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Harvard Tuition at a Bargain-Basement Price

December 12, 2007

Harvard_shield(Judith Margolin is vice president for planning and evaluation at the Foundation Center and the author of The Individual’s Guide to Grants and Financing a College Education. This is her first post for PhilanTopic.)

I was delighted to hear of Harvard's recent decision to make financial aid much more broadly available than it has in the past. Clearly the prospect of increased congressional scrutiny of large private endowments and the mere fact of Harvard's $35 billion (!!!) endowment are factors in its decision. To put it bluntly, Harvard is taking measures to do away with the "two-tier situation" that has long held sway at this most elite of our institutions of higher learning. Up until now the clearly needy student (as defined by the "expected family contribution" deriving from the FASFA form) received a package of grants and low-interest loans that made Harvard among the more affordable choices among Ivy League and other elite institutions. At the same time, students from wealthy families had no worries about their parents writing that $45,000+ check. But for those many students caught in the middle -- defined by Harvard as those with household incomes between $120,000 and $180,000 -- there was little recourse except family sacrifice and loans and more loans. True, Harvard and other elite colleges and universities (with Princeton taking the lead) had taken steps in recent years to address the situation by eliminating or drastically reducing the loan components of financial aid packages for middle class students. But this latest announcement represents a truly dramatic change.

According to the New York Times, a student whose family earns $120,000 will pay only $12,000 to go to Harvard, putting Harvard very much in line, tuition-wise, with most state universities. That's astounding. As the author of several books on grants for individuals and a middle-class parent who actually sent a kid to Harvard in the 1990s (thereby incurring significant debt), an announcement such as this one has long been a dream of mine. And it makes perfect sense when you think about it. Why should access to the best education our country has to offer be made available only to the very poor and the very rich? An even more compelling question is, Why should the cost of a college education and the potential impact on ones family be the most significant factor in a student's decision about which college to apply to?

When my own offspring were attending expensive colleges, one not often remarked upon disparity that was mentioned in the New York Times article was the fact that kids from wealthy families had far more options when it came to deciding how to spend their school and summer vacations. They could travel to exotic locales or take an unpaid internship at a prestigious law or investment firm or volunteer to help feed the hungry in Africa -- whatever appealed to them. The rest of the student body, in contrast, needed to find the highest-paying jobs they could so as to help mom and dad with the often crushing burden of tuition and loan payments. What was truly unfair about this situation was that those very same prestigious internships, fascinating travel experiences, and volunteer activities helped fatten the resumes of the rich kids and led to the best job offers upon graduation. One additional factor that served to narrow options for middle-class kids was the pressure to choose the highest-paying job as opposed to the most interesting one so they could begin paying off the loans that they and their families had incurred.

For all those reasons, I’d like to take this opportunity to applaud this step on Harvard's part. That said, I wonder if the attendant publicity won’t result in even more applications being submitted to this most selective of American universities. And I can’t help but wonder what the impact will be on other institutions of higher learning. Obviously, no one else has an endowment the size of Harvard's. But competition is a healthy thing in my view, and pressure to come up with more creative ways to ensure that everybody -- everybody -- has the same opportunity to attend the college of their choice can only be a good thing.

-- Judi Margolin

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Posted by Mitch Nauffts  |   December 17, 2007 at 09:06 PM

Thanks for the post, Judi. As a father of two kids in high school, I think constantly about skyrocketing college tuition costs. Thought you, and our other readers, would be interested to learn that the University of Pennsylvania today joined Harvard and Swarthmore College in in announcing loan-free financial aid packages aimed at middle- and upper-middle-class students. According to the Associated Press, Penn (like Harvard an Ivy League school) "will phase in the changes starting in September by eliminating loans for students with family incomes under $100,000. At the same time, it will reduce need-based loans by 10 percent for students whose families make more than $100,000." Yale University is expected to follow suit in January. The full AP story can be found at: http://news.yahoo.com/s/ap/20071217/ap_on_re_us/penn_financial_aid

Posted by Sean Drew  |   January 30, 2008 at 08:45 PM

I enjoyed your post, but I would like to make a couple points somewhat contrary to your conclusions.

First, while Harvard's plan to soften the financial burden for it's middle-class student population is indeed wonderful news, this really cannot be expected to herald a solution to the "two-tier situation" of only the very poor and rich having affordable college costs. Only Harvard's ample endowment offers the flexibility to offer such a substantial subsidy to a population of students who, although financially stressed, can in fact afford the tuition. Your question, "Why should the cost of a college education be the most significant factor in a student's decision about which college to apply to?" completely disregards the financial benefit that a degree from an elite university bestows. The prestige of a Harvard degree assures a substantially higher income and opportunities compared to your typical baccalaureate degree. Is it not intuitive that a student and family should be willing to incur a higher tuition cost for that future benefit? That is the free-market at work. Harvard has the resources to supercede this, but most private universities don't have coffers overflowing with gold to allow such a generous sliding scale for their tuition. Regarding your speculation about whether this will increase the applications to Harvard, basic economics would say undoubtably so. This would be a simple reflection of the fact that Harvard is now offering its tuition at a "below-market" rate, but this is not something that that majority of less well-heeled institutions would be able to copy.

Second, I was dismayed by your third paragraph lamenting "unfairness" that middle-income students were at a disadvantage to their wealthier classmates because they had less choice in their extracuricular activities, summer jobs and even job choices after school... God forbid anyone should need to choose a higher paying job over one that is "more interesting" to them due to financial considerations. You belabor the obvious; wealth affords one greater opportunities in life. It is not inherently unfair that a wealthy individual can pad their resume with interesting travel or volunteer work during school, or be choosy about where they work (if they decide to work at all) after college. That is simply the fruits of success, and those middle and low income students at Harvard are striving for those same rewards for their children. And I note that your discussion ignored the compararable "unfairness" to the lower-income students who, while already heavily subsidized on tuition, inherently lack the resources to take advantage of "unpaid internships" and "exotic travel" opportunities. Would you argue that Harvard should extend their largesse to perhaps pay them a stipend during their attendance to mitigate this inequity when compared to both your middle-income and wealthy students?

Posted by Brad   |   April 21, 2008 at 05:39 PM

that still does not abswer the question

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