Financial aid update
February 5, 2008
To the Bates Community,
As many of you are aware, the Bates Board of Trustees held its regular mid-winter meeting on campus this past weekend. The Trustees took this welcome opportunity to discuss the issues of college costs and financial aid that we have also been considering here on campus. The matter was thoughtfully reviewed at both the Admissions and Financial Aid Committee meeting and at the full Board meeting on Saturday morning. I write now to update you on these and other continued and valuable conversations.
The context for our discussion includes the larger picture of Congressional attention to college accessibility and affordability. The chairman and ranking member of the Senate Finance Committee, Max Baucus (D-Montana) and Charles Grassley (R-Iowa) recently sent letters to 136 colleges and universities with endowments over $500 million. (This group comprises not only large research universities and the Ivies but also several national liberal arts colleges, among them Bowdoin, Colby, and most NESCACs, but not Bates, with our endowment around $275 million at present.). The letter asks 50 questions about several areas over which the committee has not previously had jurisdiction such as financial aid, endowment spending, and other budgetary matters. It follows up on the Senate Finance Committee’s attention in the past year or so to various higher education issues, including proposed mandatory endowment payments and tuition caps.
In advance of any federal regulation, some colleges and universities with large endowments have made dramatic changes in their aid policies. Harvard, for example, which eliminated the expected family contribution for parents with incomes of less than $60,000 two years ago, has now announced that beginning next year, families earning $60,000 to $120,000 a year will contribute on a sliding scale declining from 10% ; families earning from $120,000 to $200,000 will be required to pay, on average, no more than 10% of their income. Harvard will also eliminate loans in financial aid packages and change other aspects of their policy to increase financial aid support. Yale has announced a similar policy, and new announcements from private universities may be expected. [For an overview of these policies as of January 17, see http://www.acenet.edu/AM/Template.cfm?Section=Legal_Issues_and_Policy_Briefs2&
Higher education leaders, associations, and the media have responded publicly to these changes with a wide variety of opinions. Many complain that the new policies, especially those expanding aid for the “near rich,” do nothing to improve the overall affordability of most colleges and universities and, in fact, will only force many institutions to lower educational quality and/or reduce the amount of aid they provide to the most needy students in order to find the funds to compete. Others believe that these changes will actually have little effect on most institutions because so few directly compete with the elite colleges and universities for students. All agree that we are in a newly volatile period, that government and media scrutiny is likely to intensify, and that we cannot as yet foresee all the consequences of recent and future changes.
Among the national liberal arts colleges, the biggest recent change has been the announcement by colleges including Amherst, Williams, Pomona, Davidson, Haverford, Swarthmore, and now our most immediate neighbors/competitors, Bowdoin and Colby that they will be eliminating all loans from their financial aid packages.
As I said in both of my previous messages on this topic, we are paying close attention to these matters and will be making any decisions about Bates’ financial aid policies only after informed deliberation guided by our own most important and longstanding values. The Trustees and I have reaffirmed the following principles:
Providing our students with the best educational experience is our most important priority, and we are committed to using our resources wisely and strategically to sustain our leadership and reputation for academic excellence. Bates remains well positioned among the most prestigious and far wealthier peers for selectivity and yield, both of which are ways of measuring and retaining the quality of our students and the excellence of a Bates education. We are committed to sustaining this position.
To this end, and in accord with our founding mission of expanding educational opportunities, we seek to attract and retain the most talented students regardless of financial need, and we believe that all students learn best in a richly diverse and inclusive community. Access and affordability, therefore, continue to be one of the College’s top priorities. We have for several years increased our financial aid budget at a rate higher than the increase in our comprehensive fee. We spend a higher percentage of our operating budget on our need-based aid than many of our peer institutions. We have kept our loan expectations well below the national average, and 87% of our financial aid is awarded in the form of grants. (To put this fact in context, note that Princeton, for example, has announced that with its latest initiatives, including loan elimination and lowered expectations from families, the portion of tuition covered by average grant for a freshman aid student rose from 65% in 1997 to 95% in 2008. Princeton’s endowment per student as of 2006 was just under $2 million, or about thirteen times the size of the Bates endowment per student. )
The current higher education environment for financial aid and other key budget and financial matters is extremely complicated and rapidly changing, so we will not make any policy changes without our characteristic concern for due deliberation, careful analysis, and informed consideration of options and consequences.
We will focus in the near term on keeping abreast of new studies and emerging information, and we will continue to use the most sophisticated and effective tools available for assessing the impact of our policies on the quality of our faculty, students, staff and programs. Recent initiatives such as the use of experienced external consultants to help us analyze our financial aid policies are an example of the fact that we are committed to using all available information fully and intentionally in order to align our resources and programs with our goals.
The planning process currently underway will provide us with timely clarification and articulation of these goals, so that we can find creative and proactive ways to weigh trade-offs and make important decisions about costs and benefits.
We will continue to communicate with all of you in ways that promote transparency and inclusiveness. On campus, Senior Staff has been monitoring and discussing the situation for several weeks and will continue to do so.
If you have had the patience to read this far, I want to close by thanking you for your attention. These issues do not lend themselves to brief statements. For those of you who may even have an appetite for more, I list below some examples (in no particular order) of recent (as of February 1) media opinion pieces and articles that you might find worth reading. The Trustees and I appreciate that there are a variety of perspectives on these issues, and we are grateful for your continued interest.
“Rich colleges, poor students”
“Bravo for Yale and Harvard, but what about the rest?”
“Big boost to college aid unlikely despite moves by Yale and Harvard”
“’Have Not’ colleges need new ways to compete with rich ones”
“Harvard, Yale are Questioned by Senators Probing College Costs”
“Like Being Mugged in a Dark Alley” (1/25/08, ongoing blog by Bob Zemsky)
“Education Endowments’ Taste for Hedge Funds Shifts”
“Yale Follows Harvard’s Lead”
“Keeping needy students in college hinges more on academic success than financial aid, study finds”
Enhancing Affordability and Access (1/24/08, NAICU is evidently updating this Web site listing regularly)
Colleges Face Tough Sell to Freshman, Survey Finds