income from the endowment," said Harry R. Lewis '68, dean of the College.

Moreover, Harvard's endowment is deceptively large In fact, in an important sense Rice-and Princeton, Agnes Scott College, and Academy of the New Church-are wealthier than Harvard.

Harvard is 7th on a list of private institutions ranked by endowment assets per full-time student, according to last year's endowment study by the National Association of College and University Business Officers. This means Harvard-despite having the largest endowment in the U.S.-has less money to spend per student than a number of other institutions.

The other major reason Harvard's faculty and students won't immediately feel the impact of the 25.8 percent return the University earned on the endowment this year is that the payout formula is designed that way.

Harvard uses two principles to determine each year's payout. It aims to keep inflation from eroding the endowment while providing a reliable and, more importantly, steady stream of income for operations.

In fiscal year'96 these principles translated into a 3.65 percent payout, one of the lowest during the past 25 years, although Harvard earned a 26 percent return, its best performance since 1986.

But 'Harvard could-according to a number of financial executives inside and outside the University-pay out more and still maintain the purchasing power of the endowment in perpetuity, if officials wanted to. In fact, most financial executives said that Harvard could pay out as much as 5 percent a year and still protect its funds from inflation.

All that said, Harvard's major goal for its endowment is to preserve the quality and standing of the University into the future.

"The endowment is designed to preserve what Harvard offers to students forever," Lewis said. "We never want to face the day when the fundamentals of a Harvard education-including its accessibility to everyone regardless of their financial circumstances-would have to be compromised.