This school year, 28 colleges and universities across the country will implement a new method of counting home equity when determining need-based financial aid. But Yale students will barely be affected, since the University started using a similar policy last year in anticipation of the shift.
Families will still be expected to put 5 percent of their home equity toward tuition, but home value will be capped at 2.4 times a household’s income. For the class of 2007, Yale capped it at a slightly higher rate, about 3 percent.
Yale Dean of Admissions Richard Shaw said the change is intended to benefit families whose home values have risen dramatically since they bought their homes, but whose income has stayed relatively constant.
The agreement acknowledges that home equity is an asset that cannot easily be converted into tuition, said Myra Smith, Yale’s director of university financial aid.
“If you’re living in Boston, unless you move and tap into your equity, it would cost you just as much to buy another home,” she said.
Smith said the 568 Presidents’ Working Group, the organization of college presidents that passed the new policy, is working toward a more uniform definition of what constitutes financial need. The group name refers to the federal provision that permits universities to work together on financial aid policy.
“If we all calculate differently, then I’m not sure it’s need-based aid,” she said. “Ultimately, students should be able to decide [on a college] not based on aid but on what’s the best fit for them.”
The class of 2007′s award packages already reflect improvements made since a meeting in July 2001. At that meeting, schools agreed to certain principles of financial aid, including use of a common application form, shared need-analysis principles and the exchange of post-award data.
“With the class of 2007, there was, I believe, a bit more consistency in awards across schools, and that was good,” Smith said. “One of the valuable things is we’re able to get together and — look at the larger economic problem and talk about what’s the right thing to do. It’s nice to have that global economic view.”
Despite the agreement, there will still be variations in the award packages offered to applicants because of room for interpretation in the rules agreed upon by the working group, Smith said.
Besides home equity, other changes will be implemented for the calculation of the class of 2008′s financial aid. In particular, the procedure for mailing tax returns will be simplified. Students applying to colleges and universities that belong to the working group will send a copy of their tax return to the College Board’s Imaging and Documentation Service, which will then digitally pass it on to the schools.
“An applicant to Yale and Harvard will only have to send in one tax return,” Smith said. “It makes it easier for the applicant and we all have the same information at the same time.”
Smith said Yale is taking digitalization a few steps further. Financial aid applicants can now view award letters online at the Student Information Systems Web site, and next year’s letters will be sent exclusively via e-mail. A new student employment Web site that allows for online application to jobs also went live this semester.
“We want to take some of the aggravation out of the student process,” she said.