socioeconomic barriers to attending college. This time, the University
made three different improvements that totaled to a $22 million per
year increase in Harvard College’s financial aid budget. The headliner
was a vast increase in aid to middle and upper-middle class students.
But just as important are Harvard’s termination of loan-based aid and
the exclusion of home equity from aid calculations.
The new policy will limit annual tuition payments to no more
than 10 percent of income for families making between $120,000 and
$180,000 annually, reducing tuition payments for families in that
bracket by several thousand dollars per term. The University also
announced that it will increase financial support for graduate students
in order to make Harvard more competitive with its peer institutions, a
step that will no doubt increase the quality of undergraduate teaching
fellows while also making a graduate degree more affordable.
All in all, these new financial aid policies represent a huge
step forward. In past years, Harvard has pioneered one of the most
generous financial aid programs in the country via the Harvard
Financial Aid Initiative, which made attendance at the College free for
students whose families earned less than $40,000 (later raised to
$60,000). But with the full four-year cost of a Harvard education
approaching $200,000, many families in the upper-middle class struggle
to send their children to school—a point underscored by surveys
conducted by the Financial Aid Office. By limiting the cost for many of
these families to 10 percent of income, Harvard is helping to ensure
that no student should have to choose to go to a different school due
to financial considerations. The University is also taking a
significant step toward no student having a different Harvard
experience because of financial constraints.
One of the new program’s most promising features is the
elimination of loans as a part of aid packages. Studies have shown that
high levels of debt cause students to choose more lucrative career
fields, often forgoing opportunities in the public and non-profit
sectors that they might have otherwise explored. Students should not
have to choose between pursuing their passions and servicing their
debt. The removal of student debt in aid packages will go a long way
towards leveling the playing field between privileged and
underprivileged students.
Similarly, the decision to stop considering home equity in the
calculation that determines a family’s ability to pay—which will cut
out an average of $4,000 per year in payments—is a wise one. Houses are
not liquid assets, and a family should not be penalized for increases
in housing prices that do not affect a family’s short-term financial
situation.
All in all, this program appears to be one that has been well
thought through and will certainly help to increase Harvard’s diversity
on campus. However, as with any program, the key will be
implementation. In its press release, the Financial Aid Office states
that the 10 percent policy will only apply to those families with
assets typical for their income levels. Such a clause is
understandable, since it is certainly not fair for a family with an
income of $120,000 but with a large nest egg to receive financial aid.
At the same time, we hope that Harvard will carefully think about what
level of assets it defines as typical so as not to punish prudent
saving for college.
This concern, however, is fairly minor. Given the amount of
planning that appears to have gone into this proposal and the
tremendous benefit it will have for students across the financial
spectrum, we are confident that this latest expansion of financial aid
will be a roaring success.
