Harvard financial aid: Does it screw the proles?

How to protect your pockets.
Feb. 3 2011 7:58 PM

The Harvard Effect

Does Harvard's "affirmative action for the affluent" screw the proles?

Illustration by Robert Neubecker. Click image to expand.

Harvard is the most famous college in America, so you would expect it would get a lot of applications. But 35,000 applications for fewer than 1,700 slots is more than "a lot." It represents, Washington Post blogger Daniel De Vise calculates, one out of every 50 college-bound high school seniors. College enrollment is on the rise nationwide, and applications to "selective" colleges have been rising steeply, but Harvard's growth nonetheless stands out. In 2007 Harvard received 22,955 undergraduate applications. Four years later, that number has increased by more than 50 percent.

What's driving this surge? The Social Network  may be one reason. It made Harvard out to be a Hieronymus Bosch landscape  but also a begetter of billionaires. (You don't even have to graduate!) Also, because Harvard takes the "Common App," a standardized form allowing you to apply to multiple colleges, it's never been easier to apply. But in the Harvard Gazette, the university's house organ, Dean of Admissions William Fitzsimmons noted Harvard's "financial aid enhancements," which, since 2008, have made financial aid available to all families with "typical assets" earning up to $180,000. Harvard is being stampeded by bargain hunters of the haute bourgeoisie.

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At the end of 2007, Harvard announced that it would limit tuition to no more than 10 percent of family income for families earning up to $180,000. (It also eliminated all loans, following a trail blazed by Princeton, and stopped including home equity in its calculations of family wealth.) Yale saw and raised to $200,000, and other wealthy colleges weighed in with variations. This distressed administrators at less wealthy liberal arts colleges, who feared that to compete in the future, they'd be pressured to shift resources away from lower-income students. Since 1993, financial aid had shifted nationwide from 65 percent need-based to 45 percent; surely Harvard's move would accelerate that trend. The Web site Inside Higher Ed labeled it the "Harvard Trickle-Down Effect."

Harvard made its move partly to deflect a threat from Washington, which was irritated by the size of its (then-$38 billion) endowment. Sen.   Charles Grassley, * R-Iowa, had suggested that a law requiring nonprofits to spend at least 5 percent of their endowment income on an annual basis should no longer exempt universities. "Harvard is very attuned to that stuff," says Theda Skocpol, a Harvard sociologist and former dean who has been scathing about the new policy ("the parents get to take an extra Caribbean vacation"). Obviously some increase in spending became necessary. But Richard Ekman, president of the Council of Independent Colleges, wrote that he couldn't understand "why affirmative action for the upper-middle-class should be considered a high priority." Roger Lehecka, a former dean of students at Columbia, and Andrew Delbanco, director of American studies there, wrote in the New York Times  that Harvard's initiative was "good news for students at Harvard or Yale" but "bad news" for everyone else. "The problem," they explained, "is that most colleges will feel compelled to follow Harvard and Yale's lead in price-discounting. Yet few have enough money to give more aid to relatively wealthy students without taking it away from relatively poor ones."

There's no evidence the Harvard Effect has manifested itself yet—data won't be available till the Education department's next quadrennial * National Postsecondary Student Aid Study. Anecdotal evidence suggests it has not. One likely reason is that shortly after Harvard implemented its plan, the stock market crashed, taking a huge bite out of university endowments (including Harvard's, which fell by nearly one-third). Williams College  backed off from a no-income-limit policy on financial aid, and then Dartmouth followed suit. Other colleges have made quieter alterations in their generosity toward the upper middle class. This trend has continued even during the current fragile economic recovery. As I write this, Yale has just announced that for budgetary reasons it will scale back financial aid to families making between $130,000 and $200,000. Another mitigating factor, Ekman suggests, is that recession-driven cutbacks in state funding for public universities have increased applications to private colleges.

But Harvard's application stampede and the future economic recovery will surely make the long-feared pressures a reality. A likely path that less wealthy colleges will follow is to accelerate the existing shift from need-based aid to merit-based aid, which these days is awarded almost exclusively to the upper middle class. Mark Kantrowitz, publisher of FinAid and FastWeb, two financial-aid Web sites, recently wrote that the percentage of merit-based aid going to families with earnings below $50,000 was 32 percent in 2007-08, all the way down from 85 percent in 1993-94. Harvard, which gives all its aid based on need, has managed to implement its affluent-friendly aid policy while also increasing admissions to low-income students. But Kantrowitz says the numbers can be deceiving. In 2009-10 Harvard had 1,140 recipients of federal Pell grants (typically eligible only to families making less than $50,000 a year), up from 936 in 2007-08. That's laudable. But between 2007 and 2009, Kantrowitz points out, the number of Pell grantees nationwide increased by 47 percent, mostly because Congress liberalized eligibility. Harvard's 22 percent increase didn't keep pace. That's a tiny deficit for Harvard. But given the arms race of college marketing, I don't see how Harvard's new pursuit of the affluent can avoid leading to much bigger deficits elsewhere.

Disclaimer: I am a Harvard graduate and the father of a high-school senior who has applied to seven colleges. None of them is Harvard, but as a member myself of the haute bourgeoisie (albeit at its lower end), I stand to benefit from the trend I criticize here. I don't pretend that spending upwards of $50,000 per year on college tuition is practical for people like me, and whatever financial aid my son is offered we will scoop up gratefully. But surely the answer is to curb the inflation of this commodity's price, which seemed plainly unsustainable when I first wrote about it in 1983. Even college administrators say so now. "At some point," Seth Allen, dean of admissions at Grinnell, told me, "people are going to say enough is enough." Amen.

Correction, Feb. 3, 2011: The article originally misidentified Sen. Charles Grassley as Richard Grassley. (Return to the corrected sentence.)

Correction, Feb. 4, 2011: The article originally stated, erroneously, that the student-aid study is biennial. (Return to the corrected sentence.)

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