Harvard May Lose $1.5M in Gov't Aid

Harvard may find itself near the top of yet another ranking of universities as soon as this fall—but for once, the University does not aspire to be heading the list.

Harvard could lose nearly $1.5 million in federal student-aid programs when the Higher Education Act is reauthorized by Congress, potentially making it one of the big losers in federal funding, according to a study in the June 4 edition of The Chronicle of Higher Education.

According to the study, if the bill currently being considered by the House Committee on Education and the Workforce were to become law, Harvard would rank 11th in greatest losses in Supplemental Educational Opportunity Grants (SEOGs) among American post-secondary institutions, as it faces $844,000 in annual cuts. Harvard could also see a projected decline of $629,000 annually in Perkins loans—losses that would be eclipsed only by those suffered by three other universities.

SEOGs and the Perkins Loan Program, along with the Work Study Program, are the elements of the Higher Education Act that comprise campus-based aid. Unlike many other scholarships, campus-based aid is given to institutions, rather than directly to individual students, said Director of Financial Aid Sally C. Donahue. The institution then chooses how to allocate those funds to students, within the context of federal guidelines.

Donahue said Harvard would feel the impact in the loss of such funds, despite the relatively large amount of total financial aid awarded. In 2002-2003, Harvard gave students $115 million in total federal aid and an additional $171 million in institutional support, Donahue said.

“We can’t just throw money in from somewhere else, so a change in the law would entail sacrifice at some level,” she said. “There might be a slight increase in the self-help level of low-income students.”

But Donahue said the potential loss in funding would not alter Harvard’s commitment to need-blind admissions.

“We’re very fortunate here at Harvard in that we have a very generous alumni population that believes in our ability to continue to meet the full need of all of our students,” Donahue said.

According to Harvard Director of Federal Relations Suzanne L. Day, the Higher Education Act needs to be reauthorized every five to six years under congressional statute and is scheduled to expire on October 1. Day said the law will likely not be renewed this year because of a backlogged legislative agenda, but that Congress will almost certainly pass an appropriations provision extending the current financial aid levels until the Higher Education Act is renewed.

Under current law, campus-based aid is awarded according to two criteria, including the demographics of the student body and a base guarantee that ensures that institutions will receive a certain minimum percentage of campus-based aid funding. That minimum is set when the institution first applies to receive federal funding.

But two prominent members of the House Committee on Education and the Workforce—Committee Chair Rep. John Boehner, R-Ohio, and Higher Education Subcommittee Chair Rep. Howard P. “Buck” McKeon, R-Calif.—have introduced H.R. 4283 to the full committee for deliberation. For the first time since the law’s inception in 1965, the bill proposes the elimination of the base guarantee.

Day said such a move would likely be supported by the Bush administration and others that believe that the base guarantee locks the government into giving institutions aid money based on past needs, rather than based upon present needs.

Donahue said Harvard would lose out under such a change because it has received money under the Higher Education Act since the 1970s and thus has a base guarantee that allows Harvard to obtain a disproportionately large level of funding.

Day said some are concerned that without the base guarantee, the funding accorded to schools will be too volatile with yearly demographic shifts in the student body.

But Day added that Senate leaders have not publicly endorsed such a switch, which could mean that the base guarantee might not be eliminated.

Additionally, Sen. Edward M. Kennedy ’54-’56, D-Mass., the ranking member of the Senate Health, Education, Labor and Pensions Committee, and Sen. Judd Gregg, R-NH, the committee chair, both oppose redistributing federal aid, said Kennedy spokesperson Jim Manley.

“We try to advise everyone on campus that these proposals are potential options. There’s a long way to go before a final bill is passed,” Day said.

Day added that the current House proposal would have a 10-year phase-out of the base guarantee so that families could adjust to the new financial expectations.

Donahue said she did not think that reorganizing the distribution of funds would adequately address the problems facing low-income students.

“Just redistributing money is something in my mind that is probably a band-aid approach to a national crisis for low-income students,” Donahue said. “What I think would really make sense is to increase the money going to the federal aid programs.”

Donahue added, “There is an increasing relative need of low-income students for financial aid to go to college and stay in college, especially with the rising cost of tuition and inflation.”

—Staff writer Alan J. Tabak can be reached at tabak@fas.harvard.edu.