Thursday, February 21, 2008
A financial aid war is breaking out among the nation's elite universities. More than three dozen schools have capped or eliminated loans, tuition or parental contributions for low-, middle- and in some cases upper-middle-income students. Most of them are private, ultra-selective schools with enormous endowments and a small percentage of poor students. Students who qualify for more aid might find these universities cheaper even than state schools - if they can get in. [ Costly Stanford tries for 'affordable' tag] The movement could help put a damper on skyrocketing college costs. But schools with smaller endowments and larger percentages of low-income students will be hard pressed to match the price cuts of the richest schools. Stanford jumped into the fray on Wednesday. For the 2008-09 academic year, most undergraduate students from families earning less than $60,000 a year and "typical assets for this income range" will pay only $4,500 for tuition and nothing for room and board. That's the amount Stanford expects students to contribute from their own earnings. (The very neediest will pay only $2,500.) Those from families earning $60,000 to $100,000 a year will pay $4,500 plus no more than $11,182 for room and board. About one-third of Stanford students come from families making less than $100,000 and many are already receiving substantial financial aid. Some higher-income families also will benefit because Stanford is eliminating loans from all financial aid packages and replacing them with grants from its endowment that don't have to be repaid. About three-fourths of Stanford students receive aid. Stanford's full freight for next year will be $47,212 including tuition, room and board. Mark Kantrowitz, publisher of Finaid.com, says Stanford will have one of the best financial aid deals, but not the best. Harvard and Yale also will eliminate loans for all students and cap the parental contribution as a percentage of income for families earning as much as $180,000 and $200,000, respectively. Harvard requires no contribution from low-income students and Yale requires only $2,500, according to Finaid.com. Kantrowitz predicts that most of the roughly 100 universities with endowments exceeding $1 billion will eliminate loans from financial aid packages for low-income students and perhaps some middle-income students as early as this year. "The momentum is growing," he says. James Boyle, president of College Parents of America, says the moves by Harvard, Stanford and others "will be a factor in every single school's decisions about how to price themselves next year and going forward." But it won't help everyone, at least not soon. "The schools where low- and middle-income students are going don't have these kinds of endowments," says Justin Draeger, a spokesman for the National Association of Student Financial Aid Administrators. The three largest university endowments are at Harvard ($35 billion), Yale ($22 billion) and Stanford ($17 billion). The percentage of low-income students receiving Pell grants at these schools in 2005-06 were 6 percent, 8 percent and 12 percent, respectively, according to Economicdiversity.org. By comparison, the far larger UC Berkeley has a $2.9 billion endowment, while 27 percent of its students received Pell grants. Susanna Castillo-Robson, UC Berkeley's associate vice chancellor for admissions and enrollment, couldn't say how her school will respond to the financial aid wars. But "we are working feverishly to keep our self-help down," she says. Self-help is the amount all students are expected to contribute to their education from a job or student loans. It's $8,000 per student at Berkeley and closer to $9,000 at other UC campuses, she says. It's separate from the parent contribution, which is based on family income and assets. "If things don't change, by 2011, we anticipate the (self-help requirement) would be over $11,000," she adds. To prevent that, "We are working on a whole host of fronts," she says. "We have tried to keep the cost of attendance down. We try to run this place efficiently. We are working at the state level to make sure that Cal grants and other grants remain available to our students. Of course we welcome any financial assistance we can from the private sector." She adds that the UC fee policy requires that one-third of the fee amount collected from students be returned to aid for needy students. Absent other revenue, there's a chance fees could increase to return more financial aid to the needy, she says. Draeger says some "schools without large endowments are trying to find creative ways to help low-income and middle-class students." One example is the University of Maryland Pathways program. "They're doing some things to address provisions in the federal (financial aid) regulations that penalize students who are working." The elite schools hope their new aid policies will encourage more low- and middle-income students to apply. But "this doesn't guarantee they will enroll more low-income students," says Robert Shireman, executive director of the Project on Student Debt. "They tend to use criteria that make it difficult for lower-income students to qualify. If you expect someone to have 10 (advanced placement) courses, been in the orchestra and traveled Europe, then you are going to have fewer low-income students who are able to meet those expectations in the first place. That is the next issue for these colleges."
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