Campus & Community

Harvard announces sweeping middle-income initiative

8 min read

Harvard President Drew Faust and Dean of the Faculty of Arts and Sciences Michael D. Smith today (Dec. 10) announced a sweeping overhaul of financial aid policies designed to make Harvard College more affordable for families across the income spectrum. The new initiative focuses on ensuring greater affordability for middle- and upper-middle-income families through major enhancements to grant aid, the elimination of student loans, and the removal of home equity from financial aid calculations.

This initiative builds on Harvard’s recent pathbreaking policies to ensure that families with incomes below $60,000 are not asked to contribute to the cost of sending their children to Harvard.

The new policy has three major components:

  • The “Zero to 10 Percent Standard”: Harvard’s new financial aid policy dramatically reduces the amount families with incomes below $180,000 will be expected to pay. Families with incomes above $120,000 and below $180,000 and with assets typical for these income levels will be asked to pay 10 percent of their incomes. For those with incomes below $120,000, the family contribution percentage will decline steadily from 10 percent, reaching zero for those with incomes at $60,000 and below. For example, a typical family making $120,000 will be asked to pay approximately $12,000 for a child to attend Harvard College, compared with more than $19,000 under existing student aid policies. For a typical family with $180,000 of income, the payment would be approximately $18,000, compared with more than $30,000 today. The new standard reduces the cost to families by one-third to one-half, making the price of a Harvard education for students on financial aid comparable to the cost of in-state tuition and fees at the nation’s leading public universities. The new initiative also establishes a standard that students and their families can easily understand.
  • No Loans: In calculating the financial aid packages offered to undergraduates, Harvard will not expect students to take out loans. Loan funds will be replaced by increased grants from the University. Of course, students will be permitted to cover their reduced cost of attendance through loans if they wish.
  • Eliminate Home Equity from Consideration: Under the new policy, Harvard will no longer consider home equity in determining a family’s ability to pay for college. This will reduce the price by an average of $4,000 per year for affected families as compared with current practice.

“We want all students who might dream of a Harvard education to know that it is a realistic and affordable option,” said Faust. “Education is fundamental to the future of individuals and the nation, and we are determined to do our part to restore its place as an engine of opportunity, rather than a source of financial stress. With no loans, no consideration of home equity, and a dramatic increase in grant aid, we are not tinkering at the margins, we are rebuilding the engine.

“This is a huge investment for Harvard,” Faust continued, “but there is no more important commitment we could make. Excellence and opportunity must go hand in hand.”

The new initiative amplifies Harvard’s long-standing commitment to need-based financial aid — Harvard College awards neither merit aid nor athletic scholarships. Under the new initiative, the College will continue to consider individual circumstances in assessing a family’s financial need. Families with unusually high medical or sibling educational expenses, for example, may be expected to contribute less than the expected percentage income, while those with substantial wealth that does not show up as income may find that they are expected to contribute a higher percentage.

Factors such as family size, health care costs, sibling educational expenses, and other nondiscretionary expenses that place a drain on family finances are considered carefully in assessing a family’s need, and there is no income cut-off for need-based scholarship eligibility. Currently there are more than 100 families with incomes greater than $200,000 who, because of extenuating circumstances, receive need-based financial aid.

“I am very pleased that Harvard is in a position to make these dramatic changes, and I applaud President Faust and Dean Smith for their careful thought and decisive action in this area of central importance to the University and to higher education,” said James R. Houghton, senior fellow of the Harvard Corporation. “Any investment of this magnitude requires trade-offs, even at a university with substantial endowment resources. But investments in the quality of our students — like investments in the excellence of our faculty and research enterprise — occupy a special place.”

“Harvard College has had a very generous financial aid program for decades, and we have made significant enhancements in recent years, especially for families in the lower-income ranges,” said Smith, who as dean of the Faculty of Arts and Sciences oversees Harvard College. “We are concerned, however, that families in the middle are feeling increasingly squeezed as they work more hours, pay more for housing and health care, and face greater uncertainty in retirement.

“We want to ease these burdens,” Smith continued. “We want to make Harvard affordable for talented students from all financial backgrounds, and once they are here, we want to make sure they are able to take full advantage of the opportunities we provide to build their skills and knowledge and to engage their deepest interests. This experience is not possible if families are consumed with financial worry and students are consumed with debt.”

The new initiative is the latest chapter in Harvard’s systematic effort to increase affordability and widen access for qualified students from across the economic spectrum. In the winter of 2004, under the leadership of President Lawrence H. Summers, Harvard transformed the financial aid landscape with its announcement that families with annual incomes below $40,000 would not be expected to pay for their sons or daughters to go to Harvard. The zero-contribution threshold was raised to $60,000 in 2006, with further reductions in parental contributions for families with incomes up to $80,000. Over the past three years, the number of students in these income ranges has increased by 33 percent, representing a quarter of the entering Class of 2011.

“For the past several years, we in the Office of Admissions and Financial Aid have been talking with families about their needs and working with Clayton Spencer, vice president for policy, and researchers at the University to understand internal realities and external trends,” said William R. Fitzsimmons, Harvard College’s dean of Admissions and Financial Aid. “All of these inquiries have led us to the same conclusion — despite our best efforts to help families deal with rising college costs, our methods for measuring financial need are not as sensitive as they should be to the real circumstances faced by American families. Many parents won’t even allow their sons and daughters to apply to private colleges, while others allow their children to attend but experience real pain in paying the share we ask of them. I am deeply grateful to Dean Smith, President Faust, and the Harvard Corporation for their willingness to take such powerful action to remedy this situation.”

In a related move, Harvard in 2006 announced the elimination of its early action program — a form of nonbinding early admissions — and moved to a single admissions deadline of Jan. 1, beginning in the 2007-08 academic year. In explaining the decision, then-interim President Derek C. Bok stated that the change was designed to make the admissions process simpler and fairer. In his words, “early admissions programs tend to advantage the advantaged,” as students from more sophisticated backgrounds often use the system to increase their chances of admission, while first-generation college students and those from high schools with fewer guidance counselors and other resources may miss out.

Harvard is using the time and capacity freed up by the move to a single admissions cycle to intensify its outreach and recruiting efforts. The admissions staff is now able to travel more widely to make presentations in key cities and other areas to educate students, families, and college counselors about Harvard and the college admissions process in general and is also working with secondary schools in a renewed effort to make applying to college less complicated and less stressful than it is today.

Currently, two-thirds of Harvard College students receive some form of financial aid, and half receive need-based scholarship aid from Harvard, totaling more than $98 million. Major enhancements to financial aid began under the leadership of Harvard President Neil L. Rudenstine. In the past decade, Harvard’s grant budget has increased 143 percent while inflation increased by only 28 percent. With the new initiative fully in place this coming year, more than 90 percent of American families will be eligible to benefit from Harvard’s exceptionally generous financial aid.