Harvard Trims Tuition Bills for Families

Wall Street Journal's report an article on Harvard reducing the amount of contribution by parents who earn below USD180,000 a year. This effectively means that this would make Harvard much more affordable to students. Would this trigger other universities to do so as well?

For me, this is a very important initiative, where we are making quality higher education affordable, especially those high end higher education.

For the link of the article, go to Wall Street Journal

The article reproduced in full.

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Harvard Trims Tuition Bills for Families
Initiative Provides
Lower Costs
Keyed to Income
By JOHN HECHINGER
December 11, 2007; Page B17

Harvard University sweetened financial aid for middle- and upper-middle-class families at a time when elite colleges are increasingly under assault for pricing themselves out of reach for all but the wealthiest Americans.

Under its new program, to take effect next fall, the Cambridge, Mass., school said undergraduates whose families earn up to $180,000 a year would be asked to pay 10% or less of their incomes annually for the cost of Harvard, which now totals $45,620.

The university said that for about half of its undergraduates, the initiative would reduce the cost of attending the college by one-third to one-half, making the price comparable with in-state tuition and fees at top public universities.

Harvard has been criticized for its swelling endowment, which stands at $35 billion, the highest of any university in the country. The school said the initiative would increase its annual financial aid spending by $22 million to $120 million. Last year, its endowment jumped by $5.7 billion because of strong investment returns and donations.

Yesterday, Harvard President Drew Faust said Harvard wanted to attract students scared off by the hefty price tag and fear of debt. Officials said the Ivy League school also would eliminate loans from all aid packages and no longer consider home equity in calculating eligibility.

Harvard's move is likely to put pressure on other wealthy, selective colleges to increase financial aid to attract top students. In recent years, a number of other marquee institutions -- including Amherst, Columbia, Princeton, Stanford and Yale -- have taken similar steps, such as increasing aid and scrapping student loans. Harvard was among the earliest in the effort. In 2004, Harvard drew attention for eliminating tuition for families earning $40,000 annually or less, and later expanded that figure to $60,000. Other schools followed. With yesterday's announcement, Harvard is reaching higher up the income spectrum to attract upper-middle-class families.

Critics -- and college officials themselves -- have long worried about the disproportionate number of wealthy students at universities like Harvard.

At the 146 most selective colleges in the U.S., just 3% of the students came from families that ranked in the bottom 25% in income, while 74% came from the top 25%, according to a 2004 study by the Century Foundation, a New York-based research group.

Harvard says that 3,340 students out of roughly 6,600 undergraduates currently receive financial-aid grants. About a third of those receiving aid come from families earning $60,000 a year or less, with most of the rest earning between $60,000 to $180,000.

Yesterday's announcement comes as lawmakers have been lashing out at colleges that raise tuition while stockpiling money. They have discussed requiring universities to spend a minimum amount of their endowments each year. Yesterday, Sen. Charles Grassley, the senior Republican on the Senate Finance Committee, who has championed the idea, said he hoped Harvard "would inspire other expensive colleges to make tuition more affordable."

Lynne Munson, adjunct research fellow at the Center for College Affordability and Productivity, a Washington nonprofit, says some other schools will feel compelled to match Harvard. But Ms. Munson, who testified recently before the Senate Finance Committee, said Harvard could well afford to freeze tuition and eliminate it completely, "not just for poor families but for middle class families."

William Fitzsimmons, Harvard's dean of admissions, says the college believes tuition should be "a shared responsibility" for families who can afford to pay.

Under the new policy, families making $120,000 to $180,000 will be asked to pay 10% of their incomes. A family earning $120,000 would pay about $12,000, compared with more than $19,000 under current student-aid policies. Families earning below $120,000 would pay a declining percentage of their incomes, down to zero at $60,000 and below.

Write to John Hechinger at john.hechinger@wsj.com