Harvard University announced today that it is restructuring its financial aid packages to provide more assistance to middle class families. With the price of tuition at elite private colleges continuing to skyrocket, more and more middle income families are feeling the pain of hefty price tags. A college education today can cost more than many people paid for their house.
Harvard had noticed that the number of applications from middle-income families has begun to decline. Accepted students from lower income families earning less than $60,000 already receive full tuition scholarships. And the rich can find ways to pay the sticker priceâ€”however shocking it might be. But todayâ€™s middle income families are feeling the squeeze, and the prospect of liquidating assets and borrowing to finance their kidsâ€™ education has become too much of a burden for most people.
So Harvard responded. With the class entering in 2008, families earning less than $180,000 per year will have to pay no more than 10% of their income to finance a Harvard education. As a business, Harvard is trying to keep the pipeline of middle-income applicants as strong as ever by competing on price as well as quality.
First, if Harvard is experiencing a decline in applicants that can be traced to the increasing price of tuition, you can be sure that other private colleges at every point on the selectivity curve are experiencing the same trend. As the economy cools, colleges need to be cognizant that tuition increases today could deter even more applicants tomorrow.
Second, Harvardâ€™s move to alter its financial aid formula will put pressure on its competitors to do the same. But many lack the financial muscle of a multi-billion dollar endowment. Less well-endowed universities will have to find other ways to compete in the higher education market. If they cannot match Harvardâ€™s â€œtuition bonanzaâ€ (as Inside Higher Education calls it), they will have to find other ways to both control costs and provide educational value.
Third, students considering where to apply in the next year or two should not overreact to this kind of information. There are still many colleges and universities that offer excellent educational value for middle-income students and their families. One should not assume that because the â€œsticker priceâ€ of tuition is high that the actual cost of attendance will be anywhere near that. Depending on your particular combination of talents and interestsâ€”coupled with the range of institutions to which you applyâ€”you may not have to send the family into perpetual poverty and indefinite indebtedness.
So be armed with up-to-date information and expert, independent advice. This is the best way to map out your own educational journey.
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