December 2007 Lawlor Focus
'Tis the Season for Giving
For months now, the higher education headlines in the mainstream press have been broadcasting the scandal within the student loan industry, the burdening amounts of debt with which students graduate, ever-escalating tuition prices at colleges and universities, and calls for wealthy institutions to spend more of their large endowment earnings on student aid. With concerns about financial barriers to college access reaching a crescendo, National Public Radio's "Justice Talking" program featured "College Admissions: A Game of Privilege?" as a topic last month, addressing how money and privilege affect the college admissions process, how changes to financial aid affect college enrollment, and whether reforms are necessary.
Now, just in time for the holiday season of giving, comes Harvard University's announcement that students from families with incomes up to $180,000 will no longer have to borrow to finance tuition, as the school will guarantee grant aid for the difference between their family's contribution (which will now be capped at 10 percent of their income) and the cost of attendance. The announcement reverberated not only throughout the higher education news outlets, but in major media market channels nationwide.
Since 2003, when the University of North Carolina, Chapel Hill introduced a program allowing low-income students to graduate debt free, almost three dozen other institutions (listed by the Project on Student Debt—participating liberal arts colleges include Amherst, Colby, Davidson, Pomona, Wesleyan and Williams, among others) have announced initiatives to make their prices more affordable and predictable for students from low-income families, many of them eliminating student loans from their financial aid packages for these students. What's new about Harvard's plan, however, is the recognition and acknowledgement that even for families in the upper-middle income levels, a college education can be a very expensive proposition, especially in light of Americans' abysmal savings rates. Along with Harvard's announcement, Swarthmore College and the University of Pennsylvania have publicized their own planned loan-free financial aid programs aimed at middle- and upper-middle-class students, and other elite private colleges such as Yale are expected to follow suit.
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While a domino effect may play out among elite private colleges with regard to loan-free financial aid packages even for students who are not from low-income families, obviously not every college and university is in a position to craft such a policy. It should be noted that roughly half of Harvard's undergraduates come from families whose resources are so great they won't qualify under the new policy's $180,000 cap, which offers some perspective to the scope of Harvard's initiative. But if other schools react just proportionately, eliminating loans for half of their student bodies, the ripple effects of Harvard's plan could be enormous.
Price is more than a principal component of an economic model—it's also a marketing issue. While there's no one solution to fit every institution, given the attention paid in the media to the price of tuition (and subsequently, college access concerns), each college must continue to address its cost in creative ways, while also reinforcing the value proposition.
In the News: If You Build It ...
The Economist recently featured American universities' building boom, noting a 260 percent increase in construction spending during the past decade. The article made the case that many new buildings are tangential to most students' academic lives, via passages like this: "The competition for prestige, in the form of top students, prominent faculty members and grant money, is intense: it can also get remarkably petty. Last year the Dallas Morning News reported that Baylor University increased the height of its planned rock-climbing wall from 41 to 52 feet after learning that Texas A&M University's was 44 feet. Then the University of Houston built a climbing wall that was 53 feet high, and even that was later surpassed by the University of Texas at San Antonio."
Did You Know?
The practice of attending multiple schools to earn a four-year degree has become so popular, it's been given a nickname: "swirling." A study has shown that 59 percent of bachelor's degree recipients attended more than one institution.
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