In aid policy, Yale can still take lead

On Monday, Harvard once again established itself as the leader in the movement to make higher education more accessible.

With one late afternoon press call, our northern neighbor redefined financial aid, extending it with a clever clarity to middle- and upper-class families.

If a family makes $180,000 or less, it is responsible for paying a maximum of 10 percent of its income. And forget student loans that follow you past graduation. For a student from a $150,000-income family, Harvard will now cost only $15,000 per year. It’s brilliant, really.

Yale, meanwhile, came away squarely in third place — behind Princeton, too. University officials may have been planning for a “major” January announcement, but their thunder now seems stolen. Harvard beat us — yet again.

But Yale, still, can come out on top.

Richard Kahlenberg, a senior fellow at the Century Foundation, said it all in an interview with the News Tuesday: “Yale is one of those rare institutions that could do something similar to or maybe even more aggressive than Harvard,” he explained. “The real commitment would be to go beyond just financial aid to seek to diversify the undergraduate class by income.”

We pressed Yale President Richard Levin to see whether he shared our — and Kahlenberg’s — belief. He did.

Calling Harvard’s initiative “very impressive,” he seemed moved — enough, perhaps, to move his own policy — by Harvard’s initiative: “We designed a very generous financial aid initiative,” he said of the plan discussed at the Yale Corporation meeting this past weekend. “Of course,” he added, “we will now take what Harvard has done into account” before announcing the final plans.

Although Yale lost the competitive advantage, we applaud President Levin for staying above Harvard’s sneaky, albeit strategically sound, gamesmanship. The real question, though, is to what extent he will modify Yale’s plans in response. And more importantly, are President Levin and his deputies willing to seriously consider potentially novel routes to better aid that would leave even Harvard in the dust?

In revising its plan, Yale should first consider what Harvard did right. Matt Reed, a policy analyst at the Institute for College Access & Success, praised the “clarity” of the program in an interview. Its also redefines the aid game as one that should also benefit the middle class.

However, Harvard’s plan is not without flaws. A fundamental unfairness remains: Why should a student of a $200,000-income family pay full tuition while a student from a family earning $150,000 pay about $20,000 less?

Yale could adopt one of two programs. 1) Harvard’s, but not stopping at $180,000 households; After $200,000, 15 percent of one’s family income can be charged, and the graduated scale can continue until the price matches the maximum tuition, or 2) Yale could adopt an expanded Yale Law School model where students are able to defer cost to later in life, and then pay based on their salary. This plan properly places the burden on the student, not the student’s background, in determining which university to attend.

And whatever it does, Yale must increase its $62 million aid budget to Harvard’s $98 million, soon to be $120 million.

President Levin asked us to consider one argument lost in recent coverage: his concern “that only a handful of other schools are capable of offering similarly generous packages” and that Harvard’s lead may not result in “the best outcome for the whole system of higher education.”

His argument makes sense; there are fewer than two dozen universities out of thousands that are capable of implementing a plan even remotely akin to Harvard’s.

Then again, that same attitude may be why The New York Times’ most-e-mailed story Tuesday was about Harvard opening its doors wider — and not Yale.

Comments

  • Anonymous

    "Yale could adopt an expanded Yale Law School model where students are able to defer cost to later in life, and then pay based on their salary. This plan properly places the burden on the student, not the student’s background, in determining which university to attend."

    Yale has been considering this move for some time now, to match its Law School. It would also make a great pro-Yale story -- just think, "Yale Treats Undergrads the way it treats its Law School Students" -- showing Yale undergrad is just as good as Yale Law. It will be very innovative if the Corporation acts on this. But I'm not sure that that the country is ready for greater social equality. I'm also not sure that Yale is ready to give such a huge discount on tuition, that alumni investment bankers would repay over the next 20-30 years.

  • Anonymous

    I honestly don't think the law school model makes sense for undergraduates, who don't yet have the solidified career plans that law students have. Also, doing this would essentially be increasing loans and putting Yale in an even more uncompetitive position.

  • Anonymous

    I'm not sure I understand where either of you are coming from. Lessening the crippling debt of Yale's undergraduate tuition would be opposed by the general population? The tiny fraction of Yale's operating budget subsidized by tuition wouldn't be offset by the $3b or so the Investments Office returns every year? Please. These excuses are almost as sad as Levin's annual, "Let's wait and see what happens," or "Our term bills need to remain in line with those of our peer institutions."

    The second comment at least gets to the heart of the matter: An Ivy League degree no longer pays for itself, and students must prepare for law school or a similarly profitable career track if their parents are not prepared to swallow a $200k (and growing) loss. Yale's penny pinching on financial aid is ridiculous and embarrassing, particularly when Harvard makes bolder and more generous moves with each new admissions cycle.

  • Anonymous

    Yale should just eliminate tuition costs altogether for undergrads. It brings in only a small fraction of the budget, and you could save on the administrative costs of managing tuition and financial aid packages.

    And I suspect that Yale will more than make up for the lost tuitions in the future by the generosity of alumni who have fond memories rather than a pile of debt at the start of their careers.

  • Anonymous

    "Yale could adopt an expanded Yale Law School model where students are able to defer cost to later in life, and then pay based on their salary. This plan properly places the burden on the student, not the student’s background, in determining which university to attend."
    Wow! There really is deja vu all over again. Perhaps the TPO Plan from the 1970s was just a very poorly designed version of what you advocate now, but adding a tax for students to pay later in life isn't such an obviously good thing. See this from the May 1999 issue of the Yale Alumni Magazine:
    Late in March, the University announced that it will shut down its Tuition Postponement Option (TPO) program, a financial aid plan offered between 1971 and 1978 that requires participants to pay a portion of their annual income to Yale. Those still paying into the program were told that they will no longer be required to contribute after the year 2001. But the organizers of TPO Blues, the group that first called for relief from the obligation last year, say they are not satisifed with the agreement.
    "If the University has come up with a solution that takes three more years, surely they can come up with a way to end the program immediately," says Juan Leon '74, one of 50 TPO participants who signed a letter calling for the program to shut down at the end of this year.
    Yale officials say that ending the program in 2001 will cost the University $2 million, in addition to the $5-million loss it was already expecting to incur when the group obligations expired after 35 years.
    Under the TPO plan, students agreed to pay 0.4 percent of their income for every $1,000 borrowed until their class's group obligation was paid off, which was expected to take 20 to 25 years. But the numbers didn't work out that way, in part because 15 percent of the participants stopped paying. Under Yale's settlement, those who are in default will be held liable unless they make up missed payments.

  • Anonymous

    It is perfectly understandable that students and their parents would want to pay less, regardless of their income level. That self-interest comes through loud and clear in the student comments on financial aid. But is it obvious that the best use of the the growing financial resources of Harvard and Yale and a small group of other elite private universities and colleges is to provide increased discounts to people whose incomes are at the 95th percentile or higher? No doubt, Harvard and Yale can afford it but at what cost to other priorities? Shouldn't Yale use those resources to expand its reach to more students and to increase the research performed to the benefit of broader society? The answers won't be black and white; there is always going to be a balancing needed but Yale needs to consider other priorities beyond benefiting the well-off.
    A balanced consideration of the issues would also weigh the impact on less well-off institutions and society. Should there be a concern that a super-elite group of colleges can afford to charge far less than hundreds of other colleges? They don't need to do so for competitive reasons; students will generally choose Yale over Fordham for reasons having little to do with any cost advantage Yale might be able to offer.
    Yale should focus its financial aid on those who need it so that it better reflects a cross-section of the best youth our society produces, regardless of their parents' income. The current program isn't doing enough but notions that Yale should be heavily discounted or even free for the well-off is misguided.

  • Anonymous

    Yale needs to do something bold and dramatic to get good press. I suggest it should cut tuition across the board by $4,000. Yale's sticker price would be that much less than Harvard's or Princeton's.

  • Anonymous

    Assuming comprehensive room, board and tuition of $50,000 per year, a free ride for all 5,300 undergraduates would cost Yale approximately $265 million a year. If about 1/10th of Yale's $22.5 billion endowment were dedicated to generating the $265 million a year, that allocated portion of the endowment would only have to earn a little less than 12% per year. That's doable! Yale should blow the doors off the Ivies in general and Harvard in particular by announcing free tuition for all. What a publicity coup that would be! Of course, Yale should still informally solicit the monied class to pay anyway.

  • Anonymous

    That would certainly help the yield rate!

    the question is whether 1/10 of the 4endowment could be freed-up for this worthy purpose!