Schools Affirm Need-Based Financial Aid

Twenty-eight of the nation’s elite colleges and universities—including all the Ivy League schools except for Princeton and Harvard—announced an agreement last Friday to boost financial aid to their neediest students.

The wide-ranging new guidelines are an attempt to arrest a trend of giving aid to the most desirable students rather than those who need the money most.

So-called “merit aid” has made it harder for students from low- and middle-income families to attend college, since aid has not necessarily been focused on those who financially need it, according to financial aid officials.

Thus Friday’s agreement, signed largely by universities and colleges that admit students without regard to their ability to pay, will go a long way towards increasing socio-economic diversity at those colleges, the signers said.

The recommendations include:

• Institutions will take into account the higher cost of living in cities like New York and San Francisco.

• They will take into account the greater financial liabilities faced by parents who are not covered by formal retirement plans.

• They will only consider two guardians for children from separated or divorced families, instead of the traditional consideration of all four possible parents and step-parents.

The agreement also dealt with new issues that have cropped up recently in financial aid. The group recommended a consultant be hired to study how income gleaned from “day-trading” stocks should be included in need analysis.

The two abstaining Ivies both said that their decision not to sign was because the new agreement would lower financial aid awards for their students.

Princeton announced a new plan this year that goes far beyond last week’s agreement. Starting next year, all Princeton students will receive grants instead of loans, boosting financial aid awards by thousands of dollars per student.

In a similar vein, Harvard—although it was involved in the group’s discussions throughout—did not sign on to the final agreement because it differed from Harvard’s philosophy, according to University officials.

“We judged the proposed formula—which would reduce aid for many Harvard students—to be an inappropriate constraint on us. We, of course, support the objective of maximizing the role of need in financial aid,” University spokesperson Joe Wrinn said.

Harvard says it calculates aid more generously than the new agreement would necessarily offer.

For instance, under the new agreement, the universities agreed only to factor in home equity it exceeded 2.4 times the family’s income. Harvard does not factor in home equity at all when making financial aid decisions.

“We feel that’s a more reasonable way to decide family contributions,” said Sally C. Donahue, Harvard’s director of financial aid.

Harvard officials were also concerned that since some of the schools which signed the agreement offer merit aid or athletic scholarships, that placing a “cap” on need-based aid—a cap on top of which those other schools could still offer merit or athletic aid—would place Harvard, which does not provide merit or athletic scholarships, at a strategic disadvantage in the admissions process.

While Harvard may differ in some of the details, Donahue praised the agreement for possibly restoring some of the public’s trust in financial aid.

“It has been an effort that’s worthy of a lot of support,” she said. “We agree with the principles.”

Despite the new agreement, financial aid officers will still have wide discretion over the application of aid to students.

“It’s as much as an art as it is a science,” Donahue said.

—Staff writer Garrett M. Graff can be reached at ggraff@fas.harvard.edu.