Following sweeping financial-aid reforms announced Monday, the University will dramatically reduce the cost of a Yale College education for families making under $200,000.
Yale’s new plan, made public just over a month after Harvard University unexpectedly unveiled an overhaul of its own financial-aid policies, bears the imprint of Harvard’s revamped aid portfolio. The expected contributions from families in income brackets up to $180,000 are identical to those laid out by Harvard, and like Harvard, Yale will eliminate student loans from aid packages beginning next year.
But Yale will allow families making between $120,000 and $200,000 to contribute 10 percent of their income on average toward tuition, while Harvard limited the average 10-percent contribution to families making up to $180,000 in its December announcement.
Initial student reaction to the announcement was overwhelmingly positive. Out of more than four dozen students who responded to a News e-mail survey yesterday, nearly all were at least somewhat supportive of the changes.
Like their Harvard counterparts, Yale families earning less than $60,000 annually will not be asked to contribute anything to their children’s tuition, while families making between $60,000 and $120,000 will contribute up to 10 percent of their total income.
“The idea is to make a significant impact on the questions of accessibility and affordability,” University President Richard Levin said in a phone interview Monday afternoon. “[We want] to make a change that’s truly felt by a wide range of families, that both helps our existing students and helps us attract more students whose families need our support.”
Yale will also reduce the amount that students are expected to contribute from their own earnings each year to $2,500, from $4,400. Students will be able to earn this by working on campus for about seven hours a week, according to a University press release.
The changes will increase Yale’s financial-aid budget by more than $24 million, to over $80 million annually. Levin announced last week that the University will increase the amount of money it spends from its endowment by 37 percent — to $1.15 billion — next year, largely to provide more financial aid to students and to boost scientific research.
Yale will also tie its increase in tuition, room and board charges next year to the expected level of consumer price inflation, 2.2 percent, according to the statement. For the past few years, Yale has increased these costs by about 5 percent a year.
For the 2007-’08 school year, tuition, room and board total $45,000.
Yale will continue to consider home equity in financial-aid calculations, despite the fact that both Harvard and Princeton University do not. But Yale announced that it will exempt up to $200,000 of a family’s assets — which could include home equity as well as other investments — from aid calculations starting next year, reducing the expected parental contribution.
When asked why he decided against eliminating home equity from Yale’s need calculations, Levin replied, “Because you have a president who’s an economist.”
Excluding home equity might encourage families to cheat the system, Levin said. Those families could invest liquid savings in real estate or use them to pay off a mortgage, which would eliminate those funds from consideration and increase financial-aid awards as a result, he said.
By eliminating student loans, Yale is following in the steps of Princeton, Harvard and the University of Pennsylvania, among others.
Dean of Undergraduate Admissions Jeff Brenzel said Yale’s “generous” new plan will help the admissions office encourage students accepted into the class of 2012 to matriculate.
“Students who may have had a financial reason in the past for selecting another school may now come our way,” Brenzel said. “But what this may mean in terms of numbers I just don’t know.”
Right now, 43 percent of Yale’s undergraduates — about 2,300 students — qualify for financial aid. Levin said that, based on an analysis of families who applied for but did not receive financial aid this year, he expects an additional 250 to 300 students to receive aid next year. But Levin said this figure represents a low estimate because the new aid policy may encourage students who might otherwise have been deterred by the cost to attend the University.
Yale’s announcement may intensify the pressure on other colleges and universities to step up their financial-aid offerings for students from middle-class families, although few institutions can compete with Yale and Harvard, said David Hawkins, public-policy director at the National Association for College Admission Counseling.
As a result of Yale’s move, other institutions may use more of their financial-aid budgets to award merit aid, as opposed to need-based aid for the lowest-income students, Hawkins said. But at the same time, he said, merit aid has already become so common that Yale’s new policy may not significantly amplify the trend toward such aid.
“I think a lot of the damage in that area has already been done by merit aid across the country,” he said.
The announcement followed months of heavy pressure from Yale students regarding the University’s financial-aid offerings.
An online petition posted by students last month called upon the administration to match or surpass Harvard’s new financial-aid package and to “commit to a position of leadership among peer institutions in promoting economic diversity and equality among students.” The petition had received over 1,000 signatures from the Yale community as of Monday.
On the social-networking Web site Facebook, over 800 students joined a group in recent weeks urging Yale to expand its aid program.
And in a Yale College Council financial-aid poll conducted over winter break, 54 percent of respondents said increased assistance for middle- and upper-middle-class families should be the University’s top financial-aid priority.
More than one-third of students — 1,815 — responded to the poll, which was e-mailed to the entire undergraduate student body between Dec. 30 and Jan. 3.
Of 524 students contacted by e-mail for this story — one-tenth of the student body — reactions to the new policy among the 53 students who responded were generally positive. Many students praised the University’s decision to reduce the annual student contribution to $2,500, saying it would give them more flexibility in their choice of activities while at Yale.
“While [$4,400] might seem like a small amount, what with other expenses throughout the summer and the increased cost of travel this quickly became a concern,” Thanye Stoddard ’11 wrote in an e-mail. “This past semester as an incoming freshman, I found it impossible to work the recommended 12 hours a week. The reduction to $2,500 will be an extreme help.”
But several respondents criticized the University for playing second fiddle to Harvard.
“I’m happy that the administration has finally taken real steps toward making Yale affordable for middle class families, but let’s be honest, Yale has had the financial ability to do this for a number of years,” Kyle Mandsager ’08 wrote in an e-mail. “Yale should assume a leadership role in providing every American the opportunity to study amongst the best and the brightest. It’s sad that it always takes action from other Ivy League schools (Harvard, Princeton) to force Levin’s hand.”
Levin said in an interview with the News on Monday that Harvard’s announcement in December had impacted the form Yale’s new policy ultimately took.
While most respondents welcomed the new policy as a much-needed step forward, some lamented that Yale had not chosen to eliminate home equity from aid calculations and had not reduced the summer contribution of $1,850 for freshmen and $2,400 for sophomores, juniors and seniors.
Yale last altered its financial-aid policies in 2005, when the University eliminated the parental contribution for families making less than $45,000 and reduced contributions for families making between $45,000 and $60,000.
-Samuel Breidbart contributed reporting.