The Battle for Better Financial Aid

With Columbia's recent announcements that it will make a major fundraising push for financial aid and replace many undergraduates' loans with grants, the University has thrust itself into the increasingly aggressive nationwide competition in higher education to attract low-income students.

And while initiatives at other schools may offer some insight into the possible impact of similar reforms here, whether the move is enough to reshape Columbia's ability to cover the cost of tuition for an ever more socioeconomically diverse student body remains an open question.

MONEY, MONEY, MONEY

At its most basic level, Columbia's financial aid policy-like those of its peer institutions-is contingent on affordability.

Because Columbia College and the School for Engineering and Applied Science admit domestic students without regard for their ability to pay tuition, the University must ensure that available funds-a combination of earmarked endowment income, gifts, and tuition revenues-equal the level of financial aid promised under its policy.

This is no small task for a University whose $5.2 billion endowment, though large among U.S. academic institutions, lags significantly behind those of competitors Harvard, Yale, Princeton, and Stanford. Of the $36 million spent on financial aid in Columbia College in 2005, a meager 35 percent-or about $13 million-was generated by permanent endowments. At peer institutions, that portion can reach as high as 70 percent.

The rest of the money must come from annual gifts and tuition revenues, but administrators say that this places financial aid in competition with the college's other expenditures, which are paid for from the same pool. Diverting more tuition dollars toward aid, for example, could diminish funds available for student services and academic facilities.

With this in mind, the University recently announced that $440 million of its $4 billion capital campaign would be set aside for financial aid. Based on the endowment's usual rate of return-about 5 percent-the measure would add at least $22 million to the annual aid budget by the campaign's end in 2011.

If the fundraising plan is successful, it will represent a substantial increase to Columbia's current level of expenditures. Over the past several years, the average annual increase in undergraduate aid has hovered between $3.5 million and $4.8 million, bringing this year's total to $58.5 million after the loans-for-grants changeover. The capital campaign would raise that figure by over 37 percent.

HOW BLIND IS 'NEED-BLIND'?

The reforms necessarily raise the question of what a "need-blind" admissions policy actually means and what additional measures, on top of simple funding increases, are necessary.

While it is true that domestic CC and SEAS applicants are not screened for their ability to pay Columbia tuition, critics of the University's policies-members of the student group Financial Aid Reform chief among them-contest that the pool of students who apply and matriculate is largely self-selecting. Low-income applicants are scared off, they say, by the amount of financial aid many students have to pay back through work-study positions or after graduation. They may have reason to be frightened-the average four-year loan package among undergraduate aid recipients came in at about $20,000 in 2005.

This is, in part, what prompted Columbia's more immediate policy change: replacing loans with grants for students whose families earn under $50,000 a year. Executive Director of Undergraduate Financial Aid David Charlow said that the changes would impact about 15 percent of SEAS and CC students, or 30 percent of need-based-aid recipients.

When the change was announced in September, Columbia College Dean Austin Quigley stressed the pressure to attract applicants from a broad socioeconomic spectrum.

"The College's capacity to enroll a diverse student community is as vital to its future as to its past," he said in a statement.

This particular type of reform has been popular among major research institutions over the past five years. In 2001, Princeton University, bolstered by its then-$8.2 billion endowment, announced that it would replace all loans in its financial aid policy with grants, a revision of its 1998 amnesty for families earning under $46,500.

The changes, according to Princeton administrators, worked. The number of entering students from families earning under $46,500 jumped from 88 to 130 between 2001 and 2005. The percentage of minority students in the graduating class jumped 2.3 percent, and the number of African-American students went up 30 percent between 2004 and 2005 as well-both records for Princeton.

"What is most striking about our recent changes in policy and recruitment is their broad-based impact," Dean of Princeton College Nancy Malkiel told the Princeton Weekly Bulletin, the university's newsletter, in 2001. "These changes have increased our attractiveness to students from all backgrounds and all income groups."

Since then, other institutions have enacted very similar policies. Harvard and Yale universities eliminated contributions for students whose families earn under $60,000 and $45,000, respectively, while significantly reducing contributions for families in the next bracket up.

The University of Pennsylvania, whose $4.4 billion endowment is notably smaller than Columbia's, announced a plan in March almost identical to Columbia's: students from households earning under $50,000 a year will receive only grants.

MORE STILL TO COME

By and large, the policy change has been met with tempered optimism from students, with most sounding the same note of caution: the change is good, but there's more to be done.

Shade Ogunleye, CC '09 and a recipient of more than $6,000 of financial aid loans under the old system, said that the shift was helpful but that it did not constitute a silver bullet for low-income applicants.

"It's definitely a step in the right direction for us poor kids," said Ogunleye, who will receive only grants from now on. "If you can afford Columbia, then you should pay for Columbia. It's a great school."

Ogunleye said that two of her friends had been forced to leave school last year after they were unable to meet the financial demands of attending Columbia.

"It's really unfortunate because they're good people," she added.

Ricardo Millan, SEAS '05, said he was grateful for the $20,000 in grants he had received during his four years at Columbia, but that the recent policy change would have been helpful to him.

"I'd say with an extra $10,000, it would have helped," Millan said. He added that he thought the Office of Financial Aid was doing an effective job of meeting financial aid demands. "They're giving them [students] a lot already."

The reactions are largely consistent with those of University President Lee Bollinger. Shortly after the announcement of the grants program, he said: "You always want to do more than you actually can. We could do so much more if we just had the resources."

Varun Gulati contributed to this article.