College & Workforce Readiness

Private Colleges, Universities Set Standards To Gauge Aid Eligibility

By John Gehring — August 08, 2001 3 min read

To help establish a more consistent process for providing financial aid to low-income students, the presidents of 28 private colleges and universities have agreed on a set of common standards for determining a family’s ability to pay the cost of an undergraduate education.

The ad hoc group, including the presidents of Boston College, Bowdoin College, Cornell University, Duke University, and Yale University, began meeting two years ago to talk about ways to make providing aid for needy students a priority.

For More Information

The report, “Report of the Common Standards Subcommittee to the 568 Presidents’ Working Group,” is available from Cornell University.

Its efforts come at a time when many financial-aid experts have documented a steady decline in colleges’ commitment to need-based assistance. A recent report from the Institute for Higher Education Policy criticized the federal HOPE Scholarship Program as providing a “windfall” for middle-income students while doing little to help the neediest students pay for college. (“Report: HOPE Offers Little Help To Poor Students,” May 23, 2001.)

And as more colleges and universities ante up aid in what amounts to bidding wars for the best students and athletes, some observers say, such merit-based aid can often come at the expense of need-based aid.

A recent study by the Washington-based Hart Research Associates found that 82 percent of parents believe that college is moving out of financial reach, and that half the surveyed parents with college-bound children had saved $1,000 or less for college.

Restoring Confidence

The U.S. Department of Justice a decade ago sued a group of elite universities for collaborating on decisions about financial aid. But Congress, in the last reauthorization of the Higher Education Act, allowed colleges that admit students without regard to their ability to pay to discuss aid eligibility.

The presidents’ group began meeting in 1999 as the “568 Presidents’ Working Group,” named after the 1994 congressional antitrust exemption—Section 568 of the Improving America’s Schools Act—that permitted private colleges to collaborate on qualifications for need-based aid.

In its recommendations released July 6, the group seeks to provide greater clarity and fairness in the financial-aid process by establishing a more uniform approach for evaluating the financial need of children of divorced or separated parents; calculating parents’ and students’ assets together rather than individually to avoid penalizing parents who pay lower tax rates by saving for college in their children’s names; setting a formula to ease the financial burden of parents with more than one child in college; and taking into account the higher cost of living in certain cities.

“There is evidence that students and their parents are confused by the substantial disparities in the reports they receive from financial-aid experts at different campuses of the costs of educational expenses that families will reasonably be expected to pay,” Hunter Rawlings, the president of Cornell University and the chairman of the presidents’ group, said in a statement announcing the recommendations. “We need to restore confidence in the process of determining family contributions, and we need to do so before the American public’s confidence in the financial-aid system erodes further.”

For many years, private colleges used financial-aid guidelines set by the College Scholarship Service, an arm of the College Board founded in 1954 that brought uniformity to the application process and standardized the criteria for determining families’ ability to pay for education. But more recently, colleges have relied on a wider variety of their own aid formulas. That has meant a range of different ways for determining eligibility for aid at individual institutions.

“My ambitious hope is this will be a step in finding some common standards for a commitment to need-based aid,” said Michael S. McPherson, the president of Macalester College in St. Paul, Minn., and a co- author of the 1998 book The Student Aid Game: Meeting Need and Renewing Talent in American Higher Education. “This agreement creates greater transparency, and we see that as an advantage for parents.”

The presidents’ group also said it plans to look at whether it should throw its support behind other possible changes in financial aid in the future. For instance, federal financial-aid rules currently penalize some students who receive other aid from their colleges.

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A version of this article appeared in the August 08, 2001 edition of Education Week as Private Colleges, Universities Set Standards To Gauge Aid Eligibility

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