A sea of demand Rising higher education costs put aid front and center

Author: Mary Lane and Derek Schlickeisen

A growing number of elite U.S. colleges have begun offering "free tuition" to many of their applicants. On Feb. 25, Brown University joined Harvard, Yale, Stanford and Dartmouth in committing to completely eliminate the cost of tuition for students whose families earn less than $60,000 each year and increase aid to those earning up to $100,000. In the NESCAC, Williams and Amherst have cut loans entirely from their aid packages, meaning aid recipients can make their entire tuition contribution through campus work-study programs.

Yet, these schools also share something else in common: endowments in excess of $1 billion. As Middlebury nears this significant marker (the College's endowment stood at $936 million in 2007), what steps are being taken to make sure its own financial aid program can compete?

"A lot of the focus recently has been on undergraduate debt," said Kim Downs, director of Student Financial Services, the College's financial aid office. "We have a lot of graduates who are going to non-profits after graduation, and obviously they're going to have a harder time paying back their loan. We don't want these students to be overwhelmed by debt."

With this circumstance in mind, the College last year launched the Reduced Loan Initiative, a centerpiece of the school's plan to revamp financial aid packages.

The Office of Admissions lists a $46,910 annual comprehensive fee, making Middlebury one of the most expensive schools in the country. With an average grant of $30,700, however, the average financial aid recipient at Middlebury must make up the extra $16,000 or so three ways: through campus work-study, student loans and a certain financial contribution from his or her family.

Prior to the class of 2011, financial aid packages included a standard $4,000 loan per year, regardless of family income - a plan which left graduates with up to $16,000 in debts. The Reduced Loan Initiative lowers this debt burden over four years by up to $10,000 for students with the lowest levels of family income by replacing these student loans with extra grants. Though the Initiative does not completely eliminate loans as Williams and Amherst have done, the College believes it can ­- and must ­- be enough for now.

"Middlebury is catching up, but what we're seeing is Williams' nearly $2 billion endowment at work," said Patrick Norton, the College's vice president for administration and chief financial officer.

The College also hopes to expand the number of students who receive financial aid from 41 to 43 percent of the student body. The goal in mind, according to Dean of Planning John Emerson, is to increase socio-economic diversity on campus.

"In recent years we have made excellent progress in making Middlebury more attractive for upper middle-income families, but we still have a challenge with students from families in the lower half of the income distribution," explained Emerson. "Consider all families in the U.S. that have at least one student in college. These families are of course more affluent than other U.S. families. Still, almost half of them have incomes below $80,000. At Middlebury, fewer than 20 percent of families have incomes below $80,000. So we have work to do."

The College's two-pronged approach to financial aid will not come cheaply. Before the College's 2006 vault into fifth place in the U.S. News & World Report rankings, its endowment was comparable to its closest-ranked peer schools. Now in a "top five" bracket that includes the richest three liberal arts colleges, Middlebury finds itself making trade-offs between competing financially for the best and most diverse students and other priorities.

Of the $500 million to be raised by Middlebury's five-year campaign, roughly $26 million of the new endowment support will be needed to fund the Reduced Loan Initiative, while another $154 million will go towards increasing the number of financial aid recipients.

"Financial aid is expensive," said Emerson. "One example of a trade-off made is a decision to go slow with the completion of the commons infrastructure. Indeed it isn't clear that the five commons will ever have their own dining halls. Although I am personally a supporter of the commons, I think that financial access to Middlebury needs to be the highest priority."

Dean of Admissions Robert Clagett argued that this year's first-year class gives evidence that the new aid program is working.

"There is no question that the loan reduction program that we instituted for this year's first-years had the effect of increasing our socio-economic diversity across all income groups," he said. "In fact, our yield on grant recipients last year was even higher than for the whole class, so that's a very good sign that our financial aid policies are helping us attract a high percentage of our admitted students, regardless of financial background."

As the College works to upgrade its financial aid programs, Norton cautioned against being too impressed by the glossy claims of schools now offering "free" tuition.

"Free tuition doesn't mean free cost of attendance," said Norton. "Free tuition doesn't include the cost of room, board, books and other miscellaneous expenses. There are only a handful of schools that meet the full demonstrated need of their applicants, and we are one of them."