$200M Pledge Drive Within Campaign Makes Increase Possible

While reducing the self-help component of financial aid will certainly win Harvard accolades from prospective and current students alike, the applause comes at a high price.

Dean of the Faculty Jeremy R. Knowles estimates the increase in financial aid will cost $9 million--nearly three times as much as what Stanford and Yale added to their aid budgets last year.

Even though it was prudent in waiting a year, the administration will have to do more than scrounge between couch cushions to make up the difference.

Simply put, the $2.1 billion Capital Campaign, driven by generous alumni, made so by an even more generous stock market, makes it possible.

A financial aid pledge drive of $200 million is the centerpiece. The University Development Office reports that with a year-and-a-half remaining in the Campaign they have raised $167 million for financial aid out of a $200 million goal, and Knowles predicts the financial aid drive will exceed its target.

Financial aid is generally one of the more successful fundraising areas because it is an easy sell to donors that there is a need. Moreover, alums are directly motivated by their own positive experiences to make Harvard an opportunity for others.

The $200 million will be set aside within the endowment, and invested by the University's fund managers at the Harvard Management Company (HMC).

As with the rest of the endowment, the Corporation, the University's chief governing board, will decide each year to spend a certain percentage of the fund.

The goal is to choose a payout percentage lower than the growth of the endowment, preventing erosion of the principal.

Currently the endowment payout is about 4 percent. Four percent of $200 million is $8 million.

Vincent J. Tompkins, assistant dean of the Faculty, says money from Knowles' budget, which has been growing, will close the gap.

Tompkins says no money will be diverted from other parts of the budget to pay for additional financial aid, which will now cost $53 million annually for undergraduates alone.

"It's a question of priorities," Tompkins said.

What is more, the current payout of 4 percent is low, well below its 20-year average rate.

In recent years, the burden of funding financial aid has increased on the College as federal support for aid has withered in half over the last 10 years.

At the same time, tuition has risen dramatically. Close to half of the undergraduate population at the College receive outright scholarships, and without the Campaign, it is doubtful the Faculty could have kept pace with rising tuition.

The role of the Campaign in allowing the University to undertake such a drastic initiative cannot be understated.

In pure cost, Knowles' announcement eclipses those of peer institutions that dominated the higher education press for the last year.

In a single day, Harvard seems to have leapt ahead from a straggler to a leader, a game of leapfrog made possible only by the University's unparalleled--and growing--wealth.