Recent announcements of new financial aid policies at Harvard and Dartmouth, in addition to new federal legislation, will affect Williams’s stance on issues of equity and affordability.
These changes are a result of the Reauthorization of the Higher Education Act, which was recently passed by the federal government. The bill covers a wide range of financial aid issues, and it includes a call to cut the interest rates on student loans from approximately 8 percent to 7.46 percent. According to the College Board, student loans are the primary source for college aid, accounting for 54 percent of all aid.
Although these changes and others carry a lot of weight, Director of Financial Aid Philip Wick noted that it will take some time for the bill to filter down to the institutional level. “On first blush it seems that it will not have much impact on Williams or its students.”
Wick looks for changes in the financial aid structures at other colleges, particularly Williams’ direct competitors, to spark revisions in Williams’ policy. “The big issue is what’s happening amongst the upper-tier institutions,” Wick said, referring to the recent financial aid initiatives undertaken by several highly-selective colleges in the past year.
Early this year, Princeton announced sweeping changes in its financial aid policy. The school did away with student loans for families with incomes from the lower brackets and created a step program to reduce home equity.
“Princeton played with the concepts,” Wick said, developing this initiative to bolster its ability to attract low-income students and “make its cost easier to bear for middle-income ones.”
In his article “Need-Based Aid: Under Siege” published in “Connection,” a publication of the New England Board of Higher Education, Wick explains the dangers of Princeton’s plans. The announcement “raised serious concerns about stepped-up competition for students, particularly minority students” and has contributed to a trend in college financial aid towards failing to support traditional need-based principles.
Essentially, many institutions are turning to merit scholarships as the center of their financial aid policies, and this has worked in conjunction with the rise of a more competitive environment to seriously threaten need-based values. By doing away with student loans for the lower income brackets, Princeton has not only set off a warnng shot to other institutions, but has also implicitly moved toward merit scholarships as the center of its policy.
In his article, Wick lays out an example of the problem: “A college that charges $20,000 in tuition knows that it can realize $60,000 in additional revenue simply by replacing one $20,000 need-based scholarship with $5,000 merit awards to four students who could afford the full cost.”
The increase of competition between schools across the country is also a major concern. A financial aid initiative recently announced by Dartmouth is a case in point as Wick sees it having an impact on Williams.
“The Dartmouth decision is more significant to Williams than the others,” Wick said. Their plan, aimed at attracting more low-income students, is highly aggressive. “Dartmouth is doing what Princeton is doing, eliminating loans for low-income students.” This means that low-income students will receive outright grants, which they do not have to pay back, instead of loans, which would have to be paid back.
The plan falls in line with a national trend in which schools are competing fiercely for low-income students. “All of these institutions are looking to attract their market share of African-American and Hispanic students,” Wick said. This competition is rapidly displacing traditional need-based values.
“There is a lot of nervousness and anxiety between a group of institutions that used to have a more congenial and collegiate atmosphere,” he continued.
Some of the county’s most elite colleges and universities are vying for the same students, and financial aid packages are important bargaining chips. Wick sees this as a major factor in the erosion of need-based systems.
Williams is one of a small number of institutions that actively supports its need-based values at all costs. Some schools, of which Williams is one, plan to “support the equity issues some of us really care about, what we call horizontal and vertical equity,” Wick said.
Essentially, these concepts state that students from comparable family resources should pay the same and students from different income brackets should pay their fair share. In order to be truly effective, need-based systems must also be able to provide the adequate amount of aid to students who need it. Many colleges and universities that advertise need-blind admissions do not follow through with the proper financial packages, thus admitting students but not supplying them with the needed aid.
Wick makes special note that Williams, in his view, implements a true need-based system. “Williams students are admitted on the basis of merit and aided on the basis of need,” he said. Wick emphasized that Williams follows through with the required amount of needed aid.
“The concern,” he said, “is whether we can hold to our philosophy in this raging sea of competition.”
The Harvard plan, announced last month, is “an attempt to restore equity,” Wick said. According to a statement released by Harvard President Neil L. Rudenstine, the plan will support need-blind admissions and at the same time “make sure that students who need financial help receive the aid they need.” The initiative also calls for a 20 percent increase in the Harvard scholarship program.
Although Wick finds the Harvard plan intriguing, he looks to Dartmouth with a sharper eye. The Dartmouth plan, announced on Thursday, will elicit a response from Williams.
“If we’re going to make any changes to keep an equal footing in this thing,” Wick said, “it’ll have to come before March.” He said that it would be a major topic of discussion on all levels of the college for the next several months.
Wick hopes that, with time, financial aid programs for individual schools can be standardized, and competition can be reduced. “But that’s like trying to put the genie back in the bottle,” he said.
The College Board, which presides over the traditionally need-based oriented College Scholarship Service (CSS), will meet in two weeks. Wick believes much of the responsibility to restore traditional values to the world of financial aid lies with this organization.
Most major schools are members of the CSS, which was founded in 1954 to standardize need-based systems and cut down on vicious competition. The group has announced several changes in financial aid policies in an attempt to build an equal footing for all institutions.
Wick is optimistic, but realizes the problem present a challenge for financial aid at Williams. “I hope it’s not too little, too late,” he said.