Although the details have not been worked out fully as of yet, at their meeting last weekend, the trustees approved an increase in Carleton’s Financial Aid budget of $250,000. We can expect similar increases over the next three years, bringing the total up to $1,000,000 by 2012. This increase will fund a reduction in the loan portion of the Financial Aid Awards to incoming freshmen, and replace the loan component with grant.
This comes at the heels of similar developments in many of our peer institutions, which have been making somewhat splash in the world of Financial Aid. It all began in 2005 when Princeton eliminated loans altogether from its Financial Aid packaging. This trend accelerated when Harvard announced at the start of 2007 that they too would be eliminating loans, and would no longer require a Family Contribution from families with incomes below $60,000. In 2007 schools like Yale, Amherst, Williams, Pomona, and Davidson eliminated loans, and a number of other schools: Duke, Tufts, Columbia, Welseleyan and Colby have taken action on this issue in some lesser degree. In total 18 schools introduced some form of this in 2007 and early 2008. A majority of these are located on the East coast, with the exception of the University of Chicago (Midwest) and Pomona (West Coast).
There are many reasons for schools like Carleton to review the structure of their financial aid award.
One is the rising cost of college tuition, which in most cases has been outpacing inflation. This has made schools less affordable over time, especially for groups which have traditionally been disadvantaged in American society. This reduction may encourage students who otherwise are not even thinking of applying to Carleton to reconsider.
Another related issue which looms large for a liberal arts school is that the amount of loan indebtedness (or considerations of it) upon graduation may affect the student’s decision about what academic field to pursue, which can drive students into departments and careers that are not internally satisfying for them.
To address these issues, we have worked this year to create the Carleton Access Scholarship, the first recipients of which will be the incoming freshmen, class of 2012. While we are not sure on all the details at this stage, I can give you a preview of what it might look like. The scholarship will most likely have a national scope. Scholarships may extend to include families with incomes perhaps as high as $100,000. There will be a sliding scale of some sort, so that the neediest students will receive scholarships of several times the amount given to those in the upper brackets that scholarship will cover. The scholarship will renew automatically unless the family’s financial conditions change substantially.
AFAC deliberated if we should endorse a regional proposal: at the same total cost we could disburse more dollars per student-recipient; In addition, our proposal is more modest in size that the complete loan elimination which many east-coast schools (with larger endowments and a smaller portion of Financial Aid recipients than Carleton) have implemented. Therefore, we cannot hope to compete with them on sticker price everywhere.
However, we decided to recommend a national scheme, because we want to still be on the radar along the coasts 3 or 4 years down the road. The fear was that if we do not include the coasts, then people may irreversibly change their opinion about Carleton as a national institution. Perhaps more compelling (something that I tried to emphasize in meetings) is that a national scholarship will let us assist the greatest number of needy students right away, even if it will not let us extend the upper bracket of scholarship recipients as high. Although it would seem from the proposals that schools like Harvard have implemented, that competition has began to give financial incentives to a large portion of the middle class.
We hope that the Access Scholarship, when it takes its final shape, will be an appropriate response to the changes we’ve seen in the world of financial aid, a help to the needy students, and a useful recruiting tool which will help Carleton compete. I will be glad to keep you posted as this proposal solidifies in all its details.
I look forward to hearing your thoughts on this and any other Financial Aid and Admissions Related Issues. In addition, we will soon be seeking a new student member to work with us on AFAC. Stay tuned for more information on the appointment process if you would like to get involved!