Flexing its financial muscles, Harvard University announced on Monday a plan to help more students from middle- and upper-middle-income families afford the $45,000 annual cost of studying at the institution, in Cambridge, Mass.
The decision reflects the growing concern that all but the wealthiest families need more help paying for college.
Under a new policy, Harvard will ask families that make up to $180,000 to pay no more than 10 percent of their annual income each year. So a family making $180,000, which now pays $30,000 per year, would pay $18,000. A family making $120,000, which now pays $19,000, would pay $12,000.
Parents with incomes below $120,000 would pay smaller percentages of their salaries, with the expected family contribution declining to zero for those making $60,000 or less.
Harvard also announced that it would eliminate loans from all financial-aid packages and stop considering home equity in calculating a family’s ability to pay, something some colleges have already stopped doing.
“We’re trying to reconfigure our whole approach to what affordability and access means,” said Drew Gilpin Faust, Harvard’s president.
With its $35-billion endowment, Harvard can afford to make moves that most of its competitors can only daydream about. The university plans to increase its spending on student aid to $120-million from $98-million annually to finance the new policy.
That boost should allow Harvard to accomplish two things at once: improve its accessibility to students from a wide range of economic backgrounds and raise the academic profile of its entering classes. In other words, the university can help itself with its own generosity.
Weighing the Effects
Though Harvard operates in rarefied air, its new policy may have far-reaching implications for academe. “It’s not just about Harvard,” one admissions dean said of Monday’s announcement. “It’s about a system of education.”
That system is defined by a widening endowment gap between a handful of superwealthy institutions and their many competitors. How will less wealthy rivals choose to compete with Harvard and other elite colleges, such as Princeton University, that recently have eliminated loans or enhanced their financial-aid programs for low- and middle-income families?
Ronald G. Ehrenberg, director of the Cornell Higher Education Research Institute, believes poorer private and public institutions are in a bind. “They do not have the resources to compete across the board in the financial-aid-package game with the richest privates,” Mr. Ehrenberg said in an e-mail message. “So they will have to make hard choices.”
Mr. Ehrenberg speculates that some colleges may try to compete for top students by putting more money into merit-aid awards. A decision to spend more on financial aid, though, would force colleges that rely heavily on their operating budgets to make cuts elsewhere.
On Monday, several admissions professionals expressed mixed feelings about Harvard’s announcement.
Robert J. Massa, vice president for enrollment management and college relations at Dickinson College, applauded Harvard’s intentions. “My only concern is that institutions like Harvard have the resources to act unilaterally,” Mr. Massa said. “I don’t begrudge them that. But what I would prefer is that they and other wealthy institutions take the lead nationally in helping all of us develop a system of needs analysis that better recognizes the decreased ability to pay at increased income levels.”
Harvard’s announcement won instant praise in Washington, where concern about rising tuition has led some lawmakers to consider proposals that would require universities to spend a greater percentage of their endowments or risk losing their tax-exempt status.
On Monday, Sen. Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, praised Harvard’s decision. “This is big news,” Mr. Grassley said in written statement. “This could inspire other expensive colleges to make tuition more affordable.”
The more affordable colleges are, the more rewarding experiences students will have, said William R. Fitzsimmons, Harvard’s dean of admissions and financial aid. About half of Harvard’s 6,600 undergraduate students receive need-based financial aid. Recently, the university found that many of them had passed up experiences, such as unpaid internships or study-abroad trips, because they needed to work in paying jobs. Mr. Fitzsimmons worried that there was an “upstairs-downstairs” dichotomy among students. “Half the population,” he said, “were having a diminished experience.”
