<p>Check out this Newsweek article about the impact of elite colleges’ expanding need-based financial aid for the middle class.</p>
<p>"Some applaud the middle-class college bailout. “For years top schools have been locked in an arms race, building lavish facilities for their students,” says Richard Vedder, director of the Center for College Affordability and Productivity. “It’s nice to see they are finally competing on price.”</p>
<p>But economists say the effects may be far-reaching and not all together rosy. For starters, it will put pressure on flagship public schools, which traditionally educate some of the brightest, although not necessarily the richest, kids. Formerly, a high-achieving middle-class kid from Lansing, Mich., might get accepted at both Harvard and the University of Michigan but opt to stay in-state and graduate debt-free. Now it may be cheaper for that student to attend Harvard. University of Michigan spokeswoman Kelly Cunningham says the school is monitoring the developments. “We’ll probably know the effects over the next few years, as prospective students identify and respond to these opportunities,” she told NEWSWEEK in an e-mail…</p>
<p>At second-and third-tier private universities, though, the impact could be much more severe. “We do provide what we think are very generous financial aid packages for the middle class,” says Colgate University’s David Hale, vice president for finance and administration. But Colgate, with an endowment of $700 million, has less prestige and can’t provide the kind of handouts that Harvard, with its $34 billion endowment, can. Colgate isn’t changing its financial aid policy, says Hale, “but we do have to be aware of what’s going on. Schools compete hard for those students.”</p>
<p>Economist Ronald Ehrenberg, director of the Cornell Higher Education Research Institute, thinks he knows how the new policies will play out for schools like Colgate, and he’s worried. “Each institution wants to maintain their place in the pecking order,” says Ehrenberg. Top colleges have signaled their intention to use their considerable endowments to bid against each other “for the same small group of talented middle-class students.” Second- and third-tier schools, which aren’t sitting on the same kind of endowment war chest, “will have to sweeten the packages in order to lure top middle-class kids by taking money away from students who really need it: low-income students.”</p>
<p>Of course, most low-income students are educated at public colleges and universities. But at a time when the United States is failing to keep pace with an increasingly educated global workforce, the notion of narrowing any portal of access to higher education for poor kids seems like a bad idea indeed."</p>
<p>[Tuition:</a> The Price-Break Problem | Newsweek Education | Newsweek.com](<a href=“http://www.newsweek.com/id/118827/page/2]Tuition:”>http://www.newsweek.com/id/118827/page/2)</p>