Harvard and other Ivy League schools have been historically very generous to families with incomes below $60,000. But, financial generosity just got even better.
Only the Wealthy Pay Full Tuition at Ivy Leagues
A clever financial planning commercial shows a father selling all family possessions at a garage sale because the son is going to an Ivy League college. The financial aid formulas are being redone so more can afford Harvard, Stanford and Yale.
Ivy League colleges have always been on a sliding scale for financial aid along with other colleges. Lower family incomes produce lower expected family contributions. Families with incomes below $60,000 were not expected to contribute to the child’s Harvard education. However, the upper middle class took a big hit because the annual costs to attend these colleges are often over $45,000 per year. That is now changing, at least at Ivy League colleges.
Loans Replaced by Grants and Work-Study
Students attending Ivy League colleges are very likely to graduate debt free. That’s right, students may graduate debt free after receiving over $180,000 in education. But, grants will only cover tuition, right? No. Grants and work-study cover tuition, room and board, fees, and books.
Loan elimination programs are currently in place at
- Harvard
- Princeton
- Dartmouth
- Yale
- Stanford
- Williams
- Amherst
- Davidson
- William & Mary
- Bowdoin
- Claremont McKenna
These programs are not only for low-income families but also for middle-income families that have traditionally paid a higher percentage of income than the poor or wealthy have in the past. Each college may offer a slight variation of the loan elimination program.
Few Colleges Will Offer Loan Elimination Programs
Mark Kantrowitz, who runs Finaid.org, estimates that 5% of colleges will be able to afford loan elimination programs. Other colleges may offer grants for tuition only or variations of a loan elimination system. Only a few selected schools can afford to be this generous because of large endowments.
Harvard has over $35 billion in reserves. A little known four-year college may have only a few million in reserve. These reserve funds are invested in the same financial markets that have suffered great losses recently. Colleges spend only the earnings and not the principal. If the earnings are small, the grants will be small. Many small colleges without large reserves sent out letters last spring warning students that grants and scholarships will be smaller for 2009-2010.
There will be pressure for all colleges to offer more generous award letters because of the Ivys but most will not be able to do so. And, students that think they will select a college with a loan elimination program should check out the entrance requirements first. Most of the generous colleges mentioned are Level 1 schools requiring an ACT of 30 or higher to even be considered for acceptance. Only top students qualify for Ivy League acceptance.
Related article: Free Online College
Kingsbury, Kathleen. "The New Battle over Financial Aid," TIME, September 4, 2008.
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