Competitive Universities Offer Loan-Free Aid Awards

When Harvard University announced that it will no longer require lower-income families to pay for their children's education, it grabbed headlines. But Harvard's move was only a hint of changes being made around the country. As tuition costs rise, many schools are making moves to expand financial aid programs.

"The degree of inequality in access to higher education is a problem that must be addressed," Harvard President Lawrence H. Summers said at a conference of the American Council on Education early this month.

At Columbia, expanding that access is a top priority as the University enters an expansion phase, according to administrators. University President Lee Bollinger, in an address at the John Jay Awards dinner this month, said that financial aid should rank as a much higher priority in fundraising and endowment spending.

"Raising funds to support and enhance financial aid will be a very high priority in the upcoming University capital campaign," said David Charlow, the director of financial aid for the Columbia College and Fu Foundation School of Engineering and Applied Science.

In early March, Summers announced that parents with incomes below $40,000 per year would not be asked to take out loans as part of their children's financial aid packages. Parents making between $40,000 and $60,000 would also have their expected contributions reduced. The program will cost $2 million, and will affect about 1,000 students of the school's approximately 6,500 undergraduates according to the university.

Columbia officials say they would like to emulate Harvard's program in the near future.

"It's on the horizon," said Derek Wittner, deputy vice president of development and Columbia's chief officer for alumni giving. "We have been discussing and evaluating and planning for a campaign for financial aid."

Despite lacking a grant-only initiative, Columbia considers its need-blind financial aid program a strength. In the College and SEAS, 40 percent of students received some form of need-based financial aid, on par with peer institutions. A 2001 study by the Department of Education ranked Columbia number one among the Ivies for enrolling students who are eligible for Pell Grants, a Federal grant for needy students.

Student leaders are anxious for action on promises to increase grants and make good on a resolution passed last year that named student aid the Columbia College Student Council's top policy priority.

"They just tell me the same thing: they realize it's a top priority, but they just don't have the money and are working on raising the money," said Miklos Vasarhelyi, CC '04, the council's president.

Vasarhelyi said he has met with administrators to produce a study, but that aid officers at Columbia and other schools are stingy with data and don't share his sense of urgency.

"Right now, they see it as a five-year plan. That's way too far away," he said.

Financial aid makes up the bulk of the budgets of the College and SEAS. Any expansion of it will involve both fundraising and a financial reorganization of the endowment, according to various administrators.

"I'd rather it be sooner than later, but there's a lot of planning involved in such a move," Wittner said.

Harvard is the second Ivy school to move to grant rather than loan-based financial aid for the bulk of assistance. Princeton put a spotlight on the issue in 2001 with its decision to make all financial aid offered to students of all income levels.

When Princeton adopted its plan, students receiving aid jumped from 38 percent in 2001 to 52 percent in 2004.

Other schools, like Columbia, are increasing the amount of money available for financial aid on the way to a system like Princeton's or Harvard's.

"They are competing with each other for the best low-income students," David Ward, president of the American Council on Education, said in the Boston Globe last February.

Columbia College and SEAS spent nearly $44 million on financial aid last year, up from $37.5 million the year before, according to Charlow. Overall, the University spent $144 million on financial aid last year for an increase of $14 million from 2002, according to the Annual Financial Report.

The Massachusetts Institute of Technology, which spends $64 million on financial aid grants, added $5 million last year to its fund. Yale added $7.5 million, and Dartmouth added $1.5 million. Public schools University of North Carolina-Chapel Hill and the University of Virginia have also switched to no-loan financial aid for their neediest students.

According to the Association of American Universities, tuition costs at four-year colleges grew 79 percent between 1993 and 2003. The cost of a Columbia education has risen 65 percent since 1992-3, and rose 4.4 percent last year.

"Colleges and universities are devoting an increasing amount of their own resources to student aid," read a recent AAU study.

Financial aid has grown at the federal, state, and institutional level from $9.2 billion in 1992--93 to $20.4 billion in 2002--03, the study says. The FY2005 federal budget adds $8.7 billion in new funds for financial aid, including $3.7 billion to cover deficits in the Pell Grant fund, and increases the new Pell maximum to $4,500 from $4,050.