College signs onto new financial aid policy

The College signed a statement on July 6 endorsing a new formula for calculating financial aid and reasserting the primacy of need-based and need-blind financial aid. Morton Owen Schapiro, president of the College, joined with 27 presidents of other highly selective schools to develop the agreement, which ensures further development aspects of the financial aid assessment of college students.

“[The signing] reaffirms the College’s need-blind admission policy and commitment to need-based financial aid,” said Paul Boyer, director of financial aid. “Williams has held steadfast to these policies for decades.”

By signing the statement, the presidents agreed to further develop a new “Consensus Approach to Need Analysis,” which will be used by campus financial aid officials in determining student eligibility for financial aid and will result in a new need analysis methodology.

“This new approach will hopefully restore some confidence for families in the financial aid system and eliminate the disparities in financial aid awards coming from different colleges and universities,” said Boyer.

Boyer said that the new methodology will not be significantly different from the way the College currently evaluates families’ ability to pay for college. However, he said that the new formula will take a different approach when assessing the parent and student asset contributions, “especially in cases where it is clear that the assets accumulated in the student’s name have been saved by the parents.”

“The new treatment of college savings, or family assets, will have the direct effect of reducing family contributions,” added Boyer.

Additionally, the new methodology will also account for known areas of the country where the cost of living is significantly higher than the national average.

“There have been some curious aspects in the financial aid formula that most of us have been using,” said Schapiro, a higher education economist and a world expert in financial aid. “This is a much fairer way to figure out financial aid packages.”

However, while the College is committed to continue to improve financial aid, these changes will not immediately take effect. “Such sweeping changes take time,” said Boyer.

“It is not yet known when these changes will be implemented and further whether they will be phased-in with each incoming first-year class or adopted across all classes,” he added.

It is not yet known by how much financial aid packages will increase at Williams, since the new methodology will not be installed immediately.

“At this time it is impossible to say how much student financial aid will increase at Williams,” said Boyer. “Although it is true that in most cases family contributions will decrease and the difference will be made up with additional scholarships.”

This newly signed agreement is a product of the “568 Presidents’ Working Group,” a group of presidents of highly selective schools that Schapiro states has been working on new standards for some time.

Prior to the 568 Group, about two dozen institutions, including all of the Ivy League universities, collaborated in determining the financial aid awarded to all students admitted to one or more of the member schools. Named the “Overlap” group, this partnership lasted nearly 30 years. Many believed that this group helped both the students, as those admitted could select a school based on the college’s merit rather than the money provided, as well as the member institutions, since they would not be competing against each other financially.

However, in 1989, the U.S. Justice Department began investigating the “Overlap Group,” as it called their actions a violation of federal anti-trust laws. This government intervention effectively stopped the meetings of this group. As a result, financial aid at highly selective schools became what some observers described as a “bidding war,” which resulting in much more merit-based and much less need-based aid.

To help restore stability to the financial aid system, in 1992, Congress passed an anti-trust exemption to allow need-blind colleges to work together to improve financial aid. Utilizing this new law, Cornell University president Hunter Rawlings and Harry Payne, then-president of the College, formed a group to work on strengthening need-based financial aid. The presidents named their group after Section 568 of the law, which provides for the anti-trust exemption.

“There has been an erosion in colleges’ commitment to admitting students regardless of their families’ income,” said Rawlings, who led the group at their July meeting, in an interview in The Chronicle of Higher Education.

“I fear that trend will further erode the public’s confidence in the financial-aid system unless institutions make their policies transparent, consistent, and understandable.”

One of the goals of the “568 Presidents’ Working Group” and their statement is to partly return to the days of the Overlap Group where students were offered equal financial aid packages from all member institutions and were free to choose their college based on the merit of the school, not the financial aid package awarded.

“I think that we should use the 568 anti-trust exemption as much as possible to agree to basic standards for awarding aid,” said Schapiro. “If someone turns down Yale to come to Williams, it should be based more on what we have to offer and less on a difference in price.”

While this statement from the “568 Presidents’ Working Group” was signed by the president of nearly every highly selective college and university, there were some notable exceptions.

“Some schools were not eligible to participate – the antitrust exemption was only for schools that were 100% need-blind,” said Schapiro. “That leaves out Brown, Smith and other fine schools that consider ability to pay in taking students off the wait list.”

Additionally, Princeton and Harvard (whose president attended the July meeting) did not sign the statement. However, Schapiro says that his group hopes that “in the future, all of the eligible schools will take into account this new, much more generous way to allocate financial aid money.”