Student Loan News, Updates and Blog Posts

“We had a great fear we were becoming unaffordable and inaccessible,” said William Fitzsimmons, dean of admissions and financial aid at Harvard. “Now I think we can make a great case we are neither.” If you’re one of many who believe you have the wits but not the coinage to get into the name brand universities, you may want to rethink your outdated stance. Harvard has changed the rules for everyone.

Earlier this year Harvard University made a number of policy changes surrounding how they calculate financial-aid. These changes have had a profound impact on the financial-aid landscape. They have made attending Harvard and other moneyed universities a reality for middle-class families.

Harvard’s plan holds three key ingredients. First, families making between $120,000 and $180,000 annually would be expected to pay no more than 10% of their income now. That percentage would then steadily decline until reaching zero for incomes of $60,000 and below. For example, a family making $150,000 would be expected to contribute $15,000.

Second, Harvard is replacing all loans with grants and spending up to $22 million more annually on aid. And finally, they would no longer consider home equity in determining a family’s ability to pay. These three changes have made Harvard surprisingly affordable.

According to figures compiled by the Project on Student Debt Harvard is now cheaper for the parents in the $120,000 bracket by about $7,000 less than a school in the University of California system.

But many believe Harvard is acting merely out of self interest by instituting these financial-aid overhauls. They are looking to attract the top middle to upper middleclass students, and can do so by flexing their endowment muscle. Harvard has the largest total endowment among schools in the U.S. If you breakdown the average endowment per student it comes out to a staggering 1.8 million.

Recently congressional lawmakers have been scrutinizing endowment spending at the Harvard, Yale, and Princeton’s of the world. By policing themselves some believe they are hoping to ward off any future regulatory constraints on their sizeable endowment nest egg.

A case can certainly be made that Harvard is to the world of higher education what the New York Yankees are to Major League Baseball. They have the money and are not shy about spending it to attract the best candidates, even at the detriment of other flagship public schools. And until legislative action is taken to regulate endowment dollars Harvard will continue to play by the established precedent and sleep with a clean conscious each night doing so.

Whether you applaud Harvard’s effort as forward thinking and enlightened or curse them for the Everest size wad of cash they have at their disposal one undisputed fact remains; opportunity is now knocking for more middleclass students. I suggest you answer the door.