Yale will likely announce today a $7.5 million increase in financial aid, substantially raising its aid budget in response to sweeping reforms by Harvard and Princeton universities last winter, administration sources said.
The proposal, scheduled to be discussed by the Yale Corporation in a conference call this morning, provides grants to sharply reduce the self-help contribution: the amount of money students are expected, through loans and work, to contribute towards their tuition.
Under the new plan, students could use the grants in place of taking out loans or use them to reduce the amount of summer or term-time income they must pay Yale.
Yale will also make it easier to earn money: the minimum student wage is rising this year from $7 to $9 per hour.
Administrators said the new proposal would put Yale on equal footing with other top universities in the escalating competition to attract talented students.
The proposal also includes the effects of Yale’s agreement this summer with other colleges to standardize the method they use to calculate parental contribution. The guidelines of the 28-school pact will require Yale to add about $1.2 million to its aid budget.
“The effort was to make it somewhat similar to fill the gap between Harvard and Princeton, in particular,” an administrator said of the proposal.
It comes at a tenuous time: Yale students complained loudly last year as first Princeton and then Harvard made sweeping financial aid changes while Yale stood by idly.
Yale’s proposal would greatly shrink the disparity between the levels of self-help underclassmen and upperclassmen pay.
Currently there is a $2,100 difference between the self-help freshmen and sophomores pay — $6,020 — and the amount juniors and seniors pay — $8,120. Yale’s proposal would lower self-help much more for upperclassmen, a source working with the new policy said.
The new policy would start next year for all students, administrators said.
Yale’s proposal is the latest in a string of momentous aid reforms at top universities. Just months after Yale announced it would fully fund aid for international students, Princeton equaled the move and went beyond it to replace all student loans with $5 million of new scholarship money. Soon afterward, Harvard, the Massachusetts Institute of Technology and Dartmouth College followed suit with similar plans that reduced students’ self-help contribution with university grants.
If the policy is approved, Yale will not eliminate all loans as Princeton did, but will instead offer a flexible plan through which students can choose to use the new grant money to lessen either work study or loans or a combination of both.
“There are elements of our plan that are less like Princeton and more like Harvard,” an administrator said. “We’re saying that some people may want more loans. … We’re giving them flexibility.”
Wages for all student workers will also rise by about 30 percent. In past years, student salaries have increased by just three percent, said Diane Williams, supervisor of student employment.
“I think that salaries probably haven’t held up with self-help expectation,” Dean of Undergraduate Admissions and Financial Aid Richard Shaw said. “At the minimum, it would have been harder for them to meet their self-help expectation.”
The wage raise has been in the works for quite a while and is not directly related to the newest financial aid proposals, Deputy Provost Lloyd Suttle said.
While students were excited about the wage hike, some wondered if Yale couldn’t have made a more sweeping proposal than it did for financial aid improvements.
“Yale does have enough money,” said Abbey Hudson ’03, an organizer for United Students at Yale. “[It’s] a shame that we consistently follow Harvard or Princeton … Yale could be a leader.”
Hudson and a few other students met with Yale President Richard Levin in mid-August and called for the University to eliminate self-help altogether.
But administrators said students should contribute to their financial aid and the concept of need-based financial aid is being left behind.
“We’re almost in a situation of an arms race,” one administrator said. “I think all of us are worried about escalating this.”
In July, Yale joined a group of 27 colleges in an effort to stop this competition. The group, which includes Columbia, Cornell and Stanford universities but not Harvard and Princeton, agreed to use common guidelines to calculate student need for financial aid, a standardization aimed at preserving need-based aid.
“The whole regime was being threatened,” Levin said. “The schools were considering more merit scholarships. [We had to] make sure that highly selective schools stuck to the philosophy of need-blind admissions.”
The new guidelines for parental contribution are aimed at relieving the aid burden for middle-class families: they include less consideration of home values in determining parental contribution, a reduction in the amount required to be spent out of students’ savings accounts, and a cost-of-living adjustment for parents in expensive cities.
The biggest change will be a reduction of money taken from college savings accounts under students’ names from 35 percent to 5 percent, a percentage equal to the amount currently taken from parents’ savings accounts. This measure protects families who save in their children’s names.
The guidelines will also lower by 20 percent the ceiling on Yale’s consideration of home value in determining parents’ financial status.
Yale will take into account the higher living expenses in cities such as New York and San Francisco when deciding how much parents can contribute, and Yale will expect a lesser contribution from parents who have not saved for their own retirement.
Several of the 28-school pact’s guidelines are not new for Yale, a school that is more liberal in its aid than many of the other colleges in the group.
The group’s standardized guidelines address only the calculation of parental contributions. The cost of attending college is broken into three portions: expected parental contribution, student contribution and school grant.
As the school year begins, Yale faces possible changes in all portions of its aid package: the 28-school pact changed parental contribution, and the proposal before the Corporation today could change student contribution and school grant.