Harvard Plans Major Increase in Student Aid For Next School Year

Harvard University announced Monday that it would significantly increase the financial aid it offers to middle-class and upper-middle-class students, seeking to allay concerns that elite colleges are becoming too expensive for even relatively well-off families.

The move, to go into effect in the next school year, appears to make Harvard’s aid to students with household incomes from $120,000 to $180,000 the most generous of any of the country’s prestigious private universities. Harvard will generally charge such students 10 percent of their family household income per year, substantially subsidizing the annual cost of more than $45,600.

Officials said the policy would cut costs by anywhere from a third to 50 percent for many students and make the real costs of attending Harvard comparable to those at major state universities.

They said the initiative would increase financial aid spending by the university to $120 million annually from $98 million. A little more than half Harvard’s students get some form of aid, including many from families earning $120,000 or more.

The new aid policy is part of a broader effort by elite universities to alleviate the financial burden of rising tuition and ward off the perception that they have become unaffordable. Amherst, Williams, the University of Pennsylvania and Princeton are among those that have increased aid and substituted grants for loans to some students in recent years.

The move also comes as some members of Congress, concerned that tuition has steadily outpaced inflation, have been discussing whether universities should be required to spend a minimum amount of what their endowments earn on student aid. Harvard has a $35 billion endowment, the highest of any university.

Harvard officials said they had been considering the aid change for some time.

“We’ve all been aware of increasing pressures on the middle class,” said Harvard’s president, Drew Gilpin Faust. “We hear about this in a number of ways — housing costs, both parents working, the difficulty of amassing any kinds of savings, just the increasing pressures as middle class lives have become more stressed.”

Three years ago, under Harvard’s former president, Lawrence H. Summers ’75, the university decided that families whose income was less than $40,000 would no longer have to pay for their children’s undergraduate education, although students would still have to make some contribution though programs like work-study. It then raised the income level eligible for the waiver to $60,000.

Harvard’s dean of admissions and financial aid, William R. Fitzsimmons, said those changes had increased the number of low-income students by 33 percent in three years. But Harvard officials said they had become increasingly concerned about higher income families.

Many Harvard officials, Faust said, feared that cost was driving the choices students make about graduate school and careers and that it had created what amounted to a two-class system among Harvard undergraduates. Dean Fitzsimmons referred to it as “the upstairs downstairs syndrome.”

The officials said, for example, that often only the wealthy students can afford to pursue highly valuable but unpaid research opportunities with professors, take unpaid summer internships, study abroad or even spend time with their friends.

Under the new financial aid rules, the university said, a family making $120,000 would have to pay about $12,000 for a child to attend Harvard College, compared with more than $19,000 under current policies. A family making $180,000 would pay $18,000, down from $30,000.

The university also plans to substitute grants for loans in all financial-aid packages and will no longer consider home equity in calculating aid. The change in home equity considerations alone will mean, on average, a reduction of $4,000 a year in cost for those families whose home equity would previously have been a part of the financial aid calculation.

Harvard officials say they don’t want families borrowing against their homes — or selling their homes — in order to send their children to the university. “If you had an oil well in the backyard, you could sell the oil,” Dean Fitzsimmons said. “But you need to live somewhere.”

Currently, 763 students whose family incomes are between $120,000 and $180,000 receive some financial aid from Harvard, which has a total of 6,600 undergraduates. The new policy will be applied retroactively, officials said.