Colleges and Sticker Shock
Chicago Tribune Editorial
January 26, 2008
Harvard University recently acknowledged what many parents -- who get sticker shock every time the tuition bill arrives -- already know. Private colleges and even some public universities are so expensive that even the affluent upper middle class are struggling to pay the bills. They're so expensive that Harvard and others have been gradually throttling back on what it expects many parents to pay. Harvard is already picking up the tab for families earning less than $60,000.
Recently Harvard announced that it will significantly expand financial aid to students from families earning as much as $180,000 a year. The deal: Costs will be limited to about 10 percent of income, meaning that students from those families would pay a maximum of $18,000. That's a sweet deal and a hefty discount from the full annual cost of more than $45,000.
Now Yale has followed suit, declaring that it would increase the amount of money it spent from its endowment, expanding financial aid to low-and middle-income students and to students from families earning as much as $200,000 a year. Other schools -- among them the University of Pennsylvania and Swarthmore -- are scrambling to eliminate loans from their aid packages and replace them with grants, which will help middle and upper-middle income families.
Why the sudden generosity? Harvard's dean of admissions told a reporter: "People were voting with their feet. It was pretty clear that we were missing out on some pretty exciting students."
But Yale's president acknowledged what's likely to be the more compelling reason: Congressional pressure. Lawmakers have been threatening to force schools to spend at least 5 percent of their endowment funds every year, as private foundations are required to do. Last week, the Senate Finance Committee ratcheted up the pressure, demanding detailed information from the nation's wealthiest colleges on tuition hikes, financial aid and how they managed their endowments.
Harvard's got a $35 billion endowment. In fiscal 2006 alone, according to consultant Steven Roy Goodman, the school would have been forced to spend $245 million more to meet that standard.
Whatever the motives, it's hard to argue with moves to ease the financial pressure on parents of students at Harvard, Yale and elsewhere. We're sure that many other universities are now hearing a variation on an old Chicago theme from parents: Where's ours? "I don't doubt that when families talk to the aid office, they're going to say, hey, Harvard thinks we need this much," said Ted O'Neill, dean of admissions at the University of Chicago. "And you say less. How do you justify that? And our response would be, they're rewarding students beyond what they need. But boy, a lot of people are going to be angry and lot of people will be disappointed."
Calculating what's fair and what is gouging in the world of college aid is not a task for the faint-hearted. It all comes down to the calculation of "need." Schools look at a family's income and assets and decide whether they need financial aid. Typically, families earning six-figure incomes don't qualify. Now Harvard comes along and says we're redefining need, upward.
But let's be realistic. Most colleges can't afford to match Harvard. They don't have the megabillion-dollar endowment to tap. Let's also recognize that parents earning $180,000 a year shouldn't be at the front of the line, or probably even in line, for aid. If Harvard wants to open its pockets a little wider, fine. But affluent parents shouldn't expect schools to skimp on aid to low-income students so they can afford another BMW or kitchen remodeling.
In a recent visit to the Tribune editorial board, Education Secretary Margaret Spellings commended Harvard for its move. But she followed with a far more important point: "We have to get many, many more particularly poor and minority kids, not only in and out of high school but in and out of college." The big issue, she said, is "how are we going to make college affordable, accessible and attainable and high quality for the vast majority of Americans?"
She was talking not about those who feel the pinch of private college tuition, real as that may be. But all those parents and students who struggle with much lower tuition bills from, say, Southern Illinois University or Oakton Community College or Kennedy-King College.
Paying tuition bills can pinch any family's finances. But a college education is a great investment that yields immense dividends across a lifetime.