<p>... maybe it was just the abject greed that got to them. I wonder if they'll sustain the BILLION dollar endowment they've held onto for so long.</p>
<p>Don't worry, they'll probably just raise tuition, room and board at HLS, HBS and KSG to make up for it.</p>
<p>What does "no loans" really mean? Does it mean that Stafford loans are still available (unsubsidized, I assume) to the student but that no loans of any kind are included in the FA award? Many families take out PLUS loans to cover the family contribution part, and could still do that even with this new development.</p>
<p>With one 'child' in his last semester and a h.s. junior starting to look, this news and curmudgeon's comments point out the need to keep reading, reading about the topic. Things change fast in the college admissions world. A strategy that worked 4 years ago may not produce similar results today. Keeps it interesting.</p>
<p>I've read that article 4 times now and each time I get a greater feeling that we on this board have a little something to do with this. I really don't know of any other place that has been more vocal about the difficulties families from $60-180K have financing a elite college education. And we KNOW they monitor this site, don't we? LOL. </p>
<p>After D made her decision to turn down the most elite of her colleges, I wrote long e-mails to the the FA offices of 2 schools. Both e-mails were highly critical , highly specific, and both offered an opportunity for further discussion to address the issues raised. I received no response. </p>
<p>It may be irrational, but I like to think that someone in those offices remembers my e-mails after reading what Harvard has done. </p>
<p>It may be equally irrational, but I like to think our discussions here played a role in Harvard's decision and the decisions to follow their lead. Give yourselves a hand. ;)</p>
<p>I applaud Harvard for making a statement. Obviously a few other schools will be able to follow their lead. But where does that leave the 99.999999% of seniors who aren't going to get into Harvard or Princeton...some schools might only be able to increase FA by cutting into facilities or faculty salaries. Oh, well, too late for my junior...I'm trying to find a good SAT camp for my younger ones this summer so they can go to H. </p>
<p>And thank you Curmudgeon and all the CC parents who have been activists on this matter!</p>
<p>10% of AGI? Cool. We pay that for high school tuition. I am very hopeful that this will filter down to many more schools. If schools are smart, they'll plaster a blinking "10% of AGI" banner on the top of their webpages.</p>
<p>I think what Harvard is doing is great, even though I suspect some loopholes and exceptions to the 10% rule. However: Harvard has about 6800 undergraduates, a drop in the bucket when you consider the millions of students in college today. It accepts less than 10 percent of its applicants, so the chance of actually getting to benefit from this policy is pretty small. It has a humongous endowment, unlike the vast majority of schools. Most colleges couldn't offer what Harvard is offering even if they wanted to, so most students won't see any change in their financial aid.</p>
<p>Some schools promise to meet the financial aid packages of their rivals. When a kid who is accepted to Brown and Harvard tells Brown that his lawyer dad makes $180,000 a year and so should only pay $18,000 instead of $50,000, I wonder whether Brown will stick to its policy of matching Harvard's package?</p>
<p>sly, I have a question. If the lawyer's son in your post (#47) were to be applying to H with the Common App, would he now answer YES to the following question: Are you applying for need-based aid? </p>
<p>I am assuming, before yesterday's announcement, he would have answered NO.</p>
<p>Folks, don't be so literal. I don't think that all that many folks are going to actually see that "up to 10%" of AGI. There will be some W-2 wage-earners with pensions and home equity only but I know I wouldn't see it.</p>
<p>A ranch is not a home and the equity is available (counted) even if the ranch is your homestead and can't be effectively pledged (although fafsa already excludes), business deductions for depreciation are still added back in, losses on a business are still disallowed, a self-employed practice is still a saleable asset in their highly imaginative world, property investments not held in a retirement account are still not "pensions" (even if you have no other retirement plan available). But for some , this reform may well be their ticket and I applaud Harvard's effort. Just wouldn't help me, but we're in a good place so it's all good. </p>
<p>Maybe self-employed folks and farm/ranch owners will be next for the reforms.</p>
<p>Oh, I agree that we can't be wedded to a 10% AGI. But it's still a remarkable change of heart on viewing what constitutes the middle class. Curmudgeon, I think you had more FA obstales than most, if you got screwed on the ranch not being a home. Don't agree about the self-employed practice not being a saleable asset, though. Usually it is. Of course there's that small problem of selling it to pay for your kid's college & then having no income.....The whole FAFSA world is full of loopholes & illogical rules. </p>
<p>Just wondering: Is disability pay considered reportable income on the FAFSA? How about retirement pay?</p>
<p>This is a great initiative for middle-class families. I do wonder if it's designed, at least in part, to stem the recent -- successful -- efforts by schools like Wash U, Vanderbilt, and Emory to woo top, middle-income Ivy admits with massive merit aid packages.</p>
<p>HERE'S THE ARTICLE IN TODAY'S CHRONICLE OF HIGHER EDUCATION
from Sherbear</p>
<p>Harvard U. Announces More Financial Aid for Middle-Income Families</p>
<p>By ERIC HOOVER</p>
<p>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.</p>
<p>The decision reflects the growing concern that all but the wealthiest families need more help paying for college.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>"We're trying to reconfigure our whole approach to what affordability and access means," said Drew Gilpin Faust, Harvard's president.</p>
<p>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.</p>
<p>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.</p>
<p>Weighing the Effects</p>
<p>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."</p>
<p>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?</p>
<p>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."</p>
<p>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.</p>
<p>On Monday, several admissions professionals expressed mixed feelings about Harvard's announcement.</p>
<p>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."</p>
<p>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.</p>
<p>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."</p>
<p>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."</p>
<p>Absolutely, wjb. And not just those you mention. State schools & dozens of others. D's h.s. has lately had girls skipping the ivy & taking merit $ elsewhere. While there are many wealthy families at the school, I'm certain that many middle class earners just had enough & couldn't justify the crazy expense & impact on both retirement and college options for siblings.</p>
<p>Like so many things in higher ed, I fear that there is less here than meets the eye. Look at the choice of words in their own press release:
[quote]
The “Zero to 10 Percent Standard”: Harvard’s new financial aid policy dramatically reduces the amount families with incomes below $180,000 will be expected to pay. Families with incomes above $120,000 and below $180,000 and with assets typical for these income levels will be asked to pay 10 percent of their incomes. For those with incomes below $120,000, the family contribution percentage will decline steadily from 10 percent, reaching zero for those with incomes at $60,000 and below. For example, a typical family making $120,000 will be asked to pay approximately $12,000 for a child to attend Harvard College, compared with more than $19,000 under existing student aid policies. For a typical family with $180,000 of income, the payment would be approximately $18,000, compared with more than $30,000 today.
[/quote]
</p>
<p>"10 percent of their incomes." Gross ? Adjusted gross? we don't know.</p>
<p>"For a typical family with $180,000 of income,.." What does "typical" mean? If the quote immediately above were true, why not say "any family.."? Apparently there is more to the story.</p>
<p>Please don't misunderstand me. I think any move to help a broader range of folks pay is a step in the right direction. I do think, though, that wjb is right - this is both a competitive reaction to merit awards elsewhere and an effort to one-up Princeton and Yale, among others.</p>
<p>It is curious that these same colleges were forced, under an antitrust agreement in 1992, if I recall correctly, to stop colluding on financial aid offers. Yet they were in lock step with each other until two years ago, when Pton fired the first shot.</p>
<p>I do fear that we will see a good deal of further stratification amon leading universities. Indeed, that may be a key goal of such changes. There are only a few universities and LACs that have the financial resources to make such a commitment. Schools like Brown, Wash U, U Chicago and others do not have the endowment to make such a move, so there is a high risk that we will see a top tier of "affordable" elite colleges that skim the best of the best. The merely good of the best go to the next tier. and so forth. </p>
<p>These changes may have an interesting impact on state Universities. In my day, there was a broad range of students at state Universities, with a good number of nationally competitive academic stars (to complement the sports teams, I think). Today, they have fewer star students, as these have been skimmed off by the elites. (look at the relative lack of success on the part of state U in winning elite scholarships like Rhodes, Marshall and such, for one example). With efforts like this, they may well have even fewer, as it become less expensive to attend Harvard or Yale than U. Maryland - a no brainer. This may be great for the individual student, but not so great for the rest of the students left behind at state U.</p>
<p>Finally, I predict another sharp tuition rise for those above the 180K threshold...</p>
<p>Will this cause a stampede of prospective students?
Will admission numbers drop even further making it even more elite school?</p>
<p>Harvard economics professor Greg Mankiw's take on this:</p>
<p>Greg</a> Mankiw's Blog: Moving toward Perfect Price Discrimination</p>
<p>
[quote]
A year ago on this blog, I let readers in on Harvard's secret plan:</p>
<pre><code>In the future, Harvard will cost $1 billion a year, and only Bill Gates's children will pay full price. When anyone else walks through the door, the message will be "Special price, just for you."
</code></pre>
<p>In today's Crimson, we can see the plan being carried out: New Aid Plan Targets More Affluent Families.
[/quote]
</p>
<p>From the Chronicle: "That boost should allow Harvard to . . . raise the academic profile of its entering classes. "</p>
<p>Gosh, I didn't know that was a problem! But I do think this is a really good thing that Harvard is doing, whatever the motive. Sure, there will be fine print to read, but what a brilliantly simple formula. It will get parents' attention, and make it easy to envision what impact Harvard would have on family finances. It should really help them with their athletic recruiting efforts - that decision between DI scholarship schools and Harvard will become suddenly much easier for many athletes.</p>
<p>Any guesses on what Yale is likely to do in response?</p>
<p>great job by H ....</p>
<p>If they have implemented this policy last year my kid should not applied to other colleges.</p>
<p>I bet H selctivity will drop way below then any other school maybe in the range of 8.7-9% insead of current 9.5+ (whatever it maybe)</p>
<p>Well, I'm still left out in the cold since they stop the 10% rule for agi over $180k. Why not just keep it going? It would make it much more likely D would go to H rather than other schools that are giving her significant merit. An income of $181K, after all, is not that of a hedge fund tycoon. Net from $181K is about $120K which disappears very quickly after saving for retirement, mortgage, living, and $50K for Ivy tuition.</p>
<p>
[quote]
Yet they were in lock step with each other until two years ago, when Pton fired the first shot.
[/quote]
</p>
<p>Princeton eliminated consideration of home equity as an asset earlier than that. That announcement really caught my notice back when it was made. Princeton has also practiced an admirable degree of transparency in posting its financial aid early estimator </p>
<p>Princeton</a> University | Financial Aid Early Estimator </p>
<p>which concretely shows what other issues (that is, what kinds of assets) make a difference in financial aid awards at various levels of income.</p>