Yale University next month plans to announce a student aid plan that could rival Harvard’s initiative to ease costs for “middle-income'’ families.
The governing board for Yale, located in New Haven, Connecticut, met last week to discuss the enhanced program, university spokesman Tom Conroy said in a telephone interview yesterday. The change is occurring “irrespective of any other institution’s announcement,'’ he said. Conroy couldn’t supply details about the initiative, he said.
Harvard on Dec. 10 unveiled a plan that trims the annual cost of attending the Cambridge, Massachusetts, school by as much as half for families earning between $120,000 and $180,000. Other schools, responding to competition for the best students, will follow suit, said Terry Hartle, senior vice president at the Washington-based American Council on Education.
“Elite selective institutions are in fierce competition with each other for everything,'’ Hartle said in a telephone interview yesterday. “When one makes a bold step like Harvard, the others need to follow suit. I expect we will see similar action by a number of elite institutions within the year.'’
The California Institute of Technology in Pasadena yesterday said it will replace loans with grants for students whose families earn less than $60,000 a year. Pomona College in Claremont, California, said it will make an announcement on financial aid today.
Princeton First
Affordability programs trace their beginnings to 1998, when Princeton, in New Jersey, dropped loans from aid packages for needy students, said Tony Pals, information director for the National Association of Independent Colleges and Universities in Washington. Grant-only packages were expanded to all Princeton undergraduates in 2001.
“There was a lot of doubt that peer institutions and other schools would be able to follow through,'’ Pals said in a telephone interview yesterday. “Obviously, we’ve seen that they have been. Harvard’s move will further that trend.'’
Duke University in Durham, North Carolina, Williams College in Williamstown, Massachusetts, and Amherst College in Amherst, Massachusetts, are among more than 30 institutions who have already instituted programs such as the elimination of loans for some lower-income students, according to the nonprofit Project on Student Debt.
“With Harvard, if it is a straight-up competition thing, we can’t compete on an endowment level,'’ John Burness, Duke University’s senior vice president for public affairs and government relations, said in a telephone interview. “But we look at it and wonder, `Should we be tweaking it?”’
2004 Decision
Harvard started to address its costs systematically in 2004, when then-President Lawrence Summers decided to make attendance free for students from households with incomes of less than $40,000. That figure was raised to $60,000 last year.
President Drew Faust is expanding the program so that students from families earning $120,000 to $180,000 will pay 10 percent of income for tuition and fees. Those earning less than $120,000 will pay on a declining scale, with households at $60,000 attending for free. The new program is designed to focus on a “middle-income group,'’ she said.
The typical family earning $120,000 will pay about $12,000, compared with $19,000 now, according to data supplied by Harvard. The total cost of attending Harvard without aid this year is $45,620, the school has said.
At Princeton, the family contribution from households earning from $120,000 to $180,000 ranges from 5 percent to 20 percent of income, said spokeswoman Cass Cliatt. The average is about 16 percent, with families typically contributing $23,545 and receiving grants of $21,150, Cliatt said.
Payment Varies
The payment varies because Princeton considers an individual family’s assets, such as stocks and land, as well as income, while Harvard assumes an average net worth for each level of income, Cliatt said. Princeton excludes home equity from its considerations in computing aid, a step Harvard said on Dec. 10 it will also take next year.
“We are delighted that many of our peers are now addressing the challenge of these families in the more middle-income levels,'’ Princeton’s Cliatt.
Public universities and liberal arts colleges, could make their prices clearer and help students become less reliant on loans, said Matt Reed, a policy analyst with the nonprofit Project on Student Debt.
“Not everyone can do what Harvard did,'’ Reed said. “What we really hope is that all schools, across the spectrum of schools, will move in that direction.'’
In 2006, the nation’s median household income was $48,200, according the U.S. Census Bureau. Families with incomes exceeding $174,000 were in the top 5 percent of earners. bloomberg
« Why Borrowers May Not Benefit From Rate Cut | Jitters Spread to beginning Student-Loan Market »