Harvard’s decision to extend financial aid to students from families earning up to $180,000 a year appears to have some unintended consequences (or were they intended?), according to an article in the New York Times. Jonathan Glater reports that the increased financial aid is putting pressure on smaller colleges to match Harvard, and, by creating greater competition for middle-class kids, may actually take aid money away from low-income students.
Officials at colleges without anything like Harvardâs $35 billion endowment say a rush to give tuition discounting to the middle and upper middle class at institutions like theirs could end up shifting financial aid from low-income students to wealthier, make pricing seem even more arbitrary and create pressure to raise full tuition to pay for all the assistance.
…Some administrators say there will now be pressure to provide more merit aid to relatively wealthy high achievers, reducing the amount available to poorer students.
âIt could lead to schoolsâ doing this sort of thing because they want to be part of the top group,â David W. Oxtoby, president of Pomona College in California, said of Harvardâs move. If that meant those colleges had to reduce the number of their low-income students, Dr. Oxtoby said, âthat would be terrible, exactly the wrong outcome.â
[Glater should have noted that Oxtoby was a candidate for the Harvard presidency.]
In the piece, Harvard dean of admissions Bill Fitzsimmons admits that a significant motive for the university’s decision was to compete for middle-class kids whom Harvard wanted but who weren’t applying because they felt they couldn’t afford to go.
“People were voting with their feet,â Dean Fitzsimmons said.
This is all very interesting. Presumably one of Harvard’s motives was also to deflect attention away from the rising-much-faster-than-inflation tuition it charges, but the move seems to have backfired.
Jonathan Burdick, dean of admissions and financial aid at the University of Rochester, where costs are nearly $45,000, said: âHarvard has made it harder for everybody. Theyâve given fuel to the argument that colleges are charging more than they should.â
Of course, parents and students are going to be grateful for Harvard’s move, and they should be, not just because of how it helps them pay for Harvard, but because it suggests that there ought to be more pressure on colleges to lower tuition, or at least help families pay it, and creates something more of a free market in college tuition.
What is irrefutable, though, is that the race here goes to the wealthiest; Harvard is playing this game with vastly greater resources than any other university.
How long will it be before there are serious calls for income redistribution? Perhaps a luxury tax like baseball’s?