The road to revamping financial aid

By Jennifer Supernaw

On Thurs., Feb. 5, Yale University President Richard Levin, GRD '74, announced major changes in Yale College's financial aid policy that could save middle-income families thousands of dollars a year. Levin insisted the issues have been under serious revie w for about a year in response to concerns raised by students and the Administration. He acknowledged, however, that the financial aid overhaul unveiled at Princeton two weeks ago prompted Yale officials to move up their schedule to this week.

Under the revised policies, family assets up to $150,000 will not be included in the calculation of parental contributions. Upperclassmen will be able to petition for a waiver of the summer work requirement so they can pursue low-paying public service int ernships, Yale-sponsored summer travel fellowships, or formal study abroad programs. The budget for international financial aid will increase by 50 percent, and monies from recently approved federal education incentives will remain in parents' pockets ra ther than being transferred directly to the University. Levin also announced that next year's term bill will increase by only 2.9 percent, marking the sixth consecutive year in which its rate of growth has declined, and the first time since the mid-1960s that it has increased by less than three percent.

Motivations for change

Levin said the changes in Yale's financial aid system, which currently provides some level of support to 42 percent of the student body, were prompted by the dwindling number of middle-income students matriculating in recent years. "We have observed in the last few years that our yield was higher in the low- and high-income ranges than it was in the middle," he said. "We've been looking at how we can do something to enhance our attractiveness for students in the middle-income range."

The change in asset calculation is designed to do just that. Levin said the previous policy sometimes penalized parents with long-range financial planning strategies because they were expected to dip into savings and home equity to help pay for college.

"We felt a program that raised the level of exemption on all assets would be more equitable and fair to all parents," Levin said. He added that this change will apply to all current and future students. "If we've decided [this] is the right way to calc ulate a family's ability to pay, it just seems right to extend that policy to students who are already here," Levin said.

Enrolled students will also be able to take advantage of the policies designed to increase summer options. Yale College Dean Richard Brodhead, BR '68, GRD '72, said that with unpaid internships becoming more common in recent years, Yale realized that a se rious inequality of opportunity was developing between students on financial aid and those from more affluent backgrounds. This year the exemption will only be available to juniors, but Brodhead said that after gauging student interest and working out det ails, the Administration hopes to extend the policy to students who are completing their sophomore year.

Administrators also hope the new reforms will draw a more diverse student body from around the world. Past policies that increased the overall number of international students without increasing funding for international financial aid tended to draw in st udents predominantly from Western Europe. Now, according to Levin, "we will have a greater opportunity to get outstanding students from some poorer countries."

Yale student involvement

Student activism was instrumental in bringing about these and other recent reforms. In April 1997, the Coalition for Financial Aid Reform (COFAR) outlined its demands in a petition that garnered the support of approximately 1,400 undergraduates. According to COFAR Co-Coordinator Rachel Deutsch, ES '00, the petition called for more effective recruitment of minorities and students in public schools and rural and urban areas; a reduction in summer work requirements; increased work-study wages; a reduction in the interest rate on Yale Student Loans, whose primary borrowers are international students; need-blind admissions for international students; an end to bursar's hold; and free health care for undergraduates on financial aid.

Yalies' firm resolve

Since last year, COFAR and the Yale College Council (YCC) have been working closely to convice the Administration to reform its financial aid policies. In January, the YCC passed two resolutions that directly addressed this issue. The first called on Yale to create a board to review requests for reduced summer work requirements.

"[The YCC] felt that the resolution [was] essential to guarantee equal opportunity among students from all income brackets, one of the core values of a Yale education," Fawzi Jumean, MC '00, chair of the YCC's Issues Committee, said. According to Brod head, "The YCC's proposal was truly excellent. What we have put in place is potentially significantly more generous than what they suggested."

The second YCC resolution demanded that the Subcommittee on Admissions and Financial Aid (SCAFA) live up to an agreement it made with the YCC and COFAR to provide new loan and credit options for all students. Within a few days of the resolution's passage, the Yale Student Loan interest rate was reduced from 12 to nine percent. YCC Treasurer Zach Kaufman, SY '00, thinks student pressure was a key factor in bringing about the change. "I don't know if it was definitely cause and effect, but I think our resol ution helped," he said.

Like COFAR, the YCC is also committed to the principle of need-blind admission for international students. According to Jumean, "The 50 percent increase in aid for international students is a great step, but Yale's ultimate goa l should be to have need-blind admission for international students like Harvard has." Kaufman added that the YCC will soon discuss a third resolution demanding need-blind admissions standards for international students without a tuition increase.

Yale 's Bursar's hold policy has also been revamped this year in response to students' pressing concerns. "Bursar's hold has been revised to the point where it's no longer a hardship for students," COFAR Co-Coordinator Katie Unger, BR '98, said. According to Donald Routh, director of University financial aid, this was the first year students on Bursar's hold were allowed to move into their rooms and attend classes.

While the Administration has made significant changes, it continues to face student pressure on other issues. According to Deutsch, at its next meeting with SCAFA, COFAR plans to ask the University to change the policy whereby scholarships from other orga nizations reduce the amount of grant and scholarship money students receive from Yale. This issue is also of concern to the YCC. Jumean said that the policy "sadly weakens the incentive to strive for these awards and grants."

Routh explained that any school that meets a student's full financial need is required under federal regulations to make an adjustment if the student receives outside funding. The law allows the school to determine the spec ific adjustment and, according to Routh, "Our policy is more generous than those at some of the other Ivies."

Working within the system

Students fighting for financial aid reform said one of the main obstacles to achieving results has traditionally been the lack of a formal means for students to express their views to the Administration. According to Unger, "Yale's committees, especially those dealing with financial aid, have no student representation at all. We have no official voice to provide input a nd submit proposals. Students have very few official avenues to address how the University deals with these kinds of issues."

At Princeton, however, students have a well-defined institution that enables them to shape major policy and budgetary decisions. Mark Mahan '98, a student involved in the financial aid reform process, said that Princeton has a governing structure unique a mong universities.

Students are elected to serve on a hierarchy of committees and work with faculty and administrators to set the university's budget. The Committee on Undergraduate Admissions and Financial Aid (CUAFA), which has roughly equal numbers of student and faculty members, submitted a financial aid reform proposal last fall to Princeton's Priorities Committee. PriCom cons ists of equal numbers of students and faculty, as well as three administrators and a staff member, giving undergraduates a quarter of the total votes.

According to Pavan Ahluwalia '99, a former member of CUAFA who currently serves on PriCom, the commi ttee members work together effectively to set Princeton's priorities. "You actually do see a consensus being established. Votes end up being more of an administrative exercise because people agree on what should be prioritized," he said. Two weeks ago, Princeton announced it would undertake major substantive changes in its calculation of family contributions, loan expectations, and aid for international students.

The Princeton plan and Ivy League competition

According to Richard Spies, Princeton's vice-president for finance and administration, the university will not weight home equity as heavily in its asset calculations, effectively reducing the amount many families will have to pay by several thousand doll ars a year.

"For many students we're not going to include any contribution from the value of the home, and for others we're going to reduce it," Spies said. Spies explained that families with incomes below $40,000 will no longer be expected to take out loans, those who earn between $40,000 and $57,500 will have reduced loan expectations, and families with incomes above $57,500 will be expected to borrow sligh tly more than $4,000 per year. Money that students would have had to borrow under the old system will now be replaced with grants.

A "smaller piece of the total picture," according to Spies, was an increase in funding provided for international students. Princeton will now be able to offer financial aid to four or five more international students each year.

These changes developed because of concern among students and administrators over the decline in economic diversity at Princeton. "We were becoming perceptively a richer school, which could be seen as a regressive trend in education," Mahan said.

According to Spies, 42 to 43 percent of undergraduates receive need-based financial aid, but "there is considerable variation from class to class. That was part of what led us to make changes" to the financial aid system. Spies noted that only 38 perc ent of the class of 2001 received need-based financial aid. "This was low for us," he said.

Spies said Princeton's reforms were not specifically designed to give the university an advantage in the battle to attract the nation's top students. "This is no t intended to be a way to gain a competitive advantage over Yale, Harvard, or anyone else. It's a way to make our institution more accessible," he said. "Our desire is to make it more affordable and make it known so people will think about Princeton and p laces like Princeton."

According to Spies, the changes at Princeton may benefit upper-echelon schools throughout the country. "The best possible outcome will be if students who don't think about places like Princeton or Yale begin to think about it, to apply, and to come," he said. "Our objective is to have more of them in the total applicant pool that we share. If everyone gets more students from these backgrounds as a result of this, we'll be happy."

Yale administrators are determined to meet the challenge of remaining competitive within the Ivy League. "If a student is equally interested in Princeton and Yale and Princeton gives the student a package with no loans, that puts Princeton at an advan tage. We don't match other awards as such, but we are willing to look at the underlying differences between the awards," Routh said.

Students believe it is important for top universities to pay attention to each other's financial aid policies and to keep raising the bar for each other. "I praise Princeton for setting a new standard in some aspects of financial aid that the Ivy League would do well to follow. I'm glad Yale is improving in this respect," Jumean said.

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