Alumni donations subsidize the cost of research (which has obvious benefits) and also serves to keep tuition levels "low". I know low is a difficult word to associate with tuition but without development money coming in, the money would need to be raised elsewhere.
It's almost like when investing in startups. Not every graduate is going to strike it rich but the more graduates there are, the more likely that more of them will (assuming your standards remain the same). So you can keep your tuition low enough to attract enough people and hope that the lost tuition revenue will be made up for by alumni donations by those who do well with their degree.
Trying to apply "business model A" to "business B", seeing that it doesn't work, and then saying "business model A" is a dumb idea isn't a worthwhile approach to looking at something. It's actually a pretty stupid way to look at things. I generally hate when people try to take something relatively complicated and try to dumb it down. The wrinkles and complications are what makes the problem. If every problem was summed up into one digestible solution, there wouldn't be any unsolved problems.
It's almost like when investing in startups. Not every graduate is going to strike it rich but the more graduates there are, the more likely that more of them will (assuming your standards remain the same). So you can keep your tuition low enough to attract enough people and hope that the lost tuition revenue will be made up for by alumni donations by those who do well with their degree.
Trying to apply "business model A" to "business B", seeing that it doesn't work, and then saying "business model A" is a dumb idea isn't a worthwhile approach to looking at something. It's actually a pretty stupid way to look at things. I generally hate when people try to take something relatively complicated and try to dumb it down. The wrinkles and complications are what makes the problem. If every problem was summed up into one digestible solution, there wouldn't be any unsolved problems.