Hopping on the Affordability Bandwagon

For students worried about the cost of attending a selective college, last week was a bonanza.

On Tuesday, the University of Pennsylvania and Brandeis University both announced they were expanding their financial aid programs to a broader range of students. The next day, Carnegie Mellon, the Massachusetts Institute of Technology and the entire University of Texas system did the same. The plans will make more lower- and middle-income students eligible for free tuition, with some raising the family income threshold to $200,000.

Those five institutions join dozens of others that have rolled out similar initiatives this year: Dartmouth, Vanderbilt, Colby College, Duke, Columbia, Richmond and the Universities of Virginia and North Carolina, to name just a handful. So what’s behind the flurry of affordability initiatives?

The announcements have come pouring in at a time when public resentment of elite institutions has reached a fever pitch, doubts about the value of college are at a historic high and the impact of the Supreme Court’s affirmative action ruling on demographics is becoming clear. And after last year’s bungled FAFSA rollout, families are warier than ever of financial aid promises.

“We know what’s going on with confidence in higher education, and one element of that is increasing cost and increasing debt levels,” said James Milliken, chancellor of the UT system. “This is about sending a clear message that college is affordable. That’s what we’re doing, that’s what MIT and Brandeis are doing, and I think that’s really important.”

Tania LaViolet, director of research and innovation at the Aspen Institute, said context is crucial to understanding why so many selective institutions are announcing at the same time. It’s part of a broader marketing and recruitment effort to raise awareness of the financial aid resources at colleges with staggeringly high sticker prices—she calls it a “clear cost” initiative. And as more colleges expand financial aid, it creates a domino effect among peer institutions looking to compete for highly qualified applicants from lower income brackets, she said.

“There’s been a greater microscope on affordability at these institutions. People are asking, ‘Are they fulfilling their public purpose to support economic mobility for American families?’” she said. “And these initiatives are working. I think institutional leaders are beginning to pick up on that, and that’s why you’re seeing this surge now.”

The plans are similar but not identical. Penn’s program lifts the income threshold for free tuition from $140,000 a year to $200,000; pays for room, board and books for those making under $75,000; and includes other changes like removing home equity from the family contribution formula. MIT’s plan also lifts the income threshold to $200,000 and raises the eligibility bar for covered room and board from $75,000 to $100,000.

Carnegie Mellon is waiving tuition for families making under $75,000 and replacing loans with grants for those making under $100,000. At Brandeis, $75,000 will be the threshold for free tuition while families making under $200,000 will receive at least half off the sticker price. The University of Texas system is waiving tuition at all nine of its campuses for Texas residents making $100,000 or less.

For all their variety, officials from the colleges told Inside Higher Ed their plans have the same goals: making their degrees more affordable and conveying that affordability in clear and simple terms to prospective students from the bottom half of the economic stratum.

“Part of the journey has been recognizing how much we’re asking of these families, how onerous the documentation is,” said Elaine Varas, Penn’s senior director of financial aid. “One of our goals here is not only trying to help families afford an education, but also to help them simplify the process.”

‘There Are No Coincidences’

Many of the colleges that rolled out their plans last week are also defendants in an antitrust lawsuit alleging financial aid price-fixing. Part of Penn’s plan even includes eliminating the issue at the heart of the antitrust suit: requiring noncustodial parents to factor their financial information into the expected family contribution, when many children of single parents will only receive support from one. Varas said that decision had nothing to do with the lawsuit.

While the timing of the spate of financial aid announcements raised eyebrows among some higher ed observers, college officials say it’s purely coincidental.

“There’s no collusion here,” Milliken said. “But I think it’s terrific that everyone is doing this.”

Mark Kantrowitz, a financial aid expert and consultant, doesn’t think collusion or collaboration was involved in the oddly timed announcements either, but he isn’t sure it was purely serendipitous.

“There are no coincidences,” he said. “The fact that all of this is happening at once suggests a common trigger.”

One is the impact of the affirmative action ban on class diversity. MIT was among the first colleges to report the demographic profile of their Class of 2028, and the data showed a steep decline in Black and Hispanic student enrollment, from 25 percent of the class to 16 percent. At Carnegie Mellon, the share fell from 16 percent to 8 percent.

Another potential driver is the FAFSA fiasco, which seems to have put a dent in low-income and first-generation enrollment as well—and which further soured the public outlook on an already unpopular and byzantine financial aid system.

“I think schools are hyperaware of the skepticism that families are feeling, especially after going through the challenges with the FAFSA last year,” LaViolet said. “Making extra clear to families that they are going to get financial aid is a counterbalance to the challenges and uncertainties they faced last year.”

Kantrowitz said that above all, highly selective colleges are waging a united public relations campaign against their worsening reputation.

“They all attend the same conferences, they have similar strategies, they have common problems,” he said. “One of those problems is that they’ve become bastions for the wealthy. And the wealthy don’t have a monopoly on intelligence.”

Serving the Middle Class

Over the last 10 years, MIT’s financial aid budget has increased by 70 percent, according to admissions dean Stuart Schmill. He added that the latest expansion will help broaden the impact of the university’s financial aid offerings and bring down costs for the middle class in particular.

“For low-income students, we have long been affordable, and we’ve always tried to communicate that. It’s the middle class that feels a little bit squeezed,“ Schmill said. “Middle-class families often don’t think they’ll receive substantial financial aid. We wanted to make it clear that they would.”

Varas said that while $200,000 a year may sound like a high income, students from those families are often the most burdened with debt. Many have saved enough to pay for one or two years of college but have to resort to loans to complete their degrees. Others have expenses that eat significantly into their college budgets.

“We heard that even with the $140,000 [free tuition] threshold, families were struggling to pay. These are families struggling to get by on two incomes,” Varas said.

Penn’s financial aid plan also removes a factor many may not be aware colleges consider when packaging aid offers: home equity.

In the past, Penn—along with many other colleges that offer institutional grants—has counted home equity as part of a family’s wealth when determining financial aid awards. That could significantly raise a family’s expected contribution, without taking into account mortgage payments and property taxes. Varas said that students affected by the change will receive an average of $4,000 more in institutional grants; when Stanford removed home equity from financial aid calculations in 2019, the university increased its financial aid budget by 7 percent.

“A lot of these families are living paycheck to paycheck, and all they have is their home,” Varas said. “People work so hard to own a home in this economy and to try to make ends meet, and most families that buy a home are still paying their mortgage 25 years later … it’s really not fair to consider that as part of the source of funding for their kids’ education.”

LaViolet said that for all the benefits of colleges’ recent spree of financial aid investment, the impact will be limited unless they match it with more equitable admissions and recruitment strategies.

“If this is just for public relations but you’re not actually admitting more of the talented students who are coming to your doorstep, that’s not going to result in moving the dial on low- and middle-income student enrollment,” she said. “Even for those who had really robust financial aid investments in the past, the hope is that, if you pair this with increased outreach into low- and middle-income communities, you’re going to get more interest.”