Tuition Assistance for the Middle Class

Why recent moves by Harvard and other educational heavyweights to lighten the financial load for middle-income families won't be copied at many schools

by Alison Damast

• View Slide Show

Well-endowed colleges have discovered they love the middle class.

Following recent announcements by Ivy League heavyweights Harvard and Yale that they were cutting costs for families earning in the low six figures, a growing number of competitors have fallen in line to offer comparable packages to middle-class families. On Jan. 31, Cornell became the fifth Ivy League school to announce a new financial aid initiative for students, closely following on the heels of Dartmouth and the University of Pennsylvania. Even schools outside the Ivy League, such as Northwestern University, are following suit. On the same day that Cornell weighed in, Northwestern announced plans to eliminate student loans and replace them with grants for undergraduate students with the greatest financial need.

These institutions say the moves are designed to make it easier for middle-class and upper-middle-class families to pay for college. For example, Harvard University describes the news as a "sweeping middle-income initiative" on its Web site, while other schools made similar pronouncements. But despite this big talk, real help for the middle class, at least for the majority of families with students at colleges with fewer financial resources than the Ivies and other elites, will not be coming any time soon.

"It's basically a very few privileged people who will be helped by this initiative," says Sandy Baum, senior policy analyst for the College Board and a professor of economics at Skidmore College. "There aren't many colleges that can remotely afford to do this."

Affordable for the Richest Colleges

The move to increase endowment spending by top schools comes amid political pressure to do something to cushion the high cost of college education. On Jan. 24, Senators Charles Grassley (R-Iowa) and Max Baucus (D-Mont.) asked the nation's 136 wealthiest colleges and universities for detailed information on their endowments, tuition hikes, and financial aid. Their requests came shortly after the National Association of College & Business Officers released a report that a record 76 schools had endowments topping $1 billion or more in the last fiscal year. As tuition continues to outpace inflation at the nation's colleges (BusinessWeek.com, 10/22/07), the pressure is on for schools to distribute more of their wealth among students.

"I think the discussion in Washington reflects what Congress hears from students and parents. Yale hears from students and parents as well," Tom Conroy, a spokesperson for Yale University, wrote in an e-mail. "Both Congress and the school are reacting to the same voices."

But while the tuition aid by the big schools is welcomed by students and their families, comparable largesse is not a feasible option for most of the nation's schools, which have endowments significantly below Harvard's $34.6 billion. For the foreseeable future, it appears just a small percentage of the nation's 18 million college students attending elite universities—less than 1%—will be affected by the financial aid decisions at some of the nation's top schools. The reason? Most higher-education institutions, including small private colleges and state universities, simply can't compete with the vast financial resources of the Ivies and their peers. The majority don't have endowments anywhere near the size they would need to offset the cost of tuition for middle- and upper-middle-class students, experts say.

In fact, pressure at less-wealthy state schools to compete for top students could have the perverse effect of hurting those students most in need. In the worst-case scenario, schools could choose to divert money from low-income students in favor of more financial aid for middle-class and affluent students, says Richard Vedder, director of the Washington (D.C.)-based Center for College Affordability & Productivity. "In that sense, low-income students are a little bit at risk," Vedder says.