<p>We all know that at private IHE’s such as Stanford middle-income families are struggling to pay the cost of their children’s education. To ease the financial burden, Stanford University has announced it will commit $5 million in financial aid for the 2007-08 academic year to give middle-income families both a lower parent contribution and a reduction in the amount students are expected to borrow during the school year - to $2,000 from $3,500, which will be offset by increased scholarship funds for students. </p>
<p>This is great news for those who are attending those elite private schools which meet full need and have large endowments with which to award institutional aid. We all know that acceptance to these schools is highly competitive…and we have to hope that other schools using the Profile will follow suit. AND wouldn’t it be helpful if these schools were somehow able to award finaid that meets need instead of “gapping” so many of their accepted students?</p>
<p>Members of the 568 President’s Group have changed the amount of home equity they consider when awarding financial aid. Should be a real benefit to many.</p>
<p>Amherst College
Boston College
Brown University
Claremont-McKenna College
Columbia University
Cornell University
Dartmouth College
Davidson College
Duke University
Emory University
Georgetown University
Grinnell College
Haverford College
Massachusetts Institute of Technology
Middlebury College
Northwestern University
Pomona College
Rice University
Swarthmore College
University of Chicago
University of Notre Dame
University of Pennsylvania
Vanderbilt University
Wake Forest University
Wellesley College
Wesleyan University
Williams College
Yale University</p>
<p>This sounds great to me, too. I was also interested to see another article in inside higher ed on private giving that singled out Stanford (and Stanford alumni, friends, and parents) for its recent major, successful campaign for undergraduate education, as well as the $4.3 billion campaign underway (the largest ever in higher education). Stanford University “easily outdistanced all other colleges and universities with its $911.2 million take.” Good to see initiatives to encourage middle class families to aspire to attend institutions such as Stanford and those in the 586 group such as Amherst. </p>
<p>IMO…it seems that the universities/businesses could be more forthcoming with aid…just on the interest alone they could “afford” to cover the cost of each and every student that applies…the student who graduates then could pay it forward by earmarking a certain per centage of their income to the university…</p>
<p>I think this will make a big difference to top 20%ers (those with incomes in the $95k-$165k), precisely the population from which these schools lose students to the merit aid schools (Vanderbilt, Emory, etc.), but I doubt that it will have much effect on middle and upper-income students, from the middle and upper-middle quintiles ($40-$95k). There just aren’t that many of them at these schools.</p>
<p>If the report is accurate in the way it describes the 568 school’s practices, this change will NOT help moderate income families who are carrying a large mortgage. Assume, for a minute, a $60K income family with a home valued at $350K equity and a $150K mortgage. Under the old system – 2.4 x income less mortage debt – the home equity is not counted at all: 2.4 x 60= 144 cap – the mortgage amount is higher than the cap, so none of the equity is counted.</p>
<p>New system: no consideration of mortgage debt, 1.2 x 60= 72. </p>
<p>So you go from having -0- consideration of home equity to having the EFC increased by go up by $4000. </p>
<p>Who does this reform benefit? Moderate to upper income families with low mortgage debt & high home equity. </p>
<p>It’s help for the “middle class” all right – those upper middle class families who are always complaining about the system being unfair because they live in high cost-of-living areas. All of the sudden, the $120K earner living in a million dollar home is eligible for financial aid. 1.2 x 120= 144 – with that valuation, they’ve got an EFC of $27K – as opposed to around $40K under the old system.</p>
<p>Notwithstanding the press release, I suspect that what was really going on is that the 568 schools were seeing upper middle class families who live in big expensive houses and have huge mortgages come in with lower EFC’s because their mortgage debt wiped out the the capped equity – so they decided to lower the cap and disregard the mortgage debt to spread the pain around. But that isn’t going to help the median-income earners who have moderately-priced homes and have average-level mortgages.</p>
<p>The real question is why any of these college should WANT middle- and upper-middle income ($40k-$92k) students who aren’t athletes or absolute superstars (or, occasionally, URMs). They don’t get any credit for enrollling low-income students. They don’t add to school prestige. They often come from relatively unknown public high schools which are not likely to become significant feeder schools. They don’t help with “realized preference” data - most of them will end up at state schools. They cost a heck of a lot.</p>
<p>So a little sprinkling is more than enough. Much more prestige is gained by rejecting them, especially if they are vals or sals - the town will remember that for much longer time than they will an acceptance.</p>
<p>This is going to sound even greater when ALL of the schools using the Profile and thus considering Home Equity follow suit. The schools on that list mostly meet full need while many of the other schools using Profile typically gap their students. Those who are “gapped” each year need all the help they can get…we know…our gap this year was $40,000 total for two students at schools that use the Profile and do not meet full need. Also, I suspect that our home equity amount also contributed to their decisions to NOT award much institutional aid.</p>
<p>Thumper, I think you are absolutely right. When some colleges see a huge home equity, they think “hmmm…those folks can take out a home equity loan or a PLUS loan, let’s gap them and see if they’ll still attend.” </p>
<p>I thought it was interesting to read the comment from the Princeton financial aid person pointing out that Princeton had already done something similar but the announcement had been “lost” behind the news of Princeton’s no-loans-for-low income kids. Of course, middle income kids are the ones who get socked with loans, especially at schools like Princeton that have done away with them if you fall below a certain family income level.</p>
<p>Stanford is only boosting financial aid by $5 million to meet the anticipated lower EFCs of middle income kids, and there’s no mention of whether that $5 million will be given in grants or doled out in the form of loans. That tells you something about just how much they expect this “boost” for middle income applicants to be. I don’t see any mention of the percentage of kids receiving loans dropping due to this news, but perhaps Stanford just forgot to mention that side of things.</p>
<p>If you look at Xiggi’s thread about how much $$ some of these schools are taking in on donations…they could afford to do more for the middle class.</p>
<p>But why would they want to? (and I mean middle and upper-middle income folks - $40k-$95k). I don’t see any incentive for them to do so, other than the fact that it wouldn’t cost them much, as there are so few of them.</p>
<p>Maybe there are so few of them applying because they know they couldn’t afford to attend if admitted. And I thought kids at all levels of socio-economic status provided a type of diversity. What is the middle class–chopped liver??</p>
<p>There are other major financial considerations for Stanford and 865 schools. I have one graduating from Stanford this Spring and a Junior at an 865 school.</p>
<p>Stanford’s charge for health insurance (if you purchase though the school) is phenomenol - much more than the charge at the 865 school in the same state. It is nearly twice the charge.</p>
<p>Stanford’s minimum wage for on campus jobs is over $10/hr (and most jobs have paid closer to $25.00/hr). 865 school pays much less for on campus jobs -$6-$7/hr range.</p>
<p>865 school has given more financial aid every year I have had two children in school - about $5000 more/year. In addition, 865 school has lots of money for summer internships, that Stanford does not have. Money at 865 school is available really just for the asking, in the $3000-$6000 dollar range for a summer internship.</p>
<p>There are things besides the obvious when considering what the school will tell you they will give in financial aid, of which I was not aware until almost four years had gone by.</p>