ON Oct. 2, 2003, board members at the University of Virginia filed into the Upper East Oval Room of the Rotunda, the centerpiece of Thomas Jefferson’s campus design, for one of their regular meetings. As usual, they were joined by the university’s top administrators. Just before the meeting began, a member of U.Va.’s public affairs staff walked over to John T. Casteen III, the university president, to hand him a clipping from that morning’s newspaper.
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Illustration by The New York Times; photograph of Drew Gilpin Faust, president of Harvard, by Tony Rinaldo/Harvard University via Associated Press
The clipping described a sweeping new financial-aid program that the University of North Carolina had just announced. North Carolina was going to cover nearly the full cost of any student whose family made less than 150 percent of the poverty level or, for a family of four, about $30,000 in today’s dollars. Students would still have to work 10 to 12 hours a week in a campus job, but they would not have to take out any loans.
At the time, it was one of the most aggressive aid programs at any major university.
The program touched a nerve with Mr. Casteen. The son of a shipyard worker from Portsmouth, in the southeastern corner of the state, he was the first member of his family to attend college. But during his 13 years as president, tuition had risen significantly, as it had at many colleges, and the Virginia campus had become even more dominated by upper-middle-class students. North Carolina’s new policy, which had the potential to lure students away from Virginia, could aggravate the situation.
Before the meeting had ended, Mr. Casteen announced to the room that he wanted the financial-aid staff to come up with a response. He wanted it quickly, he said, and he wanted something bigger than what North Carolina was doing. Four months later, at the board’s next meeting, it approved a plan that was similar but somewhat more generous than North Carolina’s. Making sure everyone had a chance to attend college, Mr. Casteen would say, was “a fundamental obligation of a free culture.”
That same spring, officials at Harvard had been working on their own plan. Three weeks after Virginia’s announcement, Lawrence H. Summers, then Harvard’s president, traveled to Miami to give a speech titled “Higher Education and the American Dream.” In it, he alluded to Jefferson’s views on the importance of educating poor and rich alike, and he decried the paucity of low-income students on college campuses. The punch line came toward the end of the speech, when Mr. Summers raised the bar on North Carolina and Virginia. Harvard would cover nearly the full college cost for any student whose family made less than $40,000.
The financial-aid bidding war at the nation’s top universities was under way.
North Carolina soon expanded its program, to cover 200 percent of the poverty level, or $41,300 today. In 2005, Yale undergraduates occupied the admissions office to demand that their university increase aid, and administrators soon did. The University of Maryland came forward with a plan. So did the Massachusetts Institute of Technology, the University of Pennsylvania and Stanford. In 2006, Harvard raised the bar again, saying parents making less than $60,000 would not have to pay anything toward the cost of their child’s education.
All of these moves focused on low- and middle-income students — an ever-rarer breed at elite universities over the last generation. But in 2007, the bidding war took on a new character: it began to address the concerns of the upper middle class as well. In July, Amherst College announced it would eliminate loans for all students, no matter their income. In December, Harvard — under Congressional pressure, like other wealthy colleges, to spend more of its endowment — introduced a policy under which most families making less than $180,000 a year would receive significant aid. For all but the most affluent 3 or 4 percent of the population, Harvard would be roughly as expensive as many state universities.
Harvard being Harvard, the policy received a huge amount of attention, and set in motion a frenzy that made the previous few years of dueling announcements look leisurely by comparison. Within weeks, Yale went as far as Harvard had, while Bowdoin, Colby, Dartmouth, Haverford, Pomona and others came up with their own — usually less generous — policies.
In less than five years, the entire tuition and financial aid system at the nation’s top colleges has been overhauled. Today, it looks a lot like a highly progressive tax code, in which the affluent are bearing an enormous share of the overall tuition burden. No matter how high the published cost — almost $50,000, typically — these top universities have become significantly more affordable for the majority of students.
It may be the first time that has ever happened.
The changes have not been greeted with a chorus of joy, however. At colleges without large endowments, administrators are worried about the pressure they will face. Some have suggested that they may end up reducing aid to low-income students to compete for more affluent students, who typically have higher test scores and thus help an institution’s ranking in U.S. News & World Report. In the past, these colleges were able to woo some students away from the Ivy League with merit scholarships.
Others say the latest round of changes will not solve the larger issue of economic opportunity raised by Mr. Casteen, Mr. Summers and others. “There is a perception that this has gone farther than it really has,” says Sandy Baum, an economist at Skidmore College who oversees the College Board’s annual report on college costs. “The number of students going to these schools is tiny. It’s not going to make a dent in educational opportunity.” Increases in the federal Pell grant, which typically go to students whose families make less than $40,000, would probably accomplish far more on that front.
Over the last decade, the average net cost of attending a four-year public college — including room and board as well as financial aid, and controlling for inflation — has risen to $9,980 a year, from $7,650, according to the College Board. The average net cost at private colleges has risen to $23,000, from $18,050.
Still, other education experts have pointed out that the new aid policies aren’t always as generous as administrators make them out to be. Some colleges, for instance, have committed to covering only tuition, not room and board, which can be substantial.
All of these concerns may well be valid. Yet it’s still worth taking a minute to consider how quickly — and how much — the recent announcements have actually changed the landscape of higher education.
THIS past November, the admissions deans from Harvard, Princeton and Virginia went on a recruiting tour together. They no longer had to spend the month reading applications, because they had abolished their early-admissions programs. So they hit the road instead, speaking at high schools across Virginia and West Virginia.
One night, they held an information session at a Holiday Inn in the Appalachian town of Bluefield, W.Va. They had sent invitations to about two dozen students and had told guidance counselors to spread the word. William Fitzsimmons, Harvard’s admissions dean, had expected about 45 students and parents to show up, based on previous recruiting trips.
Just three years earlier, John Blackburn, Virginia’s dean, had gone on a similar tour in nearby western Virginia and discovered that few students had heard about the university’s new financial-aid plan. “You can’t just raise the U.Va. flag and expect a lot of low-income kids to come out,” Mr. Blackburn had said after one lackluster night in 2004 at a college fair in Big Stone Gap, Va. Many had assumed U.Va. was simply too expensive, even if financial aid would have made it affordable for them. This assumption, officials say, is one reason the student body at elite colleges has become less economically diverse in recent decades.
But something may be changing. At the Bluefield Holiday Inn, 110 people showed up to listen to Mr. Blackburn, Mr. Fitzsimmons and Janet Lavin Rapelye, Princeton’s dean. “We were blown away,” Mr. Fitzsimmons recalls.
The best explanation seems to be that the flurry of high-profile announcements about financial aid has helped overcome years of headlines about rising tuition. As Ms. Baum of the College Board says, “Low- and moderate-income kids now know that it’s fine to apply to Harvard and Dartmouth and money won’t be an issue. And that’s good.”
The number of low-income students at top institutions is still fairly low but is growing. The share of Harvard undergraduates receiving Pell grants rose to 13 percent this year, from 10 percent in 2003-4. At Amherst, over the same span, the number has risen to 18 percent from 15 percent.
The purest case study may be Princeton. It took perhaps the first step down this road in 1998, when it replaced loans with grants for low-income students. It expanded the program to all financial-aid students in 2001. But other colleges didn’t follow suit. And the policy had only a modest effect on the makeup of Princeton’s student body. Between 1998 and 2005, the share of undergraduates with Pell grants rose to 7.7 percent, from 6.9 percent, says Robin Moscato, the director of undergraduate financial aid. But over just the last two years, with other colleges trumpeting their new programs, the share of Princeton undergraduates receiving the Pell has increased to almost 10 percent.
The elimination of loans is a crucial part of the changes. From a straight economic perspective, this doesn’t entirely make sense: because people with a bachelor’s degree make so much more on average than people without one, college loans are usually well worth their cost. But these benefits come years later, while the costs come immediately — and intimidate many families.
“A lot of students from smaller towns look at the university and they’re like, ‘No,’ ” says Carla Rojas, a senior at North Carolina whose father is a construction worker near Lincolnton, N.C., and whose mother does alterations there. Many students know there are scholarships, Ms. Rojas says, but they figure, “Oh, I won’t get one.”
Replacing loans with grants changes the calculation. Rather than having to persuade would-be applicants that loans are a good investment, recruiters can say the students will graduate debt-free. If anything, Ms. Rojas adds, she wishes North Carolina were doing more to publicize its policy.
Mr. Summers says the ultimate goal should be to repeat the success of affirmative-action policies. Affirmative action has become so ingrained that black students with a given SAT score are more likely to apply to Harvard than white students with the same score, according to a university analysis. High-achieving poor students, however, are much less likely to apply to elite colleges than their affluent counterparts.
Closing that gap will require more than just money. “Increasing financial aid is terrific,” as Mr. Summers says. “But as important or more important is recruitment and the way students are admitted.”
If admissions officers were to give poor students more credit for what they had overcome, colleges would become considerably more diverse. But they would risk angering alumni, whose children would face tougher competition to be admitted. Recruiting more low-income students would also bring a big price tag, because the newly expansive aid policies would then apply to many more students.
It’s easier for college administrators to be generous with financial aid when their campuses don’t have very many poor students to begin with.
THERE are several arguments for increasing economic diversity at elite colleges. For one thing, it makes the universities more consistent with their self-image as meritocracies. In recent decades, as colleges have become more diverse geographically, racially and religiously — changes they regularly celebrate — they have also become less so economically, according to the Higher Education Research Institute at the University of California, Los Angeles.
At the same time that their campuses were becoming more affluent, the colleges have come to play arguably a larger role in American society.
George H.W. Bush, George W. Bush and Bill Clinton all graduated from elite colleges (Yale, Yale and Georgetown). So did Barack Obama (Columbia) and Hillary Rodham Clinton (Wellesley). The number of United States senators and Supreme Court justices with Ivy League degrees has risen in recent years.
Recent research also suggests that lower-income students benefit more from an elite education than other students do. Two economists, Alan B. Krueger and Stacy Berg Dale, studied the earnings of college graduates and found that for most, the selectivity of their alma maters had little effect on their incomes once other factors, like SAT scores, were taken into account. To use a hypothetical example, a graduate of North Carolina State who scored a 1200 on the SAT makes as much, on average, as a Duke graduate with a 1200. But there was an exception: poor students. Even controlling for test scores, they made more money if they went to elite colleges. They evidently gained something like closer contact with professors, exposure to new kinds of jobs or connections that they couldn’t get elsewhere.
“Low-income children,” says Mr. Krueger, a Princeton professor, “gain the most from going to an elite school.”
Given all this, some have argued that Harvard, Yale and other universities are mistaken in giving financial aid to upper-middle-class students rather than using the money to recruit more low-income students. Awarding a $30,000 scholarship to someone whose parents make $180,000 a year doesn’t exactly reduce economic inequality. But it does have two other benefits.
For one, it gives the new financial aid a more solid base of support among alumni. Anthony W. Marx, the president of Amherst, has been talking about the importance of making the college more economically diverse since his inauguration address in 2003. But he says he received more congratulatory e-mail messages after announcing last summer that Amherst would eliminate loans for all students than after any of his announcements about recruiting poorer students.
Expanding the pool of aid recipients may also make the policies more popular among students. It would be rather counterproductive if the children of midlevel corporate executives, who were paying $50,000 in tuition and fees, ended up resenting the children of police officers, who were paying nothing.
The most important issues facing higher education still have relatively little to do with this small group of colleges. Those issues involve preparing more low- and middle-income children to attend college, lifting the graduation rates at community colleges and at four-year colleges that educate large numbers of these students, and simplifying and expanding federal financial aid.
That said, what happens at the country’s best-known universities still matters, both because of their role in society and because of how they shape the discussion about higher education. Yes, the new policies have flaws, and they are likely to make life more difficult for administrators at other colleges. But just imagine if, five years ago, somebody had said that Harvard, Amherst and their peers would soon be using their endowments to reduce costs to almost nothing for most families making less than $60,000 — and to give large scholarships to families making as much as $180,000. Would anyone have argued that this sounded like a bad idea?
David Leonhardt writes the Economic Scene column for The Times.
