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Financial aid in a changing Ivy world
Most of the reforms targeted students from middle-income families, many of whom were turning down Ivy League schools due to insufficient financial aid packages. Yale implemented three new policies to lighten the burden on these families: the protection of the first $150,000 of family assets from the financial aid equation, an increase of 50 percent (from $300,000 to $450,000) in financial aid for international students, and a waiver program that allows upperclassmen to waive their summer income requirement to participate in community service or foreign study.
Now, a year later, The Yale Herald sat down with Donald Routh,
Yale's director of financial aid, and four concerned students to discuss the
successes and failures of the University's first year of reformed financial
aid. Eunice Cho,
YH: Do you believe the Administration was swayed by student activism in the form of the YCC and COFAR, and do you believe these organizations reached their goals? Eunice Cho: Many different groups came together and realized that things needed to be changed, like the fact that students who have to work over the summer are excluded from opportunities, not just in community service and travel, but also in internships that aren't covered by the summer waiver program. I think the Administration did have an ear open to students. Things that have gone unaddressed, though, include the recruitment of low-income minority students, the severe difference in the financial-aid versus non-financial-aid experience, and the practice of taking away outside scholarships.
Zach Kaufman: Going back to the YCC's effect on the reforms, it's difficult to assess. The actual ways that financial aid was changed reflected what COFAR and the YCC wanted, with summer waivers and the increase in international student financial aid. But what we had in mind was that every student who is on financial aid would get at least one summer off to pursue any unpaid internships they wanted. We also advocated complete need-blind admissions for international students, which Harvard has-- Donald Routh: It's the only school that does. ZK: It just seems in line with Yale's philosophy of getting the best possible students from anywhere that Yale would apply its need-blind policy for everyone. Coming from afar YH: This leads to what I was going to ask next, which is whether you all feel that complete need-blind admissions for international students should be a priority. Shu Shin Luh: I guess I'm not as radical as that, but my curiosity is, how do you balance the desire for the "internationalization" of Yale and not being able to accomplish it because you don't have need-blind admissions? Right now, especially in Asia with the Asian financial crisis, it's becoming more and more of a burden. Both my parents are professors. And if they were in America they could pay the tuition, but because they're in Taiwan they can't pay without putting a strain on the economics of our family, because it's not $30,000, it's $50,000 [with the exchange rate]. DR: We do take the exchange rate into account. The average scholarship for international students is now $25,000. The average scholarship for American and Canadian students is about $16,000. ZK: How often is the conversion rate updated? Because it can certainly change a lot. DR: We try to do it once a year--I don't mean to be facetious, but how often would anyone have us do it? What's really hard is the [international] students who come here without financial aid, because they are actually asked to sign a statement saying that they understand that they will not be eligible at any point in their four years. SSL: Right. I signed that very waiver. If my father lost his job, what would happen? Yale is no longer responsible for my not being able to pay. But for Americans, there's a whole group of people who do not get $16,000, who get a couple thousand. I wonder if there's a possibility for similar tiers of aid for international students. DR: The admissions office makes that decision. They have a pot of $450,000, and they determine which students they are going to accept. And your point is well taken--you can either take one student for $25,000 or you can take two students for $12,500. Most of the students, though, are likely to need full aid. SSL: My logic would then be: I won't apply for financial aid, because I won't get it. DR: That's a concern of American students as well. SSL: Right, but it's different [as an international student] when you sign a waiver. GR: Yale recognizes changes in American students by reassessing their package. But international students' situations do change every year, and by signing a waiver like that, it's like saying, "We can predict the future, and of course we can pay in the future." But then something happens, and then what happens to those families? DR: That's why we have them sign the waiver. If we didn't, then we'd have another 25 or 50 students coming and asking for financial aid. You may not like it, but at least it's an up-front way of doing it. EC: If Yale really wanted to demonstrate their commitment, they could do that by changing some of their financial priorities, and I think that that needs to be recognized. Different class YH: Why don't we move on to some other things that Grace brought up, concerning the divide in the Yale experience between students on financial aid and students who aren't. Do the rest of you feel that there is such a division, and is there anything the University or students can do about it? GR: The freshmen are shocked at the difference. They'll say, "I have this roommate on the rugby team or in a singing group, and I have to work at the circulation desk at the library." [Work-study] is putting a lot of strain on a very select group of students. I have to leave in 10 minutes to go to my job, for example. DR: Do you know of any schools in the country that do not expect their financial aid students to work? GR: My high school. I went to Andover, and they had all students do a work contribution. Every student had to devote a few hours a week, no matter what your financial capability. But you weren't paid, so there was this uniform experience. DR: Are you aware of the fact that a third of the students who work at Yale are not on financial aid? GR: Yes, and that also has to do with the inadequacies in assessing financial aid. I have a friend who's not on financial aid, and he works because he has a very strange relationship with his parents, and he doesn't accept money from them.
YH: Eunice, you're also on financial aid. Do you feel a similar sort of divide? EC: Oh, I think there's definitely a different experience. I think students on financial aid must make a choice between something that they might not like to do and something they'd rather do. You can't take that internship you want because it's non-paying. You can't work in that lab because you can't get a summer waiver for that. If you want to work in a low-paying field after you graduate, you have $25,000 worth of loans. You have the choice of either selling your soul and working for that investment banking firm, or it really slows you down from other types of opportunities you might have. SSL: I'm not on financial aid, but I worked for 10 hours a week my freshman and sophomore years, and I don't think it limited my Yale experience at all. I was involved in four [plays] a semester and I worked for the Yale Daily News. Maybe it worked because I don't have the pressure or obligation of self-help looming over my head. And maybe some other colleges don't have as great a self-help burden as Yale does because they do award merit scholarships. DR: Yale's plan is flexible, though. It allows the student to determine how much work-study they are going to take on. If they want to work less, they can take out more loans. GR: But all those loans limit their potential for the future. And Harvard has taken further steps to reduce self-help for these very reasons. EC: My little brother goes to Harvard, and he got a letter sent out to all financial aid students concerning the use of merit scholarships to reduce self-help. The thing is, the students who need money to go to school are the ones most likely to apply for outside scholarships. To take that money away is almost unfair because so many students depend on that income. If you look at outside scholarships as part of the student's income, then a different proportion of the money would go towards self-help-- DR: There are federal regulations about that. Harvard decided to reduce only the self-help [before enhancing other areas of financial aid]. But in terms of student income, we can't [let students keep all outside scholarships]. An adjustment has to be made. EC: Another thing is to look at the loan burden that students take on, which is so high that I think the outside scholarships can do a lot. GR: I have to go to my job now. (She leaves.) SSL: Didn't Harvard used to have higher self-help? DR: Yes, they were $1,000 higher than Yale and now they're $1,000 lower. They came from last place to first place [in the Ivy League] by changing the self-help adjustment policy. ZK: You were saying that federal regulations bind how Yale uses outside scholarships? DR: Right. The federal rule is that a student should not receive more financial aid than she has demonstrated that she needs--it's what we call "overaward." You've got merit YH: Do you think that this discourages students from seeking outside scholarships? DR: I think the answer is no. More than half [of the scholarship] goes to reduce self-help anyway. Recognition of merit is why most students apply for it anyway. People always perceive it as Yale taking money away. Fact is, we budget every year with the expectation that our students will bring about $2 million in outside scholarships. If we didn't make awards until August, no one would have the perception that we are "taking away." Harvard's policy changes in this area won't have any effect on us because we don't do very well against Harvard anyway. Last year, Harvard got 83 percent of students that got into both Yale and Harvard. ZK: Do you have a breakdown of what kinds of backgrounds those 83 percent come from? DR: You mean, do we lose the poor students or the rich students? ZK: Right. Because then you would know exactly how the new policies affect that. DR: Well, we know we didn't lose any poor students to Princeton, even though they took the loan obligation out of the package for students under a $40,000 income. And actually, Harvard [got] 83 percent with students believing they were going to have $1,000 extra in self-help, because [Harvard] didn't make any changes until September of this year, and then they made it retroactive. That was the strangest decision that any of us had ever heard. ZK: Perhaps a large part of the 83 percent were students from middle-income families. DR: I don't think it has anything to do with financial aid. EC: I think it does, slightly. My little brother was accepted to both Harvard and Yale last year, and financial aid did influence his decision to go to Harvard because Harvard offered him a better deal. DR: Did he ask us to review his package? EC: Oh, you reviewed it, but in the end, Harvard gave him a better package. ZK: Is that particular to his case? DR: It happens both ways. That's because the Justice Department won't let us compare notes anymore. For 30 years we exercised what we called "overlap." About 25 schools literally got together around a table and reviewed the need of candidates. All we know now is what the student tells us. We no longer know if we have the same information, because we don't have a chance to compare our analysis. The competition has taken away whatever spirit of cooperation we used to have. The invisible hand YH: So would you call this a bidding war? DR: In overlap, a group of schools with a natural order of selection--nobody at Yale likes you to tell them that 83 percent choose Harvard, but it's a fact--were willing to say, "We'd like to take the financial component out of the student's decision on where she is going to go to college." That's a rather remarkable decision for a group of schools to make. But it doesn't work that way anymore. So there's competition of a sort. ZK: Maybe the argument against [overlap] is that then there is no incentive to drive up the offer. DR: You all have thrown out four or five changes that you would like to see made: changing self-help policies, expanding the summer waiver program--every one of those things has a price tag. If I told you we had another $700,000 to spend on financial aid, would you like to see us change the self-help adjustment policy? Or would you like to see us put it towards international students? Or would you like to see us use it to expand the summer waiver program? EC: I just think it's important to make a commitment to a recognition of the student experience. DR: Would you all agree on what that was? EC: No, but I think that when you put the emphasis on student experience rather than on "how are we going to spend the dollars," that's when COFAR's goals get realized. SSL: Maybe you could change the mission so that Yale has the responsibility to make sure that the students' experience here is valuable. Then you can look at the whole package and think, "Where can we help the students rather than just being sure that they pay their bill?" DR: We do think about those things. For example, the self-help part is based on the expectation that a student should not have to work more than 10 hours a week. I'm sorry Grace doesn't get more enjoyment out of her job, but I don't think it's bad that students should have to work. But we sometimes get calls from Deans and Masters and roommates saying, "Sally's working 20 hours a week." There are a lot of people who don't want to borrow, and we have to try to help them understand that borrowing is a reasonable trade-off for being able to take advantage of opportunities here. EC: One other issue that I think is important is recruiting low-income students. Do you feel that a cooperation has formed between financial aid and admissions in this area? DR: The answer is yes. I think it's particularly helpful in areas where we know that having a financial aid person there does add something to the discussion. Spreading the word EC: What do you think you learn from the contact with the admissions office, in terms of what you think would be a good way to increase representation from very low income families? DR: One of the hardest things is that, as they say, the further west of the Alleghenies you are, the less they know about Yale. I mean, when I was off in Los Angeles, they had not heard about the Jovin murder case or the pornography case. So it's very hard to persuade low-income families that we really are in a position to give them as much financial aid as they need to go to a faraway school like Yale. When you're actually talking to a family whose income is $13,000, and you're talking about $30,000 a year, they think, "Why would anyone do that for me?" So I think that's one of the hardest jobs--to get them into the pool in the first place. All those changes in financial aid--it's not making much difference for the low-income students. EC: Exactly, yeah. DR: The low-income student either gets a full package or she doesn't go. So you don't get all this trading off that you get with $50,000 or $70,000 families. This is what I said earlier--our concern was with middle-income families because low-income families didn't have a problem. Now I meant that in the sense that our yield on low-income families is just as good as our yield on no-need families, once they're in the pool. It's getting them [to apply] that's the problem. EC: I was wondering if there's any ways that you were thinking about getting those people in the pool to begin with. DR: We have to face the fact that by normal, traditional standards, there are not that many low-income students who normally are at the point of [qualifying to go] to Yale. But they're out there, and we want to get as many as we can. I think that it has to do with establishing contact with school counselors. And the most effective recruitment any school has is its own students. SSL: [Of the aid budget,] who decides what goes where? DR: The officers don't like to say this, but the fact is that we have a blank check on scholarship aid for U.S. and Canadian students. We have the authority to honor Yale's commitment to meet the full need of every student who is accepted for admission, no matter how it changes over the course of four years. Now what that means is that it depends on us being able to estimate reasonably accurately how much we are going to spend. Normally we do a good job on that, but five or six years ago there was a significant increase in the number of freshmen who needed financial aid. After 15 years of always coming in between 35 percent and 37 percent, it went to 40 percent and we were $2 million over budget. And I didn't lose my job, because they knew that we were meeting a greater need than anyone had expected. It's leveled off now--it's back to normal. We're blessed, because I've never had to tell a family, "We can't help you because we don't have the money." For the last 28 years, we have also held the percentage increase of self-help at or below the percentage increase of the term bill. The average loan here is about $5,000 less than that of the average graduating Ivy senior. The average for last year's graduating class was $15,700. That's a lot of money, but you've got 10 years to repay it. What hurts is when you want to go to graduate school. Getting the worm YH: The binding early admission program has been criticized as admitting a high concentration of wealthy, white students who know they can pay and don't need to compare packages. Is this a problem, and is there anything Yale can do to make it more equitable? DR: Let me confirm your hypothesis. One of the reasons that the proportion of freshmen on financial aid has dropped over the past few years, we're quite certain, is because of the implementation of early decision [as opposed to non-binding early action]. Last year we took about 40 percent of the class that way. And there's no question that you have less in that group on financial aid than you do in the general pool. We don't get a lot of minority students on ED either. So I think that's a real concern. I think there's a role for early decision, but the question is, should we be taking that many in that way? EC: Is there any cap on the number of students taken early? DR: The admissions committee tries to apply the same standards as they do to regular applicants, but there is a difference in the pool. I don't think we should abolish it altogether, but it is a hot topic that is being discussed.
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